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Multipurpose Shipping Recovery Expected End 2017

Drewry Supply Chain Advisors [logo]

May 26, 2016 – According to the presentation by Susan Oatway of Drewry at the European BreakBulk Conference in Antwerp, the competing sectors continue for the project freight market with improvements relaying on the handysize bulk carrier and container markets.

The multipurpose shipping market is not expected to recover until the end of 2017, when it is anticipated that there will be more bulk demand for the Handy vessels and therefore more breakbulk cargoes for multipurpose vessels, according to the latest Multipurpose Shipping Market Review and Forecast 2016 report published by global shipping consultancy Drewry.

The last 12 months have been dreadful for the multipurpose vessel (MPV) market with rates at rock bottom and competition for cargo from every angle. Weak demand, coupled with falling commodity prices and the oversupply of tonnage in competing sectors has brought rates down to levels not seen since just after the global financial crisis. The demand for multipurpose shipping registered a drop of almost 3% in 2015 as global demand for dry cargo slowed considerably while competition for it increased. The main competition faced by the MPV sector comes from Handy bulk carriers and containerships. The market for the first finished 2015 on its knees with earnings less than half the operating costs for the vessels, whilst the container lines were offering rates at close to zero just to hang on to market share.

Going forward, dry cargo growth is set to improve in 2017 and beyond but the return to growth for the MPV market share will be almost entirely dependent on the competing sectors. Whilst we are confident that both breakbulk and project cargo demand are showing signs that, in the medium term at least, volumes will return to growth trends, we are not confident that the competing sectors will move back to their more traditional cargoes anytime soon. The container market, however, is not expected to show any improvement for two and possibly three years. It is likely that containerships will continue to aggressively target breakbulk and project cargo for the foreseeable future.

www.drewry.co.uk

www.breakbulk.com

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