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Moody's: the peak of the global shipping industry has passed, and the growth will "slow down" next year


On December 6, Moody's, an international rating agency, lowered its forecast for the global shipping industry. Moody's believes that the peak of the shipping industry has passed, but it will still be stronger than before the outbreak led to the interruption of the supply chain.

Although the demand of the shipping market is still slightly higher than the supply, Moody's has lowered the outlook of the shipping industry for the next 12-18 months from "positive" to "stable". Moody's said that the reason for lowering the shipping outlook was that the market situation of the shipping industry was "still stable" considering the very strong cash flow this year, rather than the deterioration of the business environment, but it was unlikely to be better than the current situation in the next 12-18 months.

Daniel harlid, vice president and senior analyst of Moody's, said: "the high demand for goods has overwhelmed the supply chain, and the revenue of container ships and dry bulk carriers is at a record level. However, we expect the profit of shipping companies to decline from this year's peak next year, but still remain high."

According to the report, the market demand for commodities and bulk commodities is still high in 2022, but since it has peaked in 2021, it is expected that the growth will "slow down" next year, and record profits and cash flow have been used to repay debts. However, considering the limited number of new ships delivered by the shipping industry next year, the growth of supply and demand will maintain a general balance, and the growth of demand may be slightly higher than the growth of transport capacity, which will help to keep the freight rate at a high level.

Moody's believes that the integration of container transportation companies contributes to the stability of the industry. In 2008, the transportation capacity of the top five container transportation companies accounted for only 38% of the whole container transportation industry, but it has increased to 65% this year.

Meanwhile, strong demand for iron ore, coal and crops will push up bulk carrier freight rates. Moody's pointed out that under the bottleneck of the supply chain, the average freight rate of bulk carriers has increased by 143% in the past 12 months. In addition, the oil demand is expected to pick up, but the tanker rent is still low, the performance of the tanker company has hit the bottom, and Moody's expects the tanker to grow steadily in the next 12 months.

Moody's also said that the capital expenditure of shipping companies will continue to increase. As shipping companies begin to deal with stricter environmental regulations that will gradually take effect from 2023, orders for ships with more energy conservation and lower emissions will continue to be the theme in 2022. It is expected that the shipping industry will spend a lot of money to replace existing old ships.