Market outlook for the Breakbulk & Heavy-Lift sector BreakBulk Americas 2016 29th September 2016
Agenda: Blue Water Blues: Fleet Outlook Vessel Supply Multipurpose vessels and project carriers Cargo Demand Dry cargo demand, General cargo demand and Project cargo Sector Competition Handy bulk carriers and Container vessels Market Outlook Challenges and conclusions 2 Drewry Maritime Research #bbam2016
Vessel Supply MPV Fleet age profile ( 000 dwt) MPV newbuilding deliveries ( 000 dwt) Average dwt for vsls built in 1980 was 5,500 dwt 1990: 6,400 dwt 2000: 8,000 dwt 2010: 13,000 dwt 2015: 18,000 dwt 22,000 dwt so far in 2016 PC average 62% of newbuilding orders 3 Drewry Maritime Research #bbam2016
Vessel Supply MPV Fleet age profile by vessel type ( 000 dwt) 4 Drewry Maritime Research #bbam2016
Vessel Supply MPV orderbook / delivery schedule (no. of vessels) 5 Drewry Maritime Research #bbam2016
Vessel Supply MPV & HeavyLift demolitions ( 000 dwt) Average age of demolitions (years) 6 Drewry Maritime Research #bbam2016
Vessel Supply Fleet development to 2018 ( 000 dwt) 7 Drewry Maritime Research #bbam2016
Vessel Supply Fleet development by vessel type to 2018 ( 000 dwt) 8 Drewry Maritime Research #bbam2016
Lower steel demand as steel intensity moderates Global steel intensity is not increasing remarkably rather it has remained relatively constant Steel Consumption by sector 14.0% 14.0% 3.0% 3.0% 50.0% A shift towards small and efficient cars Bigger ships less steel 16.0% Construction Machinery Consumer Goods Transportation Metal products Electronic goods Technological changes in steel consuming sectors Low oil prices and falling rigs construction and lower new orders Lower steel intensity of OECD economies due to maturity Lower steel demand Move towards consumer led economy in China Emerging economies slow to catch up Any other China? 9 Drewry Maritime Research #bbam2016
Summary of megatrends Are we witnessing onset of slowing dry cargo shipping demand as a result of lower population and economic growth, lower steel and energy intensity? Lower economic growth Lower population growth Lower steel intensity Lower growth in dry cargo shipping demand Lower energy intensity Population Growth Population Growth 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1965-1975 1975-1985 1985-1995 1995-2005 2005-2015 Real GDP Growth Rate Real GDP Growth 3.9 3.8 3.7 3.6 3.5 3.4 3.3 3.2 3.1 3.0 1985-1995 1995-2005 2005-2015 2015-2020 Source: World Bank, IMF World Gross domestic product, constant prices 10 Drewry Maritime Research #bbam2016
Cargo Demand Key Drivers Crude steel production (million tonnes) World economic growth (% change) Crude oil price Dubai ($/bbl) 11 Drewry Maritime Research #bbam2016
Cargo Demand Development of dry cargo demand (million tonnes) 12 Drewry Maritime Research #bbam2016
Cargo Demand Development of General cargo demand (million tonnes) 13 Drewry Maritime Research #bbam2016
Cargo Demand Development of MPV market share (million tonnes) 14 Drewry Maritime Research #bbam2016
Sector competition Drewry all earnings index 15 Drewry Maritime Research #bbam2016
Sector competition Weighted East-West freight rate including fuel charges* Estimated bulkcarrier time charter rates* * Taken from Drewry s 2Q16 reports 16 Drewry Maritime Research #bbam2016
Sector competition One year timecharter rates ($pd) 17 Drewry Maritime Research #bbam2016
Market outlook Supply vs Demand balance 18 Drewry Maritime Research #bbam2016
Market outlook Supply vs Demand Index Projected movement in rates 19 Drewry Maritime Research #bbam2016
Market Outlook Forecast for the MPV Fleet 2016 market continues weak trend 2017 expected to be another difficult year 2018 hoping to turn a corner Factors affecting the forecast Global trade growth weak throughout 2016, principally due to slowdown from China but also low oil price and little investment. Competing sectors struggling with weak cargo demand, continue to encroach further into MPV share of general cargo MPV sector disproportionally losing market share Total MPV fleet supply forecast growth at just 0.4%pa but the project carrier segment is much stronger at almost 3%pa to end 2018
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