Ocean Transport: Breakbulk squeeze

   Operators of breakbulk or multipurpose ships are being squeezed as operators of container and dry-bulk ships—both shipping sectors that are facing hard times—have targeted their market.
   A recent report by Drewry found “The demand outlook for the multipurpose fleet has not improved since the first quarter of 2016. The breakbulk and project cargo sector remain weak, with little suggestion that volumes will improve significantly until the end of 2017.”
   Susan Oatway, Drewry’s lead analyst for multipurpose shipping, said there are about 3,200 multipurpose ships, with about 29.5 million deadweight tons of capacity.
   About 2,600 are “simple” multipurpose vessels, with both bulk and container capacity and cranes that can lift a minimum of 25 tons. Another 500 project carriers are ships built since 1989 with lift capacities of at least 100 tons, and there are about another 300 premium project carriers able to lift 250 tons or more. There are also about 50 older heavy-lift multipurpose ships that are over 25 years old that have the ability to lift 100 tons or more.
   When demolition of existing ships is factored in, Drewry judges the supply of multipurpose vessels “under control,” with growth estimated at less than 0.5 percent per year between now and 2020.
   Oatway said the fleet of simple multipurpose ships is declining at an annual rate of about 2.5 percent and new ships are coming into the fleet at an annual rate of about 3.5 percent. She said the new ships tend to be project carriers with heavier lift capabilities.
   She noted there is a dearth of orders for new multipurpose ships over the past 12 to 18 months, with the 101 ship orders amounting to less than 5 percent of the operating fleet.
   Ships with greater lift are favored, because it gives operators an edge when competing with those of container and bulk ships.
   “There is significant competition for the simple breakbulk cargo—you can put it on bulk carriers, you can stuff it in a container, you can put it in a ro/ro,” Oatway said. There is less competition from those sectors for the more complicated cargo.
   “It’s not that the ships are getting bigger,” Oatway said, with the most popular size remaining around 15,000-20,000 deadweight tons.
   For this reason, she believes the new locks at the Panama Canal will have little impact on breakbulk shipping since most ships can fit through the existing locks. However, container carriers might become even more vigorous competitors as they seek additional cargoes to fill the larger ships that are now able to pass through the canal.  
   The move toward ships with greater lift capacity is evident in the orders of Houston-based Intermarine, which last year took delivery of two 19,834-deadweight-ton ships, each with two 450-metric-ton cranes, for a combined lifting capacity of 900 metric tons.
   Last fall, Intermarine ordered six 13,300-deadweight-ton ships, each of which will also have dual 450-metric-ton cranes, as well as “bridge forward” designs where the house is located at the bow of the ship. The company also is building 15 ships that each have two 250-metric-ton cranes for a combined crane-lifting capacity of 500 metric tons.     
   Some carriers are also building multipurpose ships with dynamic positioning systems, so that they can maintain a fixed position while at sea. The shipping company Big Roll has taken delivery of four ships with dynamic positioning systems.
   Container carriers, such as Hapag-Lloyd and Maersk, have been quite frank about their desire to handle more breakbulk cargo. These include out-of-gauge pieces, items that do not fit within the area circumscribed by a standard container, but can be carried on flat racks or in open-top containers.
   Containerships can also carry cargoes such as forest products and metal that have traditionally been moved in breakbulk ships. Maersk, for example, announced earlier this year a deal to move up to 10,000 TEUs of product annually for RUSAL, a leading aluminum producer based in Russia.
   Oatway said there are increased orders of heavy-lift cranes to assist loading of breakbulk cargo onto containerships that don’t have their own gear. 
   Breakbulk ships are also competing heavily with geared handy-size bulk carriers with cranes that can lift about 25 tons. While they are unable to carry containers on deck and don’t have tweendecks, this does not prevent them from aggressively seeking steel, timber and other cargoes in today’s weak market.
   Oatway noted operators of roll-on/roll-off ships continue to improve their ability to carry “high and heavy cargo,” by increasing ramp strengths and door sizes, for example. 
   Other than the Rickmers acquisition of Nordana’s project business in June and the merger of Intermarine and Scan-Trans in 2012, Oatway said there have been relatively few mergers among breakbulk shipping companies.
   “It’s quite a fragmented and closed business,” she said, dominated by private companies.
   She said the lack of transparency into the financial condition of companies in the breakbulk shipping industry is worrisome for some engineering procurement and construction (EPC) companies. 
   A ship arrested for not making a bunker or charter payment could not only delay delivery of a component, but hold up an entire project costing tens of hundreds of millions of dollars.