Issue link: https://jocdigital.uberflip.com/i/802605
12 THE JOURNAL OF COMMERCE www.joc.com APRIL 2017 noted. The competition from bulk and container operators tends to intensify when rates in those markets are low, as they have been in recent years. Operators of handy-size bulk carriers with deadweight capacities of 15,000 to 35,000 deadweight tons often carry break- bulk cargoes such as steel. Container operators, meanwhile, are vigorously seeking heavy and oversize cargo to help fi ll their ships. The competition among market sec- tors isn't entirely one-sided. Operators of multipurpose ships often carry backhaul cargoes of grain or other bulk materials, especially in regions such as the US Gulf or the Great Lakes. Roll-on, roll-off ships also compete with multipurpose and project carriers. The latest generation of ro-ro vessels have high-capacity, adjustable decks and oversize ramps and doors for handling of high and heavy project cargoes such as construction modules and windmill blades, Dirk Visser of Dutch consulting fi rm Dynamar noted. He said bulk and container carriers' interest in the breakbulk cargo may be opportunistic, but that ro-ro and vehicle operators are in the market to stay. Oatway expects container and bulk operators to focus again on their core mar- kets when bulk and container rates rise. These rate increases have been slow to materialize, but there are signs that those slumping markets are starting to recover. Trans-Pacifi c container lines expect this year's eastbound contract rates to be above those of a year ago. The Baltic Dry Index of bulk carrier rates recently climbed to a three-month high. Scrapping of older multipurpose ves- sels has kept pace with deliveries of new vessel deliveries during the last year, keep- ing overall fl eet capacity approximately fl at. Oatway expects a "slight" increase in scrapping this year. New global regulatations governing ballast water treatment that take effect in September could give a small boost to MPV scrapping, but aren't expected to produce a surge in vessel demolition. Vessels won't be required to retrofi t until their ships undergo dr y-docking for periodic special surveys. R et rof it t i n g ba l l a s t s y s t em s t o comply with the International Maritime O r g a n i z a t i o n r u l e s w i l l c o s t a n estimated $250,000 to $300,000 for a 15,000 -deadweight-ton multipur pose vessel, Drewry reports. The rule's main impact will be on bulk carriers, which will have to pay as much as $1 million to retrofi t their ships. Between 2000 and 2015, Dynamar repor ts, 2,505 breakbulk ships were scrapped, while 2,422 were delivered, for an overall fl eet reduction of 83 vessels with total capacity of 5 million deadweight tons. Scrapping levels tell only part of the capacity story. Older vessels that are scrapped tend to be replaced with newer ships that are more productive. The breakbulk and project industry remains highly fragmented, but has taken modest steps toward consolidation through mergers, acquisitions, or joint ventures. This year, German operator Zeaborn agreed to acquire the business and international operations of Rickmers- Linie, includ ing Norda na Project & Chartering, which Rickmers acquired in 2016. With its global multipurpose liner service, Rickmers is among the industry's most prominent brands. Last September, Thorco and United Heav y Lifts joined to create Thorco Projects, and breakbulk operators Grieg Star and Gearbulk announced a joint venture, G2 Ocean. Oatway expects operators to pursue additional consolidation, which "contin- ues to be the best way to reduce costs." She said further M&A activity is likely, and that bankruptcies can't be ruled out, but that consolidation alone won't solve carriers' problems. That will require cargo demand that rises faster than vessel sup- ply, and recovery in the competing bulk and container sectors. ● Contact Joseph Bonney at joseph.bonney@ihsmarkit.com and follow him on Twitter: @JosephBonney. NEWER SHIPS DOMINATE BREAKBULK FLEET Existing fl eet, by year built and average age and size YEAR BUILT SHIPS TOTAL DWT AVG. DWT % OF FLEET <1970 34 203,000 6,000 0.5 1970-1974 80 606,000 6,800 1.4 1975-1979 172 1,468,000 8,500 3.4 1980-1984 256 2,179,000 8,500 5.1 1985-1989 231 2,402,000 10,400 5.6 1990-1994 273 2,346,000 8,600 5.5 1995-1999 492 5,358,000 10,900 12.5 2000-2004 427 4,977,000 11,700 11.7 2005-2009 1018 9,577,000 9,400 22.4 2010-2014 940 12,637,000 13,400 29.6 2015-MID-2016 50 957,000 19,100 2.2 Source: Dynamar YEAR BUILT SHIPS TOTAL DWT AVG. DWT % OF FLEET 34 203,000 6,000 0.5 80 606,000 6,800 1.4 172 1,468,000 8,500 3.4 256 2,179,000 8,500 5.1 231 2,402,000 10,400 5.6 273 2,346,000 8,600 5.5 492 5,358,000 10,900 12.5 427 4,977,000 11,700 11.7 1018 9,577,000 9,400 22.4 940 12,637,000 13,400 29.6 50 957,000 19,100 2.2 SCRAPPING OF OLDER MULTIPURPOSE VESSELS HAS KEPT PACE WITH DELIVERIES OF NEW VESSEL DELIVERIES DURING THE LAST YEAR, KEEPING OVERALL FLEET CAPACITY APPROXIMATELY FLAT.