Shipping firms must scrap old ships and embrace private equity investors to succeed in 2015, an industry specialist has claimed.
Richard Greiner, shipping partner at adviser Moore Stephens, said the industry needs to adopt a “can-do attitude” to overcome a collapse in confidence which hit a two-year low at the end of 2014.
He said overtonnaging was “top of the list” of things that the shipping can change in order to improve slumping freight rates.
“Accelerated scrapping is needed, together with an acknowledgement that there are already too many ships on the market and that, absent some form of rationalisation, freight rates will not pay the bills,” he said.
He also urged ship owners to work to attract investment, despite beliefs that private equity investors take a short-term approach.
“One area where shipping can demonstrate that it knows the difference between what it can and cannot change is in its attitude to private equity. Does private equity not know what the rest of us know, or does it know something the rest of us do not? Rather than bemoaning the short-term commitment of private equity, shipping should be looking to tick the boxes which attract such investors,” he said.
The firm expects that operating costs will continue to rise along with higher costs of regulation this year.
He added: “Shipping embarks on a new year with confidence in a fragile state. The industry is volatile, and will be looking for improved political stability and a stronger global economy. But it should not underestimate its proven ability to endure throughout crises. 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.”