When will the Breakbulk head towards recovery?
For as long as we can remember, the Breakbulk market has been plagued with numerous issues which in has affected the cargo market baffling experts and analysts.
Analysts hopeful:
The financial analyst such as Susan Oatway, lead analyst for multipurpose shipping at Drewry Shipping Consultants is hopeful that the Breakbulk rates are expected to rise from next year with many vessels being scrapped which will ultimately give rise to new ships which in turn will increase the competitiveness among container and bulk carriers.
Timeline needed for recovery:
Whereas other analysts as Ulrich Ulrichs, CEO of Rickmers-Linie expressed that the immediate recovery is not on the cards and it will take another five years for the Breakbulk rates to remain neutral or increase in a consistent manner. But all the analysts are hopeful to see an improvement in the Breakbulk market in the coming years.
Need for an optimistic approach:
The Breakbulk and project carrier market has been on the downward trend ever since the great recession which resulted in oil and commodity prices going Hayward which ultimately led to the low demand for cargo-generating construction projects and ordering of new ships.
Key-points highlighted in Breakbulk conference:
At the Breakbulk conference held in America, key points were highlighted to stress the need for balance in vessel supply and demand.
- Currently, the multipurpose fleet comprises of 3,224 ships with a total capacity of 29.5 dwt and the average age of just less than 16 years.
- New investment in multipurpose project carriers has increased due to the fact that these ships are capable of lifting at least 100-ton and another line of heavy-lift project carriers with the capacity of lifting 250 tons. Normal vessels are being increased scrapped without any replacement.
- In the last five years, project carriers have accounted for 70% of new capacity and made up 99% of new capacity last year and account for more than one-fourth of all multipurpose ships and almost 45% of multipurpose vessel capacity and are an average of 10 years old, half the age of simple ships.
- Vessels sans heavy-lift capacity are being scrapped at a rate of about 600,000 dwt annually and more demolition is needed. The order book of new ships is manageable with new deliveries rising at about the 600,000-ton-per-year level of vessel demolitions.
With all the key-points highlighted, lets wait and see for the market to recover, it can happen as forecasted by analysts immediately or can take another five years to be up and running.
Annually, the multipurpose fleet is touted to expand by 0.5% till 2019. The project carrier capacity of 2.5% annual growth is expected to balance a 2.7% contraction in the simple multipurpose fleet.
The modern carrier fleet is well equipped to handle global demand but can be influenced to a certain extent by a reduction in steel exports from China slowing the short-term growth.
The ro-ro vessels are expected to retain their competitive rates since they are increasing designed to handle high and heavy projects cargoes which in turn will reduce the competitiveness for breakbulk cargo.
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Ref: JOC
