SAL looks to brighter outlook for heavy lift sector in 2015

Oversupply in the sector has presented considerably downward pressure on the market for some time, but 2015 is unlikely to be a “catalyst year” for significant newbuild orders, Archard noted.

“Recent years have seen a marked increase in fleet size among the project carriers. When price and position are the key attributes to working spot markets, smaller fleets are particularly disadvantaged. Continuing low freight rates will eventually persuade some – either of their own volition or coerced by the banks - to find pooling partners to maximise the potential of their vessels,” he commented.

“I think in 2015, the fleet that remain focused on their core business, manage costs yet remain flexible will ride out what I believe will be the last of the difficult years,” Archard observed, adding that the difficulty that shipowners will have to face is in freight rates.

“As cargo volumes have trended upwards, the fall in the oil price has meant lower bunker costs for owners. This has brought a welcome margin against current market freight rates. However, unwelcome is the pressure to return this to charterers in the form of lower freight rates and those in the chase for volume are ready to negotiate with it,” he said.

“So it is entirely possible that if the bunker rates stay in the same general area for a sustained period, freight rates will certainly flat-line, possibly even fall even as cargo volumes increase.”

At the very top end of heavy lift, three new ships will enter the market next year. While the number is few, it will already present a measurable shift in the supply and demand principal, Archard believed.

He also noted that few pure play heavy lifts are forecast for 2015 and owners will find themselves having to take work for these vessels that they were not necessarily designed for.

He added that market sentiment is lifting, driven by continuing technical project work as pure play heavy lift vessels extend their range of abilities utilising their capacities and operating structures onshore to develop techniques in diversified markets.

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