CONTAINER BOOM CREATES RIPPLE EFFECT IN THE SHIPPING INDUSTRY

The industry is currently buoyed by optimism, despite lingering concerns over demand in specific sectors.

While industries such as commodities, energy transition, and construction exhibit a better-thanaverage outlook, experts caution that these positive prospects will take time to materialize fully. Nonetheless, the overall sentiment remains positive, with market conditions offering promising opportunities for sustained growth and development.

This perspective was shared by industry experts who participated in the Business and Market Outlook panel at Breakbulk Europe 2023 in Rotterdam. The session was moderated by Johan-Paul Verschuure, director at Rebel Group.

Stressing the importance of sustainable growth and responsible practices while building a resilient and enduring industry, Lars Feller, president of dship Carriers, said now more than ever, careful planning, collaboration and steadfast commitment from key stakeholders were necessary.

“I am optimistic about the next three to four years,” he said, reflecting the general sentiment shared by his fellow panelists Kyriacos Panayides, CEO of AAL Shipping; Carsten Wendt, senior manager – head of sales high & heavy and breakbulk Germany for Wallenius Wilhelmsen; Andy Tite, VP, global business development & commercial director of industrial projects at DHL Industrial Projects; and Drewry multipurpose vessel sector analyst, Peter Molloy.

The shipping industry underwent notable disruptions due to the container boom, which had farreaching implications for various sectors. Molloy highlighted the substantial rise in the Drewry Container Index. This rate surge was not solely attributed to the introduction of new cargo but was also influenced by the container scarcity induced by the Covid-19 pandemic. Consequently, he said, these developments had a discernible impact on the MPV market.

“Looking back at the shipping industry over the past year, it’s evident that various segments experienced a bullish trend,” Wendt said. “The container sector achieved record-high rates, while the multipurpose and roll-on, roll-off sectors also enjoyed favorable conditions. Expectations were high for this positive momentum to persist. However, with the arrival of new tonnage in the market and a decline in consumer goods demand during the autumn, rates plummeted significantly. Despite these developments, inquiries about rates remain elevated, even as container rates continue to decline.”

He said this was due to an increase in demand in the construction, mining, energy and agricultural sectors.

“Since 2021, rates for mining products have witnessed a remarkable surge, with a notable 20 percent increase. Australia, in particular, has seen a substantial rise in coal exports, reaching unprecedented levels. The demand is further bolstered by China’s construction of new coal-fired power plants. Conversely, Europe is experiencing a decline in coal consumption, reflecting the diverse geopolitical circumstances surrounding the coal industry,” Wendt said.

Another sector experiencing significant growth was agriculture, also driven by geopolitical factors. The market for wheat and corn was thriving, fueled by countries seeking greater independence in their food supply chains. Also, the energy sector continued to see increased volumes moved with more projects taking off worldwide. Experts agreed this surge in demand across these sectors would continue to boost the MPV industry going forward.

Another exciting development, Tite said, was the cross-over currently being seen in the three distinct worlds of shipping – containers, roro and MPV, each driven by its unique supply and demand factors. Despite the current challenges with short-term demand issues, the experts maintained a bullish outlook for 2023 and beyond, saying expectations were high for an increase in demand over the next few years.