Moore Stephens: The shipping industry is volatile

By Finance

During the first days of 2015, Richard Greiner, Moore Stephens Shipping Partner, issued a statement that the new year will be extremely important for the development of the shipping business, considering nowadays situation, as participants are faced with the need to deal with a number of critical challenges, and on the top of the list is overtonnaging.

Along with it, Greiner said more pressing issues in the industry such as the need for scrapping of many vessels, which are too worn out and even if being innovated, costs for renovation will not be covered by the freight rates of the future cargo.

Alongside with the effective implementation of cost-benefit analysis when planning renovation of facilities, changes in behavior and perception of business are also needed. It is necessary to adopt the idea that everything can be done.

Besides internal factors on business development particularly, strong impact cause also the external factors such as legal reforms. The new 2015 will be marked by changes related to regulations governing Emissions Control Areas, as well as the ratification of the BWT Convention.

Another expectation for 2015 is an increase in operating costs due to the rise in fuel prices. This will contrast to the inability to rise freight cost of the transported goods.

Among deepening challenges, risk management will also have its strong influence, as will be increased the interest, which can lead to bankruptcy of many companies, such as what happened with OW Bunker last year.

Greiner said that to overcome all these challenges it is necessary to seek for improvement of the political environment and recovering of the global economy. Anyone in the business should not forget that shipping is one of the oldest businesses and has overcome many crises, so that entrepreneurs should look primarily in themselves and try to impose realistic achievable targets.

"The biggest danger may lie not in setting the targets too high and falling short, but in setting the targets too low and achieving them,” said Greiner as a conclusion.