Multipurpose and heavy-lift shipping is facing numerous uncertainties and is most likely to see a stagnation over the coming period, according to the UK-based consultancy Drewry.
The market outlook is heavily reliant on the timing of the global economic recovery from the impact of the COVID-19 pandemic.
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Nevertheless, several other factors are impacting the market, including the recent oil price drop as well as the increasing competition and the continued encroachment by containers and bulk carriers into the breakbulk and project cargo space.
As a result, Drewry expects MPV/HL cargo demand growth to stagnate in the two years to 2021, growing at an average annual rate of just 0.3%.
“The COVID-19 outbreak is likely to have a negative short-term effect on demolition activity as ships are facing long quarantine delays. However, going forward any suggestion of a global recession is likely to increase demolition candidates,” Drewry said.
“Our forecast for this sector is modest, with most of the activity in the older smaller, less heavylift capable parts of the fleet. But we expect activity to increase by some 15-20% in comparison to previous years over 2020 and 2021.”
On the other the supply side, newbuilding activity has been weak in this sector for the last year and the consultancy doesn’t anticipate much pick up in ordering activity as there is very little spare cash for this fleet and even less investment enthusiasm.
Recent new orders (over 2018/19) have been weighted towards the more heavylift capable tonnage, but this is expected to wane.
Over 2020-21, Drewry anticipates that newbuilding deliveries will be beneath expected demolition tonnage by at least 100,000 dwt, leading to a small contraction in the fleet over this period.
Drewry forecasts that under its base-case scenario, average annual charter rates will remain at the same level as 2019. As at the end of March 2020, rates had already started to weaken, albeit not significantly, and are expected to continue in that vein over the summer.
There is limited volatility in this sector, due to the range of commodities carried and the vessel availability increased with other vessel types. This means there is little scope for improvement when the market is weak.
Should the demand pick up in 2H20, in particular for the bulk sector, there should be space to see some improvement in rates, which will continue into 2021.
Nevertheless, in the low-case scenario, which is more probable, the market will see rates weaken further into 2021 and no recovery until the second half of 2021.
about 6 years ago
Multipurpose and heavy-lift shipping is facing numerous uncertainties and is most likely to see a stagnation over the coming period, according to the UK-based consultancy Drewry. The market outlook is heavily reliant on the timing of the global economic recovery from the impact of the COVID-19 pande
