The multipurpose, or breakbulk, shipping sector should see better times following a tough 2013, according to the London-based consultant Drewry.
“While the expectation for 2014 remains subdued, there are signs that this sector should begin to pick up further volumes towards the end of the year and grow in 2015 and 2016,” said Drewry in a free white paper
that coincides with the release of its Multipurpose Shipping Market Review and Forecaster
Susan Oatway, senior consultant at Drewry, said, “We continue to be concerned about competition from container lines, particularly for the project carriers; any delay in the recovery of that sector will also delay recovery in this one.”
Commodities such as forest products and steel are sometimes carried in shipping containers and container ships also compete for oversize breakbulk cargo by using special equipment such as flat racks and open-top containers. Multipurpose ships also commonly carry some containers in addition to breakbulk items.
“Meanwhile, the multipurpose vessel orderbook is very manageable and as long as newbuildings have a unique quality -- whether that is eco-friendly engines or extraordinary lift capacity -- there is still space to accommodate them,” Oatway said. "This means that Drewry’s forecast does provide some room for optimism for owners. Demand is expected to continue to grow and has the potential to deliver significantly increased volumes.”
Last year, cargo demand for multipurpose and heavylift vessels was adversely impacted by determined competition from other shipping sectors.
Drewry noted that cargo demand has risen steadily since the crash of 2009, but that the “multipurpose sector share of those volumes has eroded” and that “2013 was in fact a worse year for ship owners than recession-blighted 2009, as its market share dropped to just 8 percent of dry cargo, although tonnage was actually higher.”
It said the biggest growth in 2013 volumes came from cargo, such as steel and forest products. Global steel production in 2013 exceeded 1.6 billion tonnes, with growth of almost 5 percent compared to 2012.
"Whilst some major exporters (South Korea, EU, USA) reported decreased exports over 2012, China and Taiwan continued to show strong growth (18 percent and 9 percent, respectively), which contributed to an expansion in overall global traffic.”
“By contrast, demand for general cargo, which includes project cargoes, dropped over 30 percent. Drewry believes this was due to a double hit of increased competition from other shipping sectors and a slowdown in the project market. Drewry estimates that project cargo volumes fell by almost 15 percent over the year.”
However, Drewry said the outlook is more positive, forecasting that “demand for the multipurpose shipping will grow at an average annual rate of 5 percent over the coming years. However, we are only expecting modest growth in 2014, as competition from other shipping sectors will continue to eat away at market share. But we expect the sector’s market share to recover through 2015/16.”