In a tight market, heavylift operators must be 'more competitive and work together'

Demand in the multipurpose and heavylift shipping sector grew just 2.8% last year and “competition continues to erode the share of non-containerised general cargo”, according to analyst Drewry.

In a presentation today on recent trends and the outlook for the multipurpose shipping market, Drewry’s senior analyst, Susan Oatway, reported “very little activity” in the supply side, with 3,192 vessels in the sector with a combined total deadweight of 29.5m tonnes and an average age of 17 years.

Ms Oatway said last year there were just 21 vessels delivered and only around 30 ships scrapped, which were mostly vessels with less than a 50-tonne crane capacity.

She said Drewry expected growth to “remain stable” over the next two years as minor bulk shipments improve and the shift of cargo to containers is expected to “continue to grow strongly in the medium term”, the result of the seemingly unstoppable drive of containerisation of breakbulk.

“Although we expect this trend to slow as the container lines move back into their more traditional high-paying cargo, we don’t see a significant rise in absolute non-containerised general cargo volumes for the short-term,” said Ms Oatway.

However, Drewry remained relatively positive on freight rates for the multipurpose sector in 2019 and that sentiment has already been reflected in improving asset values of the global fleet.

In its first review of the sector since the demise of Hansa Heavy Lift (HHL) in December, Drewry said the Hamburg-based operator may have been “too niche” in its strategy of focusing purely on super-heavylift vessels.

HHL filed for insolvency blaming an “extremely challenging operating environment” and had seen its fleet shrink from 21 vessels in 2015 to just 11.

Ms Oatway said Drewry concluded that HHL’s policy of operating super premium carriers offering a maximum lift of over 1,000 tones, and an average vessel age of just eight years, was arguably just “too niche” for the market.

Now, Ms Oatway suggested, with the weakness in the market of the past few years, operators needed to find ways of “increasing their competiveness and lowering their costs”.

She said: “There is clearly little room in this sector for carriers that can’t find a more flexible, and we think collaborative, approach to their business.

“There isn’t much work out there at the moment,” she cautioned, which she suggested could lead to a further round of merger and acquisition.

On the looming IMO 2020 regulations, Ms Oatway said very few operators in the sector were looking at installing scrubbers, instead opting to take the hit of burning the more expensive low-sulphur fuel, which many smaller ship operators on coastal trades already use, or in the case of larger vessels, trying to pass the additional cost on to shippers from 1 January 2020.