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Strong global demand to keep project carrier rates elevated in 2025

The global multi-purpose vessel (MPV) market shows a positive outlook for charterers and shipowners, despite challenges such as geopolitical conflicts and expected trade tariffs from the incoming Trump administration in Washington on January 20, according to a report from UK-based Drewry shipping consultancy. This optimism is primarily fuelled by the demand for project cargo, which supports the utilisation of Project Carriers and helps maintain higher rates.

Drewry predicts that demand for Project Cargo vessels will be robust in 2025, particularly on intra-Asia trades, supported by energy projects that remain on schedule. However, geopolitical risks, potential tariffs, and mild El Nino effects could significantly impact global trade, particularly for general cargo and bulk commodities.

Drewry’s Breakbulk Sea Transport Indices for General Cargo and Project Cargo will move up in 2025, but the gap between the General Cargo Index and the Project Cargo Index is likely to widen, driven by the distinct dynamics affecting both shipping markets. The utilisation of Project Cargo Vessels will increase amid a tightening of supply and strong demand for Project Cargo. In contrast, General Cargo vessels will have alternative methods for transporting their cargo.

The overall performance of the container and dry bulk markets will significantly affect General Cargo vessel utilisation. As dry bulk freight costs are also poised to increase, the General Cargo Index will also increase. At the same time, an oversupply situation in containers could increase competition and absorb any improvements from the dry cargo market.

In the charter market, General Cargo rates are projected to rise between 1% and 7% (for different vessel sizes), while Project carrier charter rates are expected to increase 10-20% in 2025.  Recent fixtures indicate a strong demand environment, including routes to the Middle East, Africa and Europe. For instance, vessels with a capacity of up to 10,000 to 15,000 dwt are chartered in the range of $12,000 to $16,000pd. Sustained demand and low Project Cargo vessel availability will support rates until 2026

On the supply side, the MPV fleet did not grow as per Drewry’s expectations, as fewer vessels were delivered and demolished, resulting in fleet growth that was not aligned with its projections; the total capacity stood at 60 mdwt. This includes vessels classified as General Cargo and Project Cargo, each with a capacity of 2,600 dwt or above.

Additionally, the increased supply of containerships will intensify competition with MPVs. In terms of Project Cargo, Drewry expects more substantial growth for the Project Carrier fleet. On the contrary, a tight supply of Project Cargo will persist due to a low orderbook, resulting in higher charter rates.

(Photo of BBC Pearl off Cape Town by Duncan Grant Smith)

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