Moody's Investors Service is downbeat on the outlook for the global shipping industry as sustained oversupply of vessels and high bunker oil prices will pressure margins in most shipping segments in 2012.
In its industry report on Thursday, it was said the "outlook for the sector over the next 12-18 months remains negative".
A Moody's vice president and senior credit officer, Marco Vetulli expected the aggregate earnings before interest, tax, depreciation and amortisation (EBITDA) of the global shipping industry to decline by 5%-10% in 2012.
Vetulli, who is the author of the report, said that further downside risks to the industry were the uncertainty about the depth and duration of the recession in the euro area and resurfacing geopolitical tensions in the Persian Gulf.
The international ratings agency forecast the dry-bulk and crude oil tanker segments to likely have the largest supply-demand gap in 2012, complicating these sectors' ability to meaningfully improve their earnings.
However, Moody's had a more upbeat outlook for the product tanker segment for 2012 on expectations demand growth to likely outpace supply during 2012 which would see a rise in leading freight rates by year-end.
"Box freight rates for the container segment have rebounded since March this year. However, Moody's does not expect strong improvement in earnings for the full year in this segment. This reflects sustained high bunker oil costs and pressure on container rates stemming from recent increases in deployed tonnage of box ships," it said.
The ratings agency said Japanese conglomerates were likely to be lesser affected by negative market trends affecting other global shipping companies.
The underlying fundamentals were their scale, diversification (including their liquefied natural gas, or LNG, fleets) and strong relationships with customers.
Moody's said it could consider changing the outlook for the global shipping industry to stable if there were signs that the supply-demand gap would likely narrow in 12-18 months, wherein supply exceed demand by no more than 2% or demand exceeds supply by up to 2%.