Taking Carriers' Temperatures

It’s a new year, and everyone wants to know what will happen in the breakbulk sector during the next 12 months. To make those predictions, Drewry looks at what has happened during the previous year, at the main drivers of demand, and at the future development of the multipurpose and heavy-lift fleet.

Last year started off gloomily for this sector, with few people at Breakbulk Europe in Antwerp in a positive mood. By the time we all met at Breakbulk Americas in New Orleans, things were more upbeat. A number of headlines grabbed the market’s attention in 2011 and, in some cases, defined its direction:

-- The much-discussed fall of Beluga Shipping, followed by the rise of Hansa Heavy Lift from the ashes, made a number of shippers cautious about carrier solvency. The facts of that case have been widely analyzed and indeed are still being picked over, but it did give the market pause for thought with regards to just how confident a shipper can be that the vessel he charters comes with no legal baggage.

-- Container lines’ involvement in breakbulk and project cargo — namely Maersk setting up a project cargo team and joining forces with Rickmers to transport breakbulk cargoes to the U.S. — sent some worrying questions our way. Just how much breakbulk cargo is being stuffed into containers? If the big lines begin to capture breakbulk cargo, just how low can they push rates down?

-- Pirate attacks continued to dominate headlines, with a number of multipurpose vessels being held for ransom. The extra costs for longer sea voyages and increased security led to further calls on owners’ already stretched reserves.

-- Wind farms were and are seen as a saving grace for the project cargo business. With the U.S. and Europe announcing increasing levels of power generation from these sources, the level of investment has led to increased freight tons and a more positive end to the year.

Drivers for Demand
Drewry’s container team is forecasting global demand growth for 2012 at 5.4 percent, while Morgan Stanley is proposing global GDP growth of 3.5 percent for 2012, compared with 3.8 percent growth in 2011. Meanwhile, the Procurement Executives Group forecast (at Breakbulk Americas in October 2011) that global capex for projects could increase 7 percent this year. That could equate to an increase in project cargo volumes of more than 15 percent. All this suggests a more positive demand outlook for this sector.