OUTLOOK2017 more news at
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If consolidation was the word on the lips of everyone involved in heavy lift and project cargo logistics last year, what is the outlook for 2017? HLPFI editor Ian Matheson spoke with key participants to find out what the new year has in store.
hipping consultancy Drewry kicked off 2017 with a suggestion that
A year for accountability S
improved supply-demand balance and reduced competition from the dry bulk and container sectors could boost multipurpose charter rates, and lead to the first signs of recovery by the end of 2017. Susan Oatway, Drewry’s
lead analyst for multipurpose shipping, said: “I am cautiously optimistic, and a lot more positive than I was at the start of 2016. As always, a lot will depend on what happens in the container and dry bulk sectors.” Those sentiments are shared
with a hint of caution by some ship owners and operators. Kyriacos Panayides,
managing director of shipping line AAL, appears reasonably optimistic: “As the OPEC cuts begin to take effect and new shorter-cycle oil and gas projects – driven by global demand to fill the supply gap – become viable, we are likely to see a sizeable reallocation of capital to productive ends.
I am cautiously optimistic, and a lot more positive than I was at the start of 2016. – Susan Oatway, Drewry
“The mining industry is
already accumulating sentiment towards new future capital expenditure, and infrastructure spending will rise in certain areas like Asia and the Middle East. “However, while structural
challenges are altering the big picture for many shipping segments, the industry remains vulnerable to forces that might
Consolidation and bankruptcies set to continue
SAL Heavy Lift’s Justin Archard believes that while merger and acquisition activity has been very high in the past 24 months across all industries, most growth in the project logistics sector will likely come from acquisitions rather than greenfield investments. “More bankruptcies are likely, with most banks
trying to reduce their loan books. It will put some shipowners under extreme pressure and some will find it a real challenge to meet their financial obligations.” Rickmers-Linie’s Gerhard Janssen said that while
the carrier sector is still fragmented, there has been significant activity already, but “the next wave of
22 January/February 2017
We are likely to see a sizeable reallocation of capital to productive ends. – Kyriacos Panayides, AAL
reduce trade growth.” Gerhard Janssen, director of
marketing and sales at Rickmers-Linie, said that power generation projects continue globally while infrastructure projects will present opportunities for ocean transportation service providers. “We expect that oil and
gas-related projects that have been approved will be executed
consolidation will eventually come. The container sector has set the pace, and others will follow. “On the shipper side,
whether mergers and takeovers like GE and Alstom, or Bayer and
Monsanto, will have any impact on future investments, remains to be seen.” BBC Chartering’s Raymond Fisch says the project
shipping market still has too many players on the supply side and “consolidation is essential to create a better environment”. His views are shared by Hansa Heavy Lift’s Max Harmstorf who sees “a trend towards developing partnerships and further mergers and acquisitions in 2017”.
and not delayed or postponed.” Janssen said this all depends
on the evolution of oil and gas prices. “If they head upwards, we might see more exploration and project expansion.” Justin Archard, corporate
director – commercial at SAL Heavy Lift, also believes that prospects for the global oil and gas market, and the project logistics companies that serve that sector, “will depend on if the oil price hangs onto its gains and continues to rise”. Even so, Archard said that
the effects of this will not be felt in 2017. “We expect some mothballed projects to be revived ... industry has pared back costs as far as they can. “We think that general
industrial machinery will continue to underpin freight volumes in slightly larger numbers this year.” Raymond Fisch, senior vice
president strategic projects at BBC Chartering, said he sees an ongoing strong business cycle and good prospects for wind energy and petrochemical projects. “The reinstated supply
control by OPEC may help the oil and gas sector to recover.” Max Harmstorf, director
Like Archard, Fisch believes that managing
liquidity is a top priority and “we would not be surprised to see more shipping businesses exit if sufficient solvency cannot be secured”. AAL’s Kyriacos Panayides sees that large-scale
consolidation is already a reality in the wider shipping industry. “With billions of dollars of outstanding loans to shipowners, further restructuring is inevitable. Our doors are open for discussions about partnerships that can deliver sustainable, strategic value.” Both Panayides and Harmstorf said that while
bankruptcies are regrettable, they do give the industry the chance to learn from past mistakes. Not one to mince his words, Philip Adkins (pictured),
chief executive officer of ZPMC-Red Box Energy Services said: “2017 will be a year of accountability. The recovery is still two years away. Blood and red ink will flow through the market, washing away the weak.”
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