Capacity concerns mean ratings agency is not getting carried away with box and bulk upturns.
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| Fitch believes bulker rates are not out of the woods yet. Photo: Astilleros Espanoles |
Overcapacity places a question mark over a recovery in the dry bulk and container sectors and will keep the tanker market under pressure in 2018, Fitch says.
Against this backdrop the ratings agency is keeping a negative outlook on the industry with no material improvement in fundamentals forecast for the year ahead.
Angelina Valavina, senior director at Fitch, says: “The overcapacity in shipping undermines the current rebound in dry bulk and container shipping rates and puts in doubt its longevity.
“Only prudent capacity management could reverse sector fundamentals and lead to a sustainable recovery in freight rates.
“The credit metrics of container and bulk shipping companies show some relief, but tanker companies are under pressure.”
Fitch notes that the Baltic Dry Index has risen by 75% in the year to date, helped by lower ordering of newbuildings since 2015.
However, sustained improvement is contingent on continued capacity management, it reasons.
Container rates have also shown positive developments this year but Fitch cautions that previous rallies have been short lived and a recovery may still be illusive.
On the tanker front, Fitch believes increase demand and moderate supply growth will prevent further falls in earnings.
But it does not anticipate a sustained increase in the market during 2018.