There could be some growth in the breakbulk and project cargo sectors this year, albeit weak, but only if the coronavirus outbreak is contained by the fourth quarter of the year.
This is according to maritime consultancy Drewry’s latest forecast for multipurpose and heavylift (MPV/HL) shipping.
Susan Oatway, Drewry senior analyst, multipurpose and breakbulk shipping, said there were, however, several caveats.
Depending on how the virus outbreak and the global economy develops over the second quarter, Drewry presents three possible scenarios. These range from the fairly benign best case where the global economy picks up and with it dry cargo demand, to a negative scenario where Covid-19 is not contained over 2020, leading to a global recession.
According to Oatway, current indications are that Drewry’s base-case forecast is the most likely. This predicts that demand growth for MPV/HL cargo will stagnate in the two years to 2021, growing at an average annual rate of just 0.3%.
It is based on the premise that any global economic recovery will not begin until at least the fourth quarter of this year.
“Any recovery that had been anticipated for the second and third quarters is now expected to be delayed as some of the pent-up demand will have vanished due to both the longevity of the crisis and the oil market crash. The two events (Covid-19 plus the price of crude oil dropping below $30/bbl) have resulted in predictions of wide-scale unemployment and company bankruptcies which, when occurring together, reduce investment and the collective purchasing power of the world’s population,” reads the Drewry Multipurpose Shipping Forecast.
Another issue with which the MPV/HL sector needs to contend is the continued encroachment by container and bulk carriers on the breakbulk and project cargo space.
Of concern, said Oatway, was the increasing likelihood of Drewry’s base-case scenario which anticipates a global economic recession over 2020 which will lead to large-scale unemployment and business casualties, increased uncertainty across global markets, and a prolonged downturn in freight rates in all sectors including the MPV/HL sector.