Moody Upgrades Global Shipping Outlook from Negative to Stable

Although the shipping industry has experienced one of the longest and deepest slumps, Moody suggests shipping rates are showing signs of improvement.

Moody's recently upgraded its outlook on the global shipping industry from "negative" to "stable," after almost three years of turmoil and uncertainty. According to the credit rating agency, the troubled shipping industry has reached the bottom and the gap between oversupply of shipping vessels and that of demand is not expected to worsen materially, in the next 12 to 18 months. In fact, Moody's expects that the supply of vessels will exceed demand by no more than 2 percent, or that the global demand will exceed supply by up to 2 percent.

The revision reflects our expectation that the global industry's aggregate earnings before interest, tax, depreciation and amortization (EBITDA) will rise by mid-single digits in percentage terms year-over-year in 2014, in line with our -5 percent to 10 percent growth range for a stable outlook.-  Moody's Assistant Vice President and Analyst.

Although the global shipping industry has seen one of the longest and deepest slumps, lasting nearly five years, the agency suggested that shipping rates are showing signs of improvement and represent a good investment opportunity for international investors. This is welcome news for container lines and investors, as shipping is a worldwide business, and any upturn in global fortunes can be expected to translate into higher profits and better returns.