Business, Feature, Freight News, Sea

Project Cargo Rates, Demand to Rise in 2025

[ January 10, 2025   //   Gary G Burrows ]

The uptrend in project cargo rates is likely to persist in 2025 due to limited vessel supply and high demand, according to Drewry’s Breakbulk Sea Transport Indices. Meanwhile, general cargo rates are likely to increase more moderately, influenced by regional trade patterns and increased competition from container shipping and dry bulk and other freight dynamics, Drewry said Dec. 24. “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, Drewry said. In the charter market, general cargo rates are projected to rise between 1 percent and 7 percent (based on vessel sizes), while project carrier charter rates are expected to increase 10 percent to 20 percent 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 US$12,000 to US$16,000 per day. On the supply side, the MPV fleet growth fell below Drewry’s expectations, as fewer vessels were delivered and demolished, resulting in fleet growth that was not aligned with initial projections. This includes vessels classified as general cargo and project cargo, each with a capacity of 2,600 dwt or above. However, only a few orders were placed in the second half of the year. Drewry said it has “tweaked the number of vessels scheduled to be delivered by 2026, and it is indicated that deliveries are likely to be muted over the next two years. A significant portion of the General Cargo orders scheduled for 2025 will be replacement tonnage; hence, growth will be marginal.” The increased supply of containerships will also intensify competition with MPVs. While Drewry expects more substantial growth for the project carrier fleet, a tight supply will persist due to a low orderbook, resulting in higher charter rates. “If delays in deliveries increase in 2025, we may see rates surging next year for project cargo,” the maritime research firm said. While scrapping picked up in the fourth quarter, about 40 percent of general cargo vessels are more than 25 years old, with a significant number of vessels over 30 years old. “Many owners are delaying demolition as long as the vessels are operating above break-even levels. Therefore, the outlook for charter rates of general cargo vessels of all sizes is crucial considering potential demolitions,” Drewry said. Demand for project cargo vessels will be robust in 2025, particularly on intra-Asia, supported by energy projects that remain on schedule, Drewry said. However, geopolitical risks, potential tariffs, and mild El Nino effects could significantly impact global trade, particularly for general cargo and bulk commodities. Demand for grain, fertilizer, steel and other construction materials is expected to rise significantly through 2025, which will boost the demand for general cargo and project cargo. Meanwhile, any increase in demand for these commodities is likely to be managed by the dry bulk market, which serves as a buffer. Nonetheless, ongoing global conflicts and potential policy shifts following the U.S. elections pose considerable risks. The U.S.-China trade war could affect grain and soybean trades, affecting the dry bulk sector and increasing competition for general cargo, Drewry said. Drewry’s Multipurpose Forecaster is available at https://www.drewry.co.uk/maritime-research-products/multipurpose-shipping-forecaster-annual-subscription.

Tags: Drewry