Jul 05 | 2019
Weak Demand Means Little Possibility of Improvement Before 2021
Maritime research consultancy Drewry has downgraded its outlook for the multipurpose shipping sector, as demand slows.
Pointing to weaker projected global economic growth, greater competition from dry bulk and container sectors, and slower ship demolitions, Drewry predicted that there is little possibility of improvement before 2021.
“The bulk and container markets encroach on the MPV sector in both the carriage of breakbulk and project cargo and the increasing containerisation of cargoes. With uncertainty rising across the globe due to tariff wars, the rise in populist policies and a slowing Chinese economy, all dry cargo sectors have been affected by slowing demand,” said Susan Oatway, senior analyst for multipurpose and breakbulk shipping at Drewry.
Newbuild Orders
Compounding the issue for the breakbulk sector, is the lack of newbuilds versus demolition spurring oversupply, with Drewry predicting that about 12 percent of the fleet is aging, and mainly trading short sea in the breakbulk trades.
“Regrettably, over the first half of 2019, we have not seen any significant sales for demolition that would suggest owners are starting to get rid of these vessels. This translates into fleet growth of around 0.3 percent per year over our forecast period,” Oatway said.
This is forecast to impede the sector further as over-tonnage, currently holding the fleet back, is not being removed as quickly as it should be.
Second Half Promise
Despite the gloomy prognosis for the first half of the year, Drewry expects slightly better performance for the remainder of 2019 as a number of projects get to the cargo-carrying stage.
“There are areas where this subdued forecast could pick up. Project cargo demand is expected to provide a boost to the sector over 2H19 [as] this section of the fleet is not suffering from overtonnaging and should be able to secure improved forward rates,” Oatway said.
Drewry notes that average rates for a 10,000-15,000 deadweight-tonne MPV for 2019 were US$6,630, down from US$6,650 per day for the end of 2018.
Photo: Cargo Volumes. Credit: Drewry
Pointing to weaker projected global economic growth, greater competition from dry bulk and container sectors, and slower ship demolitions, Drewry predicted that there is little possibility of improvement before 2021.
“The bulk and container markets encroach on the MPV sector in both the carriage of breakbulk and project cargo and the increasing containerisation of cargoes. With uncertainty rising across the globe due to tariff wars, the rise in populist policies and a slowing Chinese economy, all dry cargo sectors have been affected by slowing demand,” said Susan Oatway, senior analyst for multipurpose and breakbulk shipping at Drewry.
Newbuild Orders
Compounding the issue for the breakbulk sector, is the lack of newbuilds versus demolition spurring oversupply, with Drewry predicting that about 12 percent of the fleet is aging, and mainly trading short sea in the breakbulk trades.
“Regrettably, over the first half of 2019, we have not seen any significant sales for demolition that would suggest owners are starting to get rid of these vessels. This translates into fleet growth of around 0.3 percent per year over our forecast period,” Oatway said.
This is forecast to impede the sector further as over-tonnage, currently holding the fleet back, is not being removed as quickly as it should be.
Second Half Promise
Despite the gloomy prognosis for the first half of the year, Drewry expects slightly better performance for the remainder of 2019 as a number of projects get to the cargo-carrying stage.
“There are areas where this subdued forecast could pick up. Project cargo demand is expected to provide a boost to the sector over 2H19 [as] this section of the fleet is not suffering from overtonnaging and should be able to secure improved forward rates,” Oatway said.
Drewry notes that average rates for a 10,000-15,000 deadweight-tonne MPV for 2019 were US$6,630, down from US$6,650 per day for the end of 2018.
Photo: Cargo Volumes. Credit: Drewry
