Multipurpose Shipping Freight Rates Expected to Improve
Posted by Michelle Howard
January 4, 2017
Photo: Drewry Maritime Research
The multipurpose shipping market will see the first signs of recovery by the end of 2017, following in the steps of the dry bulk and container shipping markets, according to the latest Multipurpose Shipping Market Review and Forecaster report published by global shipping consultancy Drewry.
Dry cargo demand is weak but strengthening with multipurpose shipping market share expected to grow at just under 2% per year to 2020. Demolition levels are up in both the multipurpose and competing sectors, whilst newbuilding ordering has waned, which will result in minimal aggregate multipurpose fleet growth to 2020.
The 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 breakbulk and project cargo, in particular Handy bulk carriers and container vessels.
“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,” comments Susan Oatway, lead analyst for multipurpose shipping at Drewry.
The new International Maritime Organization (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. At the same time 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, whilst 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.
“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,” added Oatway.
