Moody's: Strong demand for Asia shipping companies

Moody's Investors Service said in a new report that continued strong demand is helping support a stable outlook for shipping companies in Asia Pacific (excluding Japan), although the sector faces challenges in the form of volatile freight rates, rapid expansion and rising operating costs.

Moody's noted that excess capacity has continued to contribute to freight rate volatility, holding down rates for both liners and tankers. Over the next 12 months, the ability to manage revenue uncertainty over freight rates, which have been volatile over the last several years, will remain a key credit issue, the agency said.

Another key issue for shipping companies will be the ability to manage expansion risk while avoiding the temptation to over leverage, Moody's added.

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