Breakbulk Shipping Market to Remain Weak Until 2017 - Global Trade Magazine
  January 1st, 2016 | Written by

Breakbulk Shipping Market to Remain Weak Until 2017

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  • Container shipping demand recorded its slowest rate of growth in the third quarter of 2015 since 1979.
  • Drewry: Expect further container penetration into the project market and bulk carrier penetration into breakbulk.
  • Dry cargo demand growing at 3% annually but multipurpose fleet share is expected to reach growth of 1.4%.
  • Profitability challenges in dry bulk and container is increasing their competition for project and breakbulk.

Although demand growth is expected to recover next year after a very poor 2015, and supply growth is likely to be minimal, competition from other sectors will maintain pressure on the breakbulk shipping market, according to  a report published by global shipping consultancy Drewry.

The IMF has downgraded its expectations for both GDP and trade volume growth for 2015 and

  1. Added to this, container shipping demand recorded its slowest rate of growth in the third quarter of this year since 1979 (excluding 2009).

“We expect further container shipping penetration into the project market and handy bulk carrier penetration into the breakbulk sectors,” said Susan Oatway, a senior associate at Drewry. “These factors will result in reduced market share for the multipurpose shipping fleet.”

While demand is growing—dry cargo demand is expected to reach average annual growth of three percent in the period to 2018—due to competition from other shipping sectors, the multipurpose fleet share is only expected to reach average annual growth of 1.4 percent over the same period.

“Our view is that improvement in this sector is still some way off,” said Oatway. “Overcapacity coupled with low freight rates is still a challenge for the profitability of dry bulk and container shipping sectors, and this is increasing their competition for both project and breakbulk cargoes.”

Meanwhile, the project carrier fleet is growing at a much faster rate than the simpler multipurpose fleet and vessel technology is improving every year, whether in terms of lift capacity or design. This sector’s ability to innovate, for example with the recent delivery of vessels equipped with dynamic positioning systems, according to Drewry, will be critical to its future in the face of continuing market share erosion of conventional commodities.