In our Spring Outlook market series, we find most participants are taking a glass half-full approach. The improved confidence is based on easing oversupply; with owners prioritising their spendings on meeting new regulations over newbuildings, the recovery story may really turn out to be true this time.

When considering whether their glass is half-full or half-empty, most shipowners seem firmly on the optimistic side. For now.

When analysing the main sectors of cargo carriers, the Lloyd’s List Spring Outlook series found the upbeat mood that materialised in 2017 could potentially last well into this year.

There have been some worries about global trade wars initiated by Washington and new regulations, justifiably, but the general consensus seems to be that supply-demand balances are improving.

Many shipowners are feeling the sunshine, having seen freight earnings on an upwards trajectory in some main sectors over the past few quarters.

The latest Moore Stephens survey found shipping confidence at a four-year high. Shipowners’ optimism is mainly based on easing oversupply.

Take the container and dry bulk shipping sectors, which are most vulnerable to any new China-US trade barriers, for example.

Even as there are demand-side worries, the boxship orderbook is at less than 13% of current fleet and net growth of the global bulker fleet this year is likely to be the lowest in a decade. For many, that is enough to keep freight recovery firmly on track.

But there are also the consumption-side stories that bulls can point up.

Consolidating its status as fuel of the future, liquefied natural gas is seeing its use undergo rapid expansion. Related seaborne trade requirement is being boosted consequently, not least because of rising Chinese imports and US exports. This is widely expected to be the star performer this year, with analysts continuing to adjust their forecast earnings upwards.

As with LNG, demand for liquefied petroleum gas has also been driven by growing environmental consciousness in emerging markets over recent years. But it is also aided by rising petrochemical feedstock use in China.

Placing those factors alongside the booming US shale output and exports, some are hoping the LPG shipping sector will turn a corner later this year.

There are also signs of recovery in crude and petroleum products shipping markets, which have been plagued by large newbuilding tonnage lately.

Yes, the Organisation of the Petroleum Exporting Countries will cap output for much of the year as the global de-stocking process continues, undercutting cargo flows. But fleet growth is slowing and could fall even further if more owners of aging ships assign them to the scrapheap because of weak earnings.

Against this rosy outlook, investors should take careful note that shipowners tend to be their own worst enemies. With newbuilding prices still low and an improving appetite among financiers, it is not out of the question that newbuilding orders will soar in droves and derail any recovery in a year or two.

Fortunately, owners have to prioritise their spending to meet the International Maritime Organization’s new regulations in ballast water treatment and bunker fuels.
On this occasion, it is perhaps the regulators who are bringing out the sunshine.