The title of this piece may be familiar to those with Irish heritage. It means ‘if you can just manage to survive for long enough you’ll get the one thing you need to survive’.  For many stakeholders in the industry, it sums up current market conditions. 

In our reading of the tea leaves, overall breakbulk volumes will continue at relatively subdued levels in 2017. The oil & gas segment is not expected to see much improvement, although OPEC’s recent agreement to cut production may change that. 

In the mining segment, the Purchasing Manager’s Index is above 50 which, coupled with a favourable earnings outlook for the big players, suggests Capex conditions are finally improving there. Other segments such as power generation equipment and rail rolling stock are expected to continue at more buoyant levels. 

The supply side of the equation indicates the excess of capacity will continue for the foreseeable future. This is reinforced by the fact that breakbulk cargo can, to varying extents, be carried by four different vessel types (RoRo, LoLo, container and bulker), each of which is dealing with its own over-capacity issues.  


Reducing supply through ‘early retirement’ of vessels is not an obvious choice either. On the one hand, the low steel rates from vessel recycling make scrapping a particularly unattractive option, but on the other it does have the benefit of being able to avoid costly new regulatory requirements for ballast water treatment systems and sulphur emissions.

For shippers, the demand and supply dynamics are highly favourable and some may even be hoping for further rate cuts. That may happen, but it would be prudent to also keep in mind that there is a point where ‘good rates go bad’, meaning that the risk of another ‘Hanjn’ situation starts to increase as rates decrease.

One response to over-supply and the margin pressure it creates is to achieve savings through increased economy of scale, or, in a word, consolidation. Obviously, this is a trend that has already begun, but I believe it has not yet run its course. Large parts of both the carrier and forwarder sides of the breakbulk logistics industry are highly fragmented; in short there’s a lot of scope for further deals.

Risks abound in a consolidation phase, not least of which is that there can be loss of customer focus and hence a failure to meet their ever-evolving needs. One customer trend of note is the increasing number of OEMs that are opting for a time, rather than project, based liner contract. Many are finding the stable, flexible and industrialised liner solution which RoRo offers, fits perfectly with their modern supply chain needs.

Finally, one last area to keep an eye on in 2017 are the digital developments at the industry’s periphery. The concept of ‘digital disruption’ has been feted for a quite some time now, but has had limited impact so far.  It is tempting to view its proponents creating new dotcom bubbles, however, a more measured approach is advisable. To quote Bill Gates, ‘we always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.

This industry is not inherently immune to digital disruption. As Gates continued: ‘don't let yourself be lulled into inaction.’

This article was first published in Breakbulk magazine.