Rates will improve in the multipurpose and heavy lift shipping sector through 2019 fuelled by rising volumes of project cargo traffic, but prospects thereafter are muted by an anticipated slowdown in world trade.
This was the assessment that Drewry put forward in its latest multipurpose shipping forecaster report. The consultancy added that the rise in oil prices through the first half of 2018 boosted the multipurpose shipping market, a trend that is projected to continue through 2019.
However, over the longer term, oil prices are expected to average under USD70 per barrel, limiting new project investments.
Uncertainty surrounding trade demand is receding slightly as the USA and China move toward establishing a trade accord, contributing to the more optimistic outlook in the short term. Still, the global economic outlook has deteriorated and continued uncertainty in Europe, largely due to Brexit, suggests that more turbulent times are in store for the multipurpose shipping sector, said Drewry.
Furthermore, Drewry anticipates increased competition for cargo post-2020 as global economic growth continues to slow down.
On the other side of the supply/demand balance is the multipurpose and heavy lift fleet. The number of vessels with lift capacity of less than 100 tonnes is in decline; this trend should continue for the foreseeable future with contraction of almost 3 percent per annum to 2023.
Although demolition levels are at an all-time low, they are expected to ramp-up over the course of this year. Drewry noted that the multipurpose sector has the most over-aged tonnage, which is prime for recycling.
Meanwhile the project carrier fleet with lifting capacity over 100 tonnes is growing at a rate of around 2 percent per year; most of the limited number of newbuildings (delivered and on order) is in this category fall into this category.
Drewry added that the number of competing vessels (bulkers and containerships) looking for breakbulk and project cargo will depend on how the trade war between the USA and China plays out. In the short term, the multipurpose market share is expected to improve as the competition moves back to their traditional cargo bases.
However, as general cargo demand weakens over the long term due to slowing economic and trade growth, Drewry expects these competing sectors to, once again, aggressively target breakbulk and project cargo shipments.