GROWTH PREDICTION, BUT CONCERNS ON AN AGEING MPV FLEET

The key takeaway from Drewry Shipping Consultant’s keynote speech at Breakbulk Europe 2023 in Rotterdam was that there would be growth in multipurpose ship demand from 2025, even in a lower economic activity scenario. However, there were caveats to that upbeat prediction, with warnings of an ageing fleet and an orderbook that is “not where we expect it to be” to balance freight rates.

Speaking at the event, Peter Molloy, Drewry’s multipurpose vessel sector analyst, said he sees the energy sector as one of the largest supporters of project cargoes and therefore MPV vessels. “When we talk about vessel supply there is a clear indication towards heavy-lift vessels. We also have a situation where we have not just the environmental requirements, but also discussions about energy security based on exposure for different governments and their way of protecting their country against fluctuations in energy markets. That also helps to push through certain energy projects.”

Molloy noted that there is an ageing MPV fleet in certain segments, particularly in the mid-range geared vessel sector. “That sector is going to continue to age if it doesn’t have any further investment,” he said.

Meanwhile, the small orderbook led Molloy to warn that underordering could bring different investors into the sector, without the experience that traditional operators have. “If we don’t build and order ships within the next couple of years, we will see an increase in the age of vessels operating and ‘strange’ players coming into the market, which creates a risk.”

Drewry’s figures revealed that there are very few large-size MPVs being built with the whole segment dominated by smaller size vessels of around 10,000 deadweight-tonnes. “We have a lot of vessels on the smaller side, but we haven’t had anything significant built in this sector for quite some time,” he said.

While there is “growing and consistent investment” in the premium project cargo carrier sector, more generally, investment appetite in the MPV sector is still limited. This is due in large part to the continuing uncertainty on the choice of fuel for newbuild ships and the real risk of stranded assets if an owner selects a fuel that does not turn out to be a feasible choice for bunkering down the line.

He added: “Environment regulations could force ships out of the market.”

A final takeaway from Molloy was that the sector is to remain profitable despite uncertainties. “Demand is to remain positive, in a situation where supply will start to get tight,” he said.