Moody’s cuts global shipping industry outlook to negative

The Moody’s Investors Service in a media statement said that it changed its outlook for the global shipping industry to negative from stable. The EBITDA of the shipping companies will decline in 2020 amid sharply reduced demand for shipping services in the wake of the coronavirus.

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, the statement said.

Moody’s Investors Service in a statement said that it now expects the EBITDA of rated shipping companies to decline by around 6 per cent to 10 per cent in 2020 compared with EBITDA growth of almost 40 per cent in 2019.

Given the rapid and widening spread of the coronavirus outbreak and the deteriorating global economic outlook, there is a downside risk that the EBITDA of shipping companies globally could decline by 25 per cent to 30 per cent, similar to levels last seen in 2016 when Hanjin Shipping Company went bankrupt in one of the largest recent failures in the sector.

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