News Breakbulk & Project Cargo

Tight capacity , expected demand boosting MPV rates

By Janet Nodar

Amid a milder-than-typical summer slowdown , congestion and continued disruption stemming from the Red Sea crisis , demand for multipurpose tonnage in the Middle East and Asia is bolstering daily charter rates , according to Toepfer ’ s August market report .

A few operators are nailing down period-charter tonnage at relatively high levels , implying an underlying “ unbroken faith ” that breakbulk and project cargo demand coupled with a tight supply of tonnage will continue to support the market for both the medium and longer terms , Toepfer said in the report .

The Hamburg-based shipbroker ’ s monthly forecast of average charter rates for a subset of multipurpose and heavy-lift ( MPV / HL ) ships , the Toepfer ’ s Multipurpose Index ( TMI ), reached $ 13,305 per day in August , breaching the $ 13,000 mark for the first time in a year . Consultant Drewry ’ s MPV Time Charter Index forecast for August was $ 9,245 per day , and actual pricing in July exceeded last month ’ s forecast , coming in at $ 9,212 per day rather than the expected $ 9,201 per day .

The MPV / HL market is “ stabilized and trending slightly upward — not huge swings , but it ’ s healthy ,” a US-based MPV / HL carrier executive who asked not to be identified told the Journal of Commerce . “ People are able to make money — not crazy amounts , but better than losses or break-evens .

“ Back in 2019 , [ rates ] were always below where owners could make money ,” the source added . “ Now we are up [ some ] 20 % to 40 % ... It ’ s not crazy like the pandemic , but shipowners can make money .”

In July of 2022 , during the height of the COVID-19 spillover market , the TMI topped out at $ 23,099 per day . Although well down from that high , the index remains above pre-pandemic market levels ; during the summer of 2020 , it averaged less than $ 6,500 per day .

MPV / HL rates expected to continue steady climb in August

Average daily rate for three sizes of multipurpose and heavy-lift ( MPV / HL ) vessels on a 10- to 12-month charter , with forecast

USD per day

MPV charter rates rising steadily from January low

Daily rate for a 12,500-dwt MPV / HL “ F-Type ” vessel on a six- to 12-month charter

USD per day

$ 9,331 $ 9,200

$ 9,000 $ 8,500 $ 8,800

$ 8,600

$ 20,000

$ 18,000

$ 10,000 16,000

$ 14,000

$ 12,000

Index

Forecast

Notes : Drewry ' s Multipurpose Time Charter Index is based on time charter rates received from brokers , weighted across three vessel size segments : 5,000-7,500 dwt , 10,000-15,000 dwt and 15,000-20,000 dwt

$ 10,154 $ 10,000

L Jan 2023 Jul

Jan 2024

Jul Jul , 2024

L

“ People are able to make money , not crazy amounts , but better than losses or break-evens .”

Toepfer index respondents expect the TMI to rise another 1.7 % over the next six months and 3.6 % in the next 12 months , as larger second-hand MPVs are in short supply , bolstering second-hand prices , according to the report .

High container spot rates are helping MPVs with lower lift capacities as they gather in more mode-malleable cargo looking for competitive solutions , Peter Molloy , senior analyst for multipurpose shipping with Drewry , told the Journal of Commerce . Other than a few “ one-off ” situations , however , Drewry respondents are not seeing an unusual number of containers move on MPVs , Molloy said .

Drewry ’ s MPV index is a weighted average of day rates for three bands of vessel sizes : 5,000 to 7,500 deadweight tons ( dwt ), 10,000 to 15,000 dwt and 15,000 to 20,000 dwt . The smaller dwt band includes low to ungeared vessels used primarily in European short-sea trades .

The TMI is based on expected average rates for six- to 12-month time charters for 12,500 dwt “ F-Type ” vessels with safe working loads of 240 metric tons to 360 metric tons , as reported to Toepfer by owners and operators . Toepfer addresses the short-sea market , as well as other markets , in separate reports .

Rate per day

Notes : Toepfer ' s Multipurpose Index ( TMI ) is compiled from operators , owners and brokers

Source : Toepfer Transport © 2024 S & P Global

The bulk factor

The Baltic Exchange ’ s Handysize Index ( BHSI ), a

16 Journal of Commerce | September 2024 www . joc . com