Verschuure: Ships and Infrastructure Wanted
Johan-Paul Verschuure, project director, Rebel Group
Since Q2 this year, the breakbulk sector has been hindered by increasing logistics challenges and sharply rising freight rates. Where in the container sector this has led to record high new orders, shipowners in the breakbulk sector are still in a holding pattern. Also, the container sector is seeing renewed interest in greenfield infrastructure projects while the breakbulk sector remains conservative in this respect. Likely the low utilization rates of the last decade have contributed to this stance.
However, the lights are now green for new investments in breakbulk port and shipping capacity. For one, charter rates are likely to stay elevated for at least another year. While one or two years will not be enough time to build a new fleet and benefit from the current elevated rates, it will at least replenish the financial buffers making new investments possible. The challenges of realizing a global energy transition and a more circular economy will greatly depend on the breakbulk segment.
As part of the European Green Deal, the EU has raised its 2030 climate ambition, committing to cut emissions by at least 55 percent by 2030 and achieve climate neutrality by 2050. In order to reach those targets, huge investments will be required in renewable projects. With only roughly 20 percent of the EU’s energy coming from renewable sources today, the scale of the renewable project challenge is clear.
Alternative energy carriers like hydrogen and ammonia are being suggested as options for the future, however the energy density is much less than that of fossil fuels. That means that for the same amount of energy much larger volumes would need to be transported and stored. And the requirements and redundancy factors for the stored products will be larger. On top of that, industrial facilities will need to be converted to take in the new energy feedstock and new electrolyzers will need to be built across the world.
If the European member states adopt the “Fit for 55” package and other countries follow suit, the breakbulk sector will require significant investment to facilitate its transition. As such it is vital that governments confirm their commitment to transition initiatives sooner rather than later, giving security to newbuild ordering in the breakbulk segment in the coming years.
