Demand for multipurpose vessels has stabilised in the last year but breakbulk and project cargo sector vessel demand will remain weak through to the end of 2017, according to a new report published by Drewry.
Situation under control:
Despite low demand, the supply of multipurpose vessels is ‘under control’, with a small orderbook, equal to just 5% of the operating fleet. Shipbuilding orders are expected to slow to just 0.5% in the next three years.
Continued oversupply in competing fleets erodes any positive growth in rates for this vessel type. Drewry believes that improvement in the multipurpose vessel sector is under way, but it is still some way off.
Damage due to oversupply:
While most of the damage is being done by the oversupply of bulk and container vessels, those in the multipurpose shipping community may hold the view that the problem is not theirs to solve.
There are over 600 vessels trading that are over 25 years old, which is 20% of the operating fleet in number terms, of which the majority are less than 10,000 dwt. They compete with most of the world fleet these days as most cargo is in break-bulk trades where they are most active.
Impact various sectors:
Susan Oatway, the Lead Analyst for Multipurpose Shipping, said: “This competition will impact rates across the sector as high spec project carriers will need to carry any cargo to fulfil their investors’ requirements.”
Some believe shippers are through the worst of the low ship rates as traders on March 28, 2016, started to see shipping stocks “soar” and markets rally.
According to reports, Global financial services firm Morgan Stanley upgraded several stocks, more than doubling some price targets, revealing the dry bulk market may have “bottomed” from “cyclical lows” and is now on the upswing.
Improved ratings were seen for Star Bulk Carriers Corp, Golden Ocean Group, Safe Bulkers, and Genco Shipping & Trading.
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Source: Port Technology