The shipping sector is expected to “remain volatile and uncertain” in 2016 suggesting weak growth for breakbulk and multipurpose shipments, according to predictions from research consultancy Moore Stephens.
“The Baltic Dry Index, a measure of shipping rates for everything from pins to elephants, dropped to an all-time low in December last year, and has fallen still further this month. Most people blamed this on China for not consuming as much of anything as it did previously,” said Richard Greiner, Moore Stephens shipping partner.
“The dry bulk sector will probably have to reduce the newbuilding orderbook and increase ship recycling in 2016 in order to restore the balance,” he said.
The consultancy suggests that cost of regulation is set to increase with new requirements such as the implementation of the Ballast Water Management Convention also driving up operating costs this year.
Cyber security, refinancing costs, geopolitical threats, legal disputes and volatile oil prices are all expected to play to the downside for growth in the sector.
“Now is nevertheless a good time to invest if you have access to finance and a credible business plan, preferably one with the badge of green approval. It is no coincidence that IMO recently endorsed a proposal to adopt ‘Shipping: Indispensable to the World’ as the theme for World Maritime Day 2016,” Greiner said.