The outlook for the general cargo market is far better
The outlook for the general cargo market is far better than it has been for some years. With healthy demand and a sensible orderbook, the only caveat to that rosy outlook when this sector emerges from the downturn is the threat of competition from both dry bulk tonnage and “pure” container carriers. Both these sectors are now squeezing the breakbulk market.
The cargoes carried by multipurpose vessels straddle the dry bulk and containership markets, so it is natural that these segments compete with MPVs for cargoes. More than that, the markets driving these sectors also drive the MPV market and the three are closely linked when it comes to future demand. In order to forecast market share, it is therefore necessary to look at how both these sectors are faring in their traditional roles.
The Drewry teams for the dry bulk and containership sectors see positive demand growth for the mid-term, albeit still at historically subdued levels. This would imply that the MPV share of these sectors should remain steady, however this does not appear to be the case.
There is always another side to the balance equation – the supply of vessels able to carry these commodities. Handy bulk carriers are the main competitor for the breakbulk demand and the dry bulk orderbook is, to say the least, overfull. This means that competition for cargoes is expected to be fierce over the next few years.
The other side of the MPV market – general and project cargo – is also facing increasing competition from the containership and Ro-Ro fleets. Interestingly, the recession has diminished the threat from the container market as the orderbook for that sector has reduced through cancellations and slippage. That said, the current level of over-age tonnage is barely 3%, while the orderbook is a steady 24% of the current fleet.
That is somewhat less than the same comparison for the MPV fleet (28%) and Handysize (34%) but still represents a steady stream of newbuilding deliveries in the medium term. These deliveries, coupled with the improving demand scenario for container volumes, should improve the supply-demand balance within the containership sector and should direct vessels away from the MPV market, so having a positive effect on rates.
Given that the MPV share of the pure container market is so low (less than 2%) it is assumed this is unlikely to show any significant change over the period. More concerning is whether – or indeed by how much – this sector will encroach on the general and project cargo demand. A number of container lines are already positioning themselves as project carriers and it is here that the real threat to the traditional MPV demand now lies.
Source: Drewry
