In Depth: The General Cargo Fleet – A Long Tradition of Survival within the Dutch-German Niche Market

You will never see a seagull following a ship from Groningen. This funny line refers to the tradition of never throwing anything overboard and consuming every resource. In other words: a rather calvinist attitude to saving costs, and keeping things as simple as possible.

This is, in short, the world of the Dutch general cargo fleet. Surviving every crisis by tightening the belt, and thus building up a successful tradition of Dutch seamanship. Marstrat dives into the world of this specific dry cargo segment.

The Dutch general cargo fleet consist of a range of ship types. Typically they are relatively small ships, decreasingly ice classed, geared with cranes, especially in the larger segments. Single or tween decked, generally with box shaped holds and some vessels hold open hatch notation. In smaller sizes, sea-river type vessels are sometimes fitted with hydraulic wheelhouses in order to reduce air draft. All vessels are fit to purpose resonating the wish of charterers to serve specific markets. The total Dutch owned fleet consists of 1,985 ships, with a total cargo carrying capacity of 18 million dwt. A quarter of this fleet consists of general cargo and multipurpose vessels up to 20,000 dwt.

These small work horses of the maritime industry carry a range of cargoes within the bulk and breakbulk markets. As such they are an essential part of the logistics chain. The breakbulk transported includes forestry products from Scandinavia, grain from the Black Sea region, ores and minerals for the British market, fertilisers and big bags for North Africa. Special cargoes include pipes and wind mill blades, dredging material, steel tanks, coils and cranes and much more.

The European players

Source: Clarksons
Source: Clarksons

The market of GC/MPP ships is dominated by players around the border of Groningen, a province in the North of the Netherlands. The largest player in this segment is Briese Schiffahrts from Germany, a shipowner that combines chartering with another big player form just across the border: W. Bockstiegel. Their BBC Chartering from Leer is responsible for the commercial management of a versatile fleet of medium-sized heavy lift vessels and general cargo ships. Second and third player are Dutch: Wagenborg Shipping and the combined fleet of Spliethoff Group. Another shipowner not mentioned here is Norwegian Wilson AS, with 80 vessels in this range.

The EU fleet of 2,665 ships are owned by some 2,000 individual ship owners, with no single owner representing more than 10 per cent of the cargo volume. This means that the market is highly fragmented. In his reports on the European shortsea sector (Wagelaar, 2015), eminence grise Johan Wagelaar concludes that indeed this is the case. All efforts to come to a European consolidation have failed so far, although the recently announced merger between Navigia and Feederlines may be a first sign of changing times.

Especially in the smallest segments the effects of the fragmentation can be seen. There are some 1,200 vessels active in the market below 4,000 dwt. Their average age is 31 years, which is mainly caused by an overaged fleet below 2,000 dwt. Experts believe that this segment will disappear in time, being overtaken by port efficiency and multimodal alternatives. The market between 2,500 and 3,500 dwt however is interesting. There is a demand for these sea river type ships, but charters are too low to rationalise newbuilding costs. Table two shows the linear relationship between size category and age: the smaller the vessel, the older it is.

New designs

In spite of the tough market conditions (or should we state; inspired by tough market conditions?), there are however some examples of newbuilds, and the strategy differs from owner to owner. Wilson is building three ships at record low price levels in China, whilst Spliethoff’s Wynne & Barends is building the revolutionary Lady A series at Groningen Shipyards. Arklow is building at Royal Bodewes.

Smaller ship owners active in the segments up to 3,000 dwt are studying new innovative designs. Conoship International is now working on improved performance vessels with their Cono Duct Tail technology. Trends are: lower installed power (<750 kw main engine), simplified and lighter constructions leading to a higher cargo capacity under the same ship dimension, and improved underwater ship designs. So maybe after seven years of crisis that has not surpassed shortsea shipping either there may be light at the end of the tunnel. A number of factors point in that direction, such as:

  1. The earlier mentioned aging existing fleet. Vessels above 25 years of age are under increased focus from port state control, insurance companies, chartering clients and class societies, making it more difficult to trade these vessels.
  2. New and fuel-efficient designs, not only good for the environment, but (and for the ship owner probably a more convincing argument), good for the liquid assets of the ship owner.
  3. The appetite from the shipyards around the globe. Shipyards came through the initial years of the crisis rather well on the back of existing order books. These order books have in the meantime dried up, and yards are keen for new business, resulting in historically attractive newbuild prices.
  4. Finance. Banks have also learned their lesson through the crisis as well. A large number of restructurings and in some cases even foreclosure have left the banks more restrictive compared to the situation before the crisis. Now finance is a much more scarce resource, putting a natural lid on the risk of over contracting.

So after many years of downturn we cautiously look ahead in a positive manner for the short sea sector. As long as contracting is controlled (and this seems to be the case due to the absence of easy financing possibilities), a more sustainable market equilibrium seems around the corner. It seems the seagulls will be chasing short sea vessels without much luck for the seagull for quite some time to come.

Article by Marstrat, maritime consultancy

This article was previously published in Maritime Holland edition #3 – 2016.

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Breakbulk Europe 2017

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