The Key Discussion Points: Ukraine Centre Stage

In the Q&A session at the end of Oatway’s presentation, the Ukraine confl ict was the key discussion point. Asked about the impact of the confl ict and sanctions on the MPV market and trading patterns, Oatway said: “MPVs are not massively aff ected in the Black Sea shortsea trades – but the impact of suppliers finding other sources will inevitably mean changing trade patterns.

“More significant is the bulk carrier sector – and in particular grain to developing nations. As new sources are found, there will be increased tonne-mile demand for these vessels, so removing them from breakbulk competition. On the other side, though, is that as the conflict continues, confidence is eroded. Clearly, demand for grain remains but for consumer items it is possible there will be some weakness in demand – mitigating any positive demand increase due to new trade routes.”

Another factor in the supply/demand mix is the approaching deadline for the IMO’s Energy Efficiency Existing Ship Index (EXII) regulations, which are expected to drive more ship demolitions.

IMO’s MEPC 76 requirements

From 2023, the IMO’s MEPC 76 requires all vessels to calculate an EEXI andCarbon Intensity Indicator (CII). Drewry has calculated that 15 per cent of MPV capacity could be non-compliant with EEXI regulations.

“All ships, irrespective of the built year, are required to calculate their EEXI following technical means to improve their energy efficiency,” noted Oatway. “We have had discussions with several operators; in practice, what this means is that the vast majority of the fleet is already running at slower speeds than their original design. However, our analysis discovered that some 15 per cent of MPV capacity could be non-compliant with EEXI regulations and so we would expect some decrease in operations across the fleet. We expect some rise in demolitions, and our forecast takes this into account.”

Off shore wind positives

A key positive for the MPV and heavy lift sector is the booming offshore wind sector. Drewry expects this boom to continue, said Oatway. Tracking of database and other analysis showed a 31 per cent increase in seaborne trade foroffshore wind projects in 2021 and that is only going to increase, she said. The Global Wind Energy Council (GWEC)’s recent report predicted a 6.6 per cent CAGR (compound annual growth rate) for global wind power for the next five years, based on commitments from COP26 and growing energy security concerns triggered by the conflict in Ukraine. “This latter point could also mean an increase in oil and gas investment, which is also boosted by the rising oil price,” said Oatway. “However, the push to offshore wind is definitely happening and that sector is definitely one of the highlights for MPV market project carriers going forward.”

More flexibility in vessel design

She also tackled reports of new entrants into the market and MPV owners diversifying. “MPV owners with money to invest are clearly building vessels for the future,” she said. “This is not just about making the new vessels more ‘eco-conscious’ with regards to fuel and emissions – it is also about making them more flexible so that they can carry a wider variety of cargoes, especially the larger heavier projects.”