Shipping consultancy Drewry has downgraded its outlook for multipurpose shipping, which includes both break bulk and project cargo vessel types.

The outlook was lowered due to weaker projected global economic growth, greater competition from dry bulk and container sectors, as well as slower ship demolitions.

With the ongoing tariff war affecting Chinese steel production, expectations for dry bulk iron ore volumes have weakened over the first half of 2019. However, concerns that the same tariffs would affect steel cargoes have proved unfounded.

US-China trade has decreased over the last twelve months, but imports into Europe and the Far East (excluding China) have improved. Meanwhile the overall situation is improving as new trading partners are sought, Drewry explained.

“So at the half year point we expect dry bulk and general cargo volumes to increase at an average annual rate of around two per cent in the medium term,”

“With uncertainty rising across the globe due to tariff wars, the rise in populist policies and a slowing Chinese economy, all dry cargo sectors have been affected by slowing demand – and this means greater competition for the cargo that is available.”

Also in the equation is the multipurpose shipping fleet supply. Drewry said that currently the fleet is hampered by an ageing group, representing about 12 per cent of the fleet, which are mainly trading short sea in the breakbulk trades. Over the first half of 2019, there were no significant sales for demolition that would suggest owners are starting to get rid of these vessels. This translates into fleet growth of around 0.3% per year over forecast period.

“The first half of 2019 has been very poor for the MPV sector, in spite of the promise held at the beginning of the year. Average rates for a 10-15,000 dwt MPV for end 2018 were USD 6,650 per day but for 2019 they have already slipped to USD 6,630 per day– a drop of about four per cent” Drewry said.

“Going forward we see little possibility of improvement before 2021, unless demolition levels suddenly kick-start the sector next year.”