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Moody’s Downgrades Outlook for Shipping to Negative due to COVID-19 pandemic

Logistic News - Published on Fri, 20 Mar 2020

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In the wake of the COVID-19 pandemic and deteriorating global economic outlook, ratings agency Moody’s has changed its forecast for the shipping industry to negative for the next 12-18 months from stable. It said “We have changed our outlook for the global shipping industry to negative from stable. This outlook reflects our expectations for the fundamental business conditions in the industry over the next 12 to 18 months.”

According to Moody’s, the earnings before interest, tax, depreciation and amortisation of shipping companies will decline in 2020 amid sharply reduced demand for shipping services in the wake of the coronavirus. It said “This is because of the expected impact of the outbreak on Chinese manufacturing output and demand for coal and iron ore in China, especially during the first half of 2020, as well as related economic disruption. As a result, we have changed the outlook for the global shipping industry to negative from stable.”

Moody’s expects the EBITDA of rated shipping companies to decline by around 6-10% in 2020 compared with EBITDA growth of almost 40% in 2019. The EBITDA of shipping companies globally could decline by 25-30%, similar to levels last seen in 2016 when Hanjin Shipping Co went bankrupt in one of the largest recent failures in the sector

The agency had maintained a stable outlook for the global shipping industry since May 2017.

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Posted By : Rabi Wangkhem on Fri, 20 Mar 2020
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