Oil supply worries, economic uncertainty cloud outlook for breakbulk sector

The mix of industrial sectors that drive project cargo and breakbulk demand could well shift toward electrification and renewable energy in the coming years, but the industry is still driven by the oil and gas sectors despite fresh headwinds caused by the war in the Middle East.

That sentiment, laid out in detail at the Journal of Commerce’s Breakbulk and Project Cargo Conference 2026 in New Orleans last week, cuts against the notion that service providers are totally consumed with data center construction.

Tim Killen, head of growth at forwarder Fracht, said oil and gas still represents 25% of the planned capital expenditure investment for new projects globally over the next decade, compared to 8% to 10% for data centers, the sixth-highest project category.

“We've had a lot of conversations over the last two days in terms of power generation and data centers,” Killen said at the conference. “But let's recognize that both for North America and globally, oil and gas is critical. So we're still focusing on that.”

Among the sectors sandwiched between oil and gas and data centers that are driving new project capex are transformers, which Killen said has seen 300% growth in the last five years; infrastructure, such as bridges and water projects; and renewable energy, which accounts for 15% of capex for new projects.

Cyril Varghese, global logistics director at Fluor, said the biggest issue clouding any outlook by project shippers, forwarders or carriers right now is not knowing how long the war in the Middle East will last.

“What are the trickle effects going to be?” he said at Breakbulk26. “What is the trade reconfiguration going to look like? How much is protectionism and all countries trying to have a trade surplus or a balanced trade book impact your cargo movements across the globe?”

Varghese said he is focused on what a prolonged conflict does to global GDP growth.

“When you look at the [International Monetary Fund’s] World Economic Outlook, the recalibrated baseline for global growth is in the range of 3.1% for ‘26 and 3.2% for ‘27,” he said. “Now that's in a baseline scenario, assuming that the conflict ends soon. A severe scenario takes the growth global growth rate to 2.5% and 2.2%.”

Varghese’s contention is that carriers should be careful to not over-order breakbulk and multipurpose vessels with that uncertainty hanging over the industry, especially since new vessels entering the fleet tend to be able to carry more cargo than ones exiting the fleet.

“If the overall [economic] growth slows down, and if there is more protectionism, which is coming, and if the industry just becomes sluggish, I think we would be prudent in terms of not going into an expansion spree,” he said.

‘Flexibility crisis’

A more near-term issue is whether disruption to the supply of bunker fuel at key ports, especially in Asia, extends transit times and increases costs for projects.

“On paper everything looks fine,” Melanie Drehkopf, chief commercial officer at dship Carriers, told the conference when asked about bunker availability. “In practice it’s getting tighter. There are longer lead times and you cannot just order bunker as you did before. The pricing validity window is shrinking, so if you have an offer, you better jump on it. Our flexibility is getting less and less, which means switching cargoes from one ship to another is harder.”

Drehkopf said the industry doesn’t have a supply crisis yet, “but we have a flexibility crisis, especially in heavy-lift, where you don’t have regular ports.”

Looking further out, she said if the war persists for another month and continues to curtail fuel supply through the Strait of Hormuz, lead times will get longer.

“It’s all a big question mark,” Drehkopf said. “I don’t think it’s going to get better. I don’t think it will idle capacity, but maybe you need to wait two, three, or four days to get the bunkers you need. There are already bottlenecks of some commodities due to a mismatch of vessels and specific commodities.”

This article was originally published in the Journal of Commerce on April 27, 2026.