October 7 - According to the latest Multipurpose Shipping Market Review and Forecaster report published by Drewry, "the last three months have been some of the worst the multipurpose and project carrier sector has endured in living memory".
The report follows on from Drewry analyst Susan Oatway's presentation at the Breakbulk Americas exhibition, which delivered a very pessimistic outlook for the industry.
The report suggests that "the breakbulk and project cargo sector remain weak, with little suggestion that volumes will improve significantly until the end of 2017".
Drewry noted that rates have continued to slide to "barely cover operating expenses" and the competing container and bulk shipping sectors have weakened the multipurpose market in their search for market share.
Commenting on the bankruptcy of Hanjin Shipping and recent tie-ups in the heavy lift shipping sector, the consultancy stated: "It is clear that with rates barely above operating costs for many owners, the need to find efficiencies is paramount."
Drewry suggested that owners that are being paid less than operating costs are being forced to make cuts somewhere - often from the maintenance budget. In the shipping consultancy's opinion, shippers have to decide whether their main driver is price of quality, especially when they are putting high-value cargo on ships.
"We are more pessimistic about the near term outlook than we were 6 months ago but we can see recovery for this sector, albeit some way off. It is not our view that there will be a run of (or even any more) big carrier bankruptcies in the near term, however, those who hold the purse strings might well be inclined to restrict finance to some of the smaller owners," said Oatway.
Although there has been a brief upturn in container rates, Drewry believes it is likely to be short-lived and not significant enough to impact the breakbulk sector. Drewry does foresee an upturn in the dry cargo trade, however.
Oatway added that while the consultancy's optimism for the multipurpose sector "remains muted", there are some pockets of growth for the industry.
"With oil prices forecast to rise back above USD55 per barrel next year the project sector is expected to see some renewed interest. There is also some potential spend in the Middle East and Africa. And there has been renewed interest in renewables, particularly wind in the USA. The main problem remains the competing sectors, particularly container shipping where aggressive pricing is drawing cargo away from multipurpose ships."
To obtain a copy of Drewry's latest report, visit the company's website.