Charter rates for multi-purpose (MPV) ships, which include breakbulk and heavylift vessels, are not projected to bounce back to pre-Covid-19 levels until the end of 2021, according to Drewry’s forecasts. If the global pandemic is not contained, the recovery may be further delayed. The decline in project cargo demand also poses a risk to newbuild investment.
Drewry’s latest Multipurpose Forecaster has shifted from best and worst case scenarios to a base case and two progressively worsening scenarios based on the containment of Covid-19. The base case assumes global containment of the virus by the second half of 2020 with no second wave, allowing for an economic rebound in 2021.
However, there are potential scenarios with more dire outlooks, including further global economic recessions and long-term damage to demand, resulting in a prolonged downturn in the freight market. The possibility of a second wave of Covid-19 is also a growing concern, increasing the likelihood of these alternative scenarios.
In the base case scenario, the global economy is expected to experience a significant recession in 2020, with a projected global GDP decrease of -5% compared to 2019. Following this, a V-shaped economic recovery in 2021 is projected to boost global GDP by 6.5%, with continued positive growth in the long term.
This economic recovery is expected to mirror trends in cargo demand, with a temporary decrease of 4.5% compared to 2019 due to factors such as reduced container port handling and steel production caused by Covid-19 and lower crude oil prices. As countries emerge from lockdowns, manufacturing resumes, and business sentiment improves, a rapid return to positive growth in cargo demand is anticipated.
