Newbuild multipurpose ship orders will not hit pre-pandemic levels this year, according to Drewry’s recently published Multipurpose Shipping Forecaster report.
In sharp contrast to developments in the container and dry bulk sectors, new orders for multipurpose and heavy lift tonnage over 2021 will struggle to reach levels seen in 2019, where just over 200,000 dwt was ordered.
Drewry said that all firm multipurpose orders this year (amounting to 160,000 dwt) are for vessels with a lift capability of less than 100 tonnes. This means for the first time in a number of years, the percentage of heavy lift capable tonnage on order is less than that of non-heavy lift capable tonnage.
The multipurpose shipping market has been in recession for the last 10 years and the positive rate development seen in the past 12 months has been long overdue – many carriers had been operating at or below operating costs, leaving little space for new investments.
Even today, said Drewry, “there is very little spare cash, even after a bull market run that has so far lasted nine months. Added to this is the simple fact that the yards are full of orders for containership and bulk carriers, so even if owners had the spare cash and the desire to build, there are very few slots available.”
This trend is clearly in contrast to the newbuilding levels of the competing container and bulker fleets – longstanding competitors for heavy and breakbulk cargoes.
Drewry’s concern is that it has the potential to leave a short-term hole in the project carrier sector at the point it could take off. “That said, this shortage in supply around 2023 will coincide with the influx of the container carrier newbuildings, so may actually help to keep the supply side constrained,” said Drewry.
On the other side of the supply equation is demolition. “Here too activity levels are very weak and indeed practically ground to a halt over the third quarter of 2021. In a strong charter market this is less surprising, as currently every available vessel is on the ocean. Indeed, we have reduced our expectations for this year and next, as we believe the charter market will be a stronger pull than the demolition sector,” the analyst added.
“However, here too 2023 could be a watershed year. At this point the average age of the fleet (multipurpose and project carrier combined) will be over 20 years. It is true that most of the overage tonnage is less than 10,000 dwt and not heavy lift capable, but it still transports a significant volume of breakbulk cargo. At this point the latest IMO rulings on greenhouse gas emissions will become much more significant for this tonnage and demolition levels are expected to rise. Without newbuildings to replace them, we expect a period of fleet decline in the medium term.”