MULTI-PURPOSE VESSEL OPERATIONS
WEAKENED CONFIDENCE The influence of the Ukraine war on global economic conditions is seen as a significant factor influencing the outlook for the multi-purpose vessel fleet. Felicity Landon reports
Russia’s invasion of Ukraine might not have an immediate, clear impact on multipurpose vessel (MPV) and heavy lift operations but there will be a fallout from reduced global economic confidence, according to Drewry Shipping Consultants. At a webinar to present Drewry’s MPV fleet and shipping outlook report, Susan Oatway, Senior Analyst, Multipurpose and Breakbulk Shipping, said a protracted conflict in Ukraine, along with harsher sanctions against Russia, will reduce economic confidence further and lead to an additional percentage point off global growth. “We can see little, if any potential upside [in the MPV sector] at the moment,” she said. “In the shorter term, we expect rates to plateau in 2022. The market is waiting to see what will happen.” Most MPVs are already booked for the next couple of months “and there is a bit of a hiatus about how global confidence will be, going forward”, said Oatway. “Yet the war in Ukraine has definitely weakened confidence and dented our demand forecast. That said, we do expect [MPV] rates to stay above pre-pandemic rates when they start to settle around 2023.” Ukraine has “definitely usurped COVID-19” at the top of the list and market uncertainty is one of the biggest drivers of the sector’s outlook in the short to medium term, she said. However, COVID-19-related supply disruption and lockdowns are also underpinning short-term MPV demand. Drewry’s multipurpose time charter index indicated that MPV rates fell 0.2 per cent from February to March, to
US$11,170 per day. Over the year to March 2022, rates had leapt by 43 per cent and compared with March 2020 daily rates were up by 78 per cent. “We expect this weakening trend to continue into April with the index dropping perhaps a further half a percent to $11,100 per day,” said Oatway. At the end of 2021, she noted, Drewry had been ‘cautiously optimistic’ for the sector, until the events of the past three months. “It is all to do with uncertainty in the global market – the conflict in Ukraine, new COVID-19 lockdowns in China … they have a multitude of ripple effects coming from them, with the biggest being the change in expectations for the global economy. We see little, if any, upside in our base case scenario.”
8 Newbuilding activity has been quiet but is expected to pick up marginally with greater flexibility incorporated into vessel designs
TRADE DEMAND AND… Translating economic assumptions into trade demand, Oatway noted that global dry cargo (containers, bulk, general cargo including breakbulk and project) demand bounced back over 2021 with a growth of 4.5 per cent, and although that growth is expected to slow over the next two years, an average 3.5 per cent growth per year is likely for 2022 and 2023. The MPV market share rebounded strongly last year with seven per cent growth – this is expected to slow to nearer four per cent growth in 2022 and 2.5 per cent in 2023 “as the supply chain issues start to unwind”. “The MPV sector has benefited from that desperate search for space which has resulted in cargoes that were previously
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MAY 2022 | 29
