This week, Drewry hosted two webinars on the multipurpose shipping market outlook. During the course of both webinar broadcasts, they received a range of questions and have now provided a question and answer summary.
1. What is the biggest risk to the positive growth in charter rates?
Ans: Currently the fleet is contracting at the same time that capacity is tightening in other sectors, hence the booming charter markets. At the same time we have a positive global economic outlook. Our main concern is that the increased optimism will lead to new investment decisions, without corresponding cargo commitments, in not just this MPV sector but also container and bulk carrier fleets. An increase in capacity would inevitably lead to a downturn in rates.
2. What is the impact of wind power on the project cargo sector? And can you comment on the outlook for project cargo?
Ans: The global wind market experienced a record year over 2020, in spite of the pandemic (according to GWEC) with a record level of new installations. We believe that offshore wind in particular, led by China and Europe will be a key area of project cargo going forward. It has been reported that in order to meet the Paris agreement targets on global warming and carbon emissions by 2030, the shortfalls of the first half of the decade will have to be significantly compensated for in the second half, leading to a dramatic rise in wind power installations, both on and offshore.
3. Do you think that there is more scope to load project cargoes on containerships using flatracks/adjusted holds?
Ans: The container lines have invested heavily in people and equipment to run their project cargo divisions. Although there is currently a slight move away from this cargo type, it is due to the supply constraints for more traditional (i.e. containerised) cargo. When this situation reverts to more usual levels, I am sure that the lines will be making further inroads into this sector. That said there are always constraints around the larger, heavier pieces of cargo.
4. In terms of trade development, where do you see more growth today and in the following years?
Ans: The current growth in trade is largely on the back of supply constraints in other sectors leading to shippers booking more MPV than previously. Going forward we see project cargo, in particular for renewable energy, increasing demand, as above. We are also expecting a positive rebound in trade in steel products over 2021 and into 2022, in line with global expectations and the stimulus packages announced by some governments.
5. What is the definition of premium project carriers?
Ans: Drewry’s definition of a project carrier is a multipurpose vessel with lift capacity greater than 100t SWL. A premium Project carrier has lift capacity greater than 250t SWL.
6. With reference to the Index what does the ‘basket’ of vessel types and sizes look like and how do you weigh them?
Ans: The three main vessel segments are: 5-7,500 dwt, 10-15,000 dwt, 15-20,000 dwt. We take the average (taken from a number of broker reports) one-year period charter rate for the month for each sector and work out an average rate for the fleet, weighting according to number of vessels in the fleet. This is then plotted as seen in the Index chart to determine a trend. In our Multipurpose Forecaster report we produce a separate Index by sector, so that the smaller MPV do not affect our expectation for the larger project carriers. I believe it is our weighting that makes the difference from other one vessel type indices but is also why we are probably more cautious than others, as we are looking at the fleet as a whole.
