CREDIT trends for Asia-Pacific's shipping, airlines, and logistics companies are expected to remain stable over the next year, although an underperforming Chinese economy or a major change in the country's economic policy could hit demand, according to Standard & Poor's (S&P) Ratings Services.
The outlook comes on the back of rising demand, easing fuel prices and prudent financial policy, which should offset industry headwinds such as stiff competition and overcapacity.
"Our outlook for Asia-Pacific's transportation industry in 2015 is stable amid steady economic growth and lower fuel prices," said S&P credit analyst Katsuyuki Nakai. "But the industry's reliance on China is greater than ever before. Therefore, any underperformance in the Chinese economy could undermine demand in the sector, as could a significant change in the Chinese government's economic policy."
S&P said that overall macroeconomic conditions remain "favourable" for the region's transportation companies, with the Asia-Pacific expected to grow by 5-6 per cent over the next few years, driven largely by China.
It added that the Chinese economy appears to be "mostly on track" to meet the country's growth target of 7.5 per cent for this year. Meanwhile, the United States' economy is expected to grow moderately in H2 14.
"The economic growth trends in the US and Asia-Pacific will enhance seaborne cargo trade for the region's shipping industry, even as we expect China's economy to continue to underpin this segment," added Mr Nakai. "Both business and leisure air travel in Asia-Pacific will grow. Logistics companies will also generally experience steady cargo growth."
Performance will also be bolstered by lower fuel prices.