Drewry has reported that dry cargo demand is weak but strengthening with multipurpose shipping market share expected to grow at just under 2% per year to 2020.
The consultancy’s research has shown an increase in demolition levels for multipurpose and competing sectors, with a decrease in new building ordering, which will result in minimal aggregate multipurpose fleet growth to 2020.
Drewry has also found that future market prospects for the multipurpose shipping sector are not only dependent on the supply-demand balance for that segment, but also on the other vessels that compete for break-bulk and project cargo, in particular handy bulk carriers and container vessels.
Susan Oatway, lead analyst for multipurpose shipping at Drewry, said: “Slow growth in supply, alongside better growth in demand, is expected to help multipurpose charter rates in 2017 and beyond, supported by a recovery in the dry bulk market, albeit a slow one. In particular, the oversupply situation, which has dogged this sector for many years, is expected to level out in the medium term.”
Drewry predicts that the new International Maritime Organisation (IMO) regulation on Ballast Water Management is likely to have a small effect on demolition levels in the multipurpose sector, and even more so for the bulk carrier sector.
In October 2016, it was estimated that global ship owners will face $18 billion in costs to meet the new ballast water treatment legislation.
Any investment in this sector will be in project carriers (with a lift of 100 tonnes or more) producing fleet growth in this segment of almost 3% pa to 2020.
The general cargo segment will contract at around 2% pa over the same period, leading to overall MPV fleet growth of less than 1% pa to 2020.
Oatway added: “On the face of it, the supply-demand balance is levelling out, demand is growing faster than supply and the market is improving. As ever, it is the competition for cargoes from bulk carriers and containerships that will keep rates in this section of the market subdued for at least another 12 months.
“Until rate increases are sustained in the bulk carrier and container ship sectors, there will be little reprieve in their drive to obtain further market share.”