Apr 19 | 2019
Project Cargo Demand to Spur Rates Increase
Increasing demand for project cargo transport is set to bolster multipurpose and heavy-lift shipping rates in 2019, according to research by maritime consultancy Drewry.
“The multipurpose and heavy-lift shipping sector will see strengthening rates through 2019 fuelled by rising project cargo traffic,” said Susan Oatway, senior analyst, multipurpose and breakbulk shipping at Drewry, adding that “the project market is expected to be strong in 2019 as it was boosted by the rise in oil prices through the first half of 2018.”
The forecast suggests that uncertainty surrounding trade demand may improve moving into the second half of the year, as tensions between the U.S. and China recede, boosting breakbulk activity.
3.8 Percent Annual Growth
Drewry predicts that addressable demand for the multipurpose vessel fleet will deliver annual growth of 3.8 percent in 2019. This is expected to tail off to 1.4 percent in 2020 and lead to 1.2 percent average annual growth over the long term to 2023.
“This is because as the global economy is expected to slow down after 2020, increased competition for cargo will eat into market share,” Oatway explains. “Over the longer term oil prices are expected to average under $70 per barrel and this will limit new project investments.”
Demolition Levels at All-time Low
Drewry notes that the global fleet of vessels with lift capacity of less than 100 tonnes safe working load is in decline, and “this trend is expected to continue for the foreseeable future.” Contraction of almost 3 percent per annum is forecast to 2023.
Despite demolition levels resting at an all-time low, they are expected to pick up over 2019 and the multipurpose sector, both no gear and geared, has the most overaged tonnage available for recycling.
Larger capacity vessels, with lift more than 100 tonnes safe working load are conversely expected to grow, increasing at a rate of about 2 percent per year, as newbuilds are delivered to market.
Net Contraction of 0.2 Percent
Across all lift classes, Drewry predicts that the global fleet will see a net contraction of about 0.2 percent per annum to 2023 in total supply, while kandy bulk carriers and container lines are expected to act as swing ships for the sector.
“The number of competing vessels looking for breakbulk and project cargo will depend very much on how the trade war between the U.S. and China plays out … As general cargo demand weakens over the longer term with slowing economic and trade growth, it is anticipated that these competing sectors with their own oversupply challenges will return to breakbulk and project cargo and so stagnate MPVs market share,” Oatway concludes.
Oatway will speak on the MPV and heavy-lift shipping market at Breakbulk Europe in Bremen, Germany, on Thursday, May 23.
Photo: Multipurpose vessel. Credit: Wikimedia
“The multipurpose and heavy-lift shipping sector will see strengthening rates through 2019 fuelled by rising project cargo traffic,” said Susan Oatway, senior analyst, multipurpose and breakbulk shipping at Drewry, adding that “the project market is expected to be strong in 2019 as it was boosted by the rise in oil prices through the first half of 2018.”
The forecast suggests that uncertainty surrounding trade demand may improve moving into the second half of the year, as tensions between the U.S. and China recede, boosting breakbulk activity.
3.8 Percent Annual Growth
Drewry predicts that addressable demand for the multipurpose vessel fleet will deliver annual growth of 3.8 percent in 2019. This is expected to tail off to 1.4 percent in 2020 and lead to 1.2 percent average annual growth over the long term to 2023.
“This is because as the global economy is expected to slow down after 2020, increased competition for cargo will eat into market share,” Oatway explains. “Over the longer term oil prices are expected to average under $70 per barrel and this will limit new project investments.”
Demolition Levels at All-time Low
Drewry notes that the global fleet of vessels with lift capacity of less than 100 tonnes safe working load is in decline, and “this trend is expected to continue for the foreseeable future.” Contraction of almost 3 percent per annum is forecast to 2023.
Despite demolition levels resting at an all-time low, they are expected to pick up over 2019 and the multipurpose sector, both no gear and geared, has the most overaged tonnage available for recycling.
Larger capacity vessels, with lift more than 100 tonnes safe working load are conversely expected to grow, increasing at a rate of about 2 percent per year, as newbuilds are delivered to market.
Net Contraction of 0.2 Percent
Across all lift classes, Drewry predicts that the global fleet will see a net contraction of about 0.2 percent per annum to 2023 in total supply, while kandy bulk carriers and container lines are expected to act as swing ships for the sector.
“The number of competing vessels looking for breakbulk and project cargo will depend very much on how the trade war between the U.S. and China plays out … As general cargo demand weakens over the longer term with slowing economic and trade growth, it is anticipated that these competing sectors with their own oversupply challenges will return to breakbulk and project cargo and so stagnate MPVs market share,” Oatway concludes.
Oatway will speak on the MPV and heavy-lift shipping market at Breakbulk Europe in Bremen, Germany, on Thursday, May 23.
Photo: Multipurpose vessel. Credit: Wikimedia
