Drewry: headwinds for Russian multipurpose sector may bring positives elsewhere
War in Ukraine has certainly had an effect beyond the borders of the country and the multipurpose vessel industry was not exempt. Russia’s attack on Ukraine brought some uncertainties in the global multipurpose vessel (MPV) cargo demand. However, it is nowhere near what we have seen in the dry and liquid bulk sectors due to shifting trade routes, according to the latest edition of Drewry’s Multipurpose Shipping Forecaster.
On the other hand, the lack of de-escalation and hence, strengthening sanctions on Russia have taken their toll on its vessel manufacturing capabilities, which is expected to affect vessel supply in the next couple of years, Dr. Ferenc Pasztor, Deputy Head of Research within Drewry, said.
The country has a shortage of various vessel parts beyond marine engines, the biggest contributor to the wider supply issues. Although new suppliers are being sought after in “friendly countries” and domestic manufacturing is also planned to be ramped up, this might take several years to be worked out.
“While the exact impact of the above on multipurpose vessels being built in Russia is unknown to us, we expect the same challenges to be apparent in the sector, and hence strong headwinds to domestic yards, which have been supplying MPVs for the Russian domestic market. There are currently 16 vessels in the orderbook that are being built in Russia that we are aware of, although they have a total dwt of only 120,000. This means they belong to the size category in which vessels are getting really old globally, and where fleet renewal is needed,” Pasztor adds.
With most of these vessels supposed to be delivered this year, a delay in their deliveries could cause a positive effect on the secondhand market, as MPV utilisation levels are still high around the globe despite the weakening market, and newbuilding prices are still on the rise.