As with the last quarter report, we put these six questions to Susan Oatway…
Q1. Why have you released an updated report on the MPP and Heavylift market?
It is our 3Q report in our Forecaster series (4Q due in December!)
Q2. What are the key take-aways of this report for industry professionals and companies?
- A stagnating fleet where any growth there is, is in heavylift capable tonnage
- Strong demand growth recovery expected in 2021
- The global pandemic remains the main downside risk to our forecasts
- But market recovery has already started and is expected to extend into 2021
Q3. With regards to the market forecast, what is the best and worst case scenario? Or the base case and two further scenarios?
This time round we have got a best and worst case – albeit the upside potential is limited and the downside risk more probable. The worst case suggests that recovery in 2021 will be much more subdued than our base case as the second wave of lockdowns has an increasing effect on risk aversion for both households and businesses.
Best case would be if the restrictions put in place are significantly less obtrusive and do not sap consumer confidence or economic growth.
Q4. What does your forecast tell us about the fleet /multi-purpose vessels?
It is a stagnating fleet – very small order book matched by limited demolitions – only growth is in the project carrier / heavylift sector – and that only at about 1% from 2021.
Q5. How has the market outlook changed since your last update?
We have a best case scenario! seriously there is some optimism since 2Q and that is mainly because the bounce back in demand started over the summer.
Q6. Where do you see the opportunities for our industry in the short term / long term?
Big game-changer is renewables – Covid19 may have been a game-changer for the renewables sector – lockdown caused a drop in energy levels not seen for 70 years with the IEA estimating a contraction of some 6% – this caused a possible 8% reduction in emissions.
That in itself prompted a sea change with regard to how the public thinks about renewables but also how power generation industry does. As demand fell the share of electricity generated by renewables rose – in the US by 40% in 10 weeks. This then prompted a surge in demand for cheap fuel to balance the capacity and output – in spite of the historic low prices for fossil fuels – this was then also the cleanest fuel. Going forward this can only bode well for the sector that plays a significant part in the transportation of the component parts.
During today’s (28 Oct 2020) Drewry webinar, Susan Oatway and Martin Dixon discussed the latest trends and outlook for the multipurpose shipping market, covering both breakbulk and project cargo sectors.
The webinar presentation analyzed recent trends and outlook in the development of cargo demand, fleet development, supply/demand balance and what this means for freight rates and asset values. The analysis drawed on key findings from the latest edition of Drewry’s Multipurpose Shipping Forecaster report.
Here are our take aways:
- It’s all about 2021. Base forecast most probable for 2021
- Global GDP plummeted by 4% in 2020, expect a bounce-back in 2021, but not guaranteed.
- Positive growth in charter rates 2020/2021
- Global pandemic is the main downside
- Covid-19 a real game-changer for the renewable sector in the last four months. Demand for power fell, shared renewable generation rose
- Even with cheap fossil fuels, renewables were still the cheapest and cleanest fuels
- Fleet consolidation leads to little movement in fleet sizes, rarely makes a difference to the supply.
- Flat growth in the fleet, small order book, very little investment
- Aging fleet, demolition starting to increase
- More investment required for a stagnant fleet
For more information on the market forecasts visit Drewry.