Wallenius Wilhelmsen: optimism on RoRo's horizon in 2023

Wallenius Wilhelmsen: optimism on RoRo horizon in 2023

Wallenius Wilhelmsen: optimism on RoRo’s horizon in 2023Wallenius Wilhelmsen

The RoRo sector is continuing to debunk the claims that it is just a phase for the high and heavy segment (breakbulk and project cargo), with the outlook for 2023 remaining quite positive. Speaking about 2023, Erik Solum, Wallenius Wilhelmsen’s head of the global market insight team, is cautiously optimistic when looking at the various factors affecting the RoRo industry.

“Yes, the global economy is facing slowing growth; there is a strong likelihood of recessions in Europe and the US. High inflation and rising interest rates contribute to the financial turbulence. Yet, the outlook for the RoRo shipping industry is more positive as we still see pent-up demand for light vehicles. We also expect the high and heavy segment to remain solid,” says Solum whose long list of risks also include Russia’s war with Ukraine, inflation including high food and energy prices and the lingering COVID-19 pandemic.

Solum stresses that it has to be remembered that the sector is already at recession-low levels when it comes to sales of light vehicles; meaning that the global sales of vehicles are already down significantly more than 15 per cent in 2022 compared to pre-pandemic levels. This means that for these levels to become lower, there would need to be a deep global recession. “What we see is that the central banks in the US and Europe raise interests to steer the economies towards more moderate recessions.”

Wallenius Wilhelmsen: optimism on RoRo's horizon in 2023
Erik Solum, Wallenius Wilhelmsen’s head of the global market insight team

Lack of vessels also in 2023

The global fleet consist of 600 larger RoRo vessels in total. Overall vessel capacity has been tight in 2022 and is expected to be tight going forward. According to Solum, there is only 11 vessels on the order book with expected delivery in 2023. “The low number of new vessels coming this year has limited impact on the general capacity situation. My competent and smart colleagues have a constant eye on how we stack our vessels to optimise capacity while maintaining the most important issue: Safe transportation and adequate cargo spacing. It is therefore important for our customers have a longer-than-usual horizon when planning their logistics.”

Price on raw material stabilising

Solum points out that the prices on raw material such as iron ore and coal are falling from peak levels but still stabilising at a level well above historic average. “The price on raw material influences our high and heavy directly.” This segment constitutes about 30 per cent of our entire operations. One area in high and heavy is agriculture. “Prices on crops are higher than usual thus making farmers able to buy new machinery even though prices are up.” Another area of high and heavy is construction which is lagging somewhat. “We are optimistic for construction for one specific reason: The supply of semiconductors is improving. Order books in this segment are long and should keep the manufacturers busy well into 2023.”

Continued growth

“Even as there are more risk and unknowns than we have ever seen, we are cautiously optimistic when we enter 2023,” says Solum. “We hope for peaceful solutions for the geopolitical tensions and believe the green shift will contribute to accelerated vehicle sales.”

Author: Adnan Bajic

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