Drewry: Breakbulk Market Weak Until 2017

 

Although demand growth is expected to recover next year after a very poor 2015, and supply growth is likely to be minimal, competition from other sectors will maintain pressure on the breakbulk shipping market, according to the latest edition of the Multipurpose Shipping Market Review and Forecaster, published by global shipping consultancy Drewry.

 

The IMF has downgraded its expectations for both GDP and trade volume growth for 2015 and 2016. Added to this, container shipping demand recorded its slowest rate of growth in the third quarter of this year since 1979 (excluding 2009).

 

“We expect further container shipping penetration into the project market and handy bulk carrier penetration into the breakbulk sectors. These factors will result in reduced market share for the multipurpose shipping fleet,” commented Susan Oatway, senior associate at Drewry.

 

While demand is growing (dry cargo demand is expected to reach average annual growth of 3% in the period to 2018) due to competition from other shipping sectors, the multipurpose fleet share is only expected to reach average annual growth of 1.4% over the same period.

 

“Our view is that improvement in this sector is still some way off. Overcapacity coupled with low freight rates is still a challenge for the profitability of dry bulk and container shipping sectors, and this is increasing their competition for both project and breakbulk cargoes,” continued Oatway.

 

Meanwhile, the project carrier fleet is growing at a much faster rate than the simpler multipurpose fleet and vessel technology is improving every year, whether in terms of lift capacity or design. This sector’s ability to innovate, for example with the recent delivery of vessels equipped with DP systems, will be critical to its future in the face of continuing market share erosion of conventional commodities.