Rising project cargo traffic is set to push multipurpose and heavylift shipping rates up during 2019, but prospects thereafter are muted by an expected slowdown in world trade.
According to the shipping consultancy Drewry, the uncertainty surrounding trade demand is receding slightly as the US and China appear to be moving toward some kind of a truce.
However, at the same time the global economic outlook has deteriorated and continued uncertainty in Europe due to Brexit suggests that multipurpose shipping is not out of the woods yet.
The addressable demand for the multipurpose vessel (MPV) fleet is looking at an average annual growth of 1.2% to 2023, according to Drewry. This is, however, much stronger in the short term, at 3.8% in 2019 and 1.4% in 2020. As the global economy is expected to slow down after 2020, increased competition for cargo will eat into market share.
It is also the case that the project market is expected to be strong in 2019 as it was boosted by the rise in oil prices through the first half of 2018. However, over the longer term oil prices are expected to average under USD 70 per barrel and this will limit new project investments.
On the other side of the supply/demand balance is the multipurpose and heavylift fleet. The number of vessels with lift capacity of less than 100t SWL is in decline and this trend is expected to continue for the foreseeable future with contraction of almost 3% pa to 2023.
Meanwhile, the project carrier fleet with lift over 100t SWL is growing at a rate of around 2% per year as most of the newbuildings being delivered and on order are in this category. The combination of the two sectors leads to a net contraction of about 0.2% pa to 2023 in total MPV supply, Drewry concluded.