Multipurpose shipping has started 2018 on a confident footing, according to the latest edition of the Multipurpose Forecaster and Annual Review report published by Drewry.
The global shipping consultancy has forecasted that further recovery will come because of rising demand, contracting vessel supply and lessening threats from competing sectors.
Drewry stated that the multipurpose shipping market, which comprises both breakbulk and project cargo sectors, has “struggled over the last few years but conditions are now ripe for recovery”.
It found that demand for dry cargo is growing, with a number of drivers reporting improving conditions, whilst the multipurpose fleet contracts as older, smaller, less heavy lift capable tonnage reduces down.
Susan Oatway, Drewry’s lead analyst for the multipurpose sector, said: “This year has started with renewed optimism and it is Drewry’s belief that the market has finally turned that corner.
“Rate rises are never stratospheric in this sector, but we believe a steady growth of around 2-3% per year is possible over the forecast period.”
However, due to the diversity of drivers that supports this sector, Drewry has stated that it still has “some concerns” that could affect the outlook over the medium term.
The first of these is the imposition of tariffs on US steel imports, but Drewry has concluded that the impact will be limited as the 45 million tonnes of steel imported into the US on a yearly basis represents just 8% of the global trade.
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Many countries are also exempt from tariffs, including the two largest US suppliers, Canada and Mexico.
Furthermore, under certain scenarios, alternative trading patterns could lead to an increase in tonne-mile demand.
Drewry has also pointed at the IMO deadline to implement a 0.5% sulphur cap on marine fuel from 2020 as a factor, stating that there is to be no push back on this deadline, and that owners are looking at three costly measures for compliance.
These include the installation of scrubbers and using low-sulphur fuel or switch to LNG fuelled vessels.
Drewry has warned that there may more demolitions happening as a result, as older, simpler vessels of 30 years plus represent almost 10% of the fleet.
The consultancy added that the simple multipurpose fleet — vessels with lift below 100 tons — has already started to contract at a rate that is affecting the whole fleet.
However, Drewry believes that the future is with the project carrier sector — vessels with lift greater than 100 tonnes.
Oatway concluded: “Some 80% of all newbuildings over the last five years have heavylift capability, and at least 70% of the orderbook has this capability.
“The project carrier fleet is growing, but it will be some time before it reverses the decline in the overall multipurpose fleet.”