Protectionism threatens multipurpose ship recovery

Protectionism threatens multipurpose ship recovery

Pardon the cliché, but the question must be asked: is this a light at the end of the tunnel for breakbulk carriers, or something else?

Drewry analyst Susan Oatway thinks late 2017 could be when the fortunes of multipurpose carriers finally begin to recover from a multiyear slump. Her latest forecast is considerably more optimistic than the ones she and others have been grown accustomed to issuing. “All in all, the outlook for carriers is brighter than it has been in a while,” Oatway said. “On the face of it, the supply-demand balance is leveling out, demand is growing faster than supply, and the market is improving.”

Growth in demand for multipurpose shipping is expected to be modest during the next few years, but increased scrapping and reduced shipyard orders are holding capacity expansion in check, particularly for basic breakbulk vessels without heavy-lift capacity or other specialized features.

Just as important, the dry bulk and container shipping sectors are showing signs of improvement, Oatway says. Bulk shipping rates have risen from rock-bottom levels, and the upheaval among container carriers and alliances could provide a foundation for higher rates in that sector.

Higher rates for bulk and container carriers would encourage them to concentrate on their core markets instead of competing with multipurpose carriers for breakbulk shipments and project cargo.

All of this could bolster breakbulk rates, which even most shippers agree have fallen to ridiculous levels. Shippers like low prices as well as anyone, but some of them are starting to worry about the health of chronically strapped carriers.

Risk management has become a bigger part of the job at engineering, procurement, and construction companies, which are paying as much attention to carriers’ finances as to the condition of their ships.

So, what’s the outlook for the multipurpose carriers that are the workhorses of the breakbulk and project cargo business? Is rate recovery in sight? Possibly, but there’s still a lot that can go wrong.

For starters, there’s a disturbing rise in protectionist sentiment and the increasing likelihood of new tariff and non-tariff barriers that could halt or reverse more than a half-century of movement toward freer global trade.

Especially difficult to handicap is US economic and trade policy during the next four years. During his successful election campaign, new US president Donald Trump emphasized infrastructure development, which would be a plus for shipping. But he also railed against current US trade agreements and threatened to slap tariffs of 45 percent on China and 35 percent on Mexico.

How much of that talk was serious, and how much was just campaign bluster? Breakbulk shipping has a lot riding on the answer. 

Contact Joseph Bonney at and follow him on Twitter: @josephbonney.