However, owners, charterers and managers were more confident than they were at the time of the previous survey in May, 2019.
The average confidence level recorded by the survey in the three months to end-August, 2019 was 5.8 out of a possible maximum of 10, compared to 6.1 recorded for the previous quarter.
Confidence was highest in the chartering sector (up from 6.2 to 7), while the increased ratings for owners and managers were from 6.3 to 6.4 and from 5.8 to 5.9, respectively. The rating for brokers, however, was down from 5.7 to 5.1.
According to the BDO survey, the likelihood of respondents making a major investment or significant development over the coming year was up from 5.4 to 5.5 out of 10. Charterers’ confidence in this regard was up from 5.6 to 6.8, and owners’ from 6.3 to 6.5. The ratings for managers and brokers were also up, from 4.8 to 6.1 and from 3.9 to 4.4, respectively.
The number of respondents expecting finance costs to increase over the coming year was down from 48% to 25%. The figures for all major categories of respondent were down, and in the case of owners and managers, to survey lows of 27% and 20%, respectively.
Demand trends were cited by 23% of respondents as the factor most likely to influence performance over the next 12 months. Competition (20%) and finance costs (16%) featured in second and third place, respectively, in this context.
In the freight markets, the number of respondents expecting higher tanker rates over the coming year was down by 12 percentage points to 43%, with the rating for charterers tumbling from 75% to just 25%.
Responding to a stand-alone survey question, 26% of respondents said they expected the price differential between high sulfur fuel oil and IMO-compliant low sulfur fuel oil at 1st January, 2020 to be between $175 and $249 per tonne, while 17% estimated the cost at between $250 and $324, compared to 24% last time.
Richard Greiner, Partner, Shipping & Transport at BDO, said: “Geopolitical uncertainty contributed significantly to the decline in confidence recorded in our latest survey, with a number of respondents expressing concern about burgeoning trade wars and political tension in various parts of the world. Ongoing indecision surrounding Brexit was also a salient factor.
“But it was not all bad news. Confidence on the part of owners, charterers and managers was up in the last three months, as was the likelihood of imminent major investment – in the case of owners, to an all-time survey high.
“Indications from the freight markets were less encouraging, with a fall in expectations of higher rates in all three main tonnage categories. But shipping confidence must be weighed against the highly cyclical nature of the industry. Not every reversal in fortunes is a portent of significant decline.
“Major challenges lie ahead, some of which will be beyond the control of the industry itself. But there will always be a role for the shipping industry, and particularly for one that is technically inventive and environmentally compliant and thereby attractive to investors,” he concluded.