The multipurpose shipping market is finds itself in a quandary. Both shippers and carriers report upcoming demand, particularly in in the premium sector, with forward bookings placed. There is also growing impetus from the oil and gas sector. However, the actual present level of activity and availability of prompt cargo is weak.
Toepfer Transport’s monthly multipurpose rate index has continued its slow decline and at the start of October 2023 the average daily time charter rate for a 12,500 dwt/F-type heavy lift vessel stood at USD12,572. The October index is only a slight decrease from the previous month, when it stood at USD12,958. Nevertheless, it is a considerable drop when compared to the October 2022 rate, which hit USD20,289.
Toepfer said that the spot market in the summer months continued to fall short of multipurpose owners’ and operators’ expectations. At the same time, confidence remains that the period charter rates will recover in the next 12 months as demand improves. The analyst expects rates in March 2024 to be 1.81 percent higher, and by September next year rates could be 5.65 percent greater.
For now, according to Toepfer, the reference fixtures are mirroring the gap between short and long-term time charter rate levels. Cargo volumes and enquiries remain weak in the Atlantic spot market, while the Far East is not showing much upside either. Owners currently need a long breath to counter the pressure as charterers are trying hard to push rate levels further southwards, said Toepfer. It added that the last quarter of the year will be crucial to provide shipowners with optimism and security as only a sustainable, adequate income will allow them to take necessary measures and investments for the forthcoming challenges around global and regional regulations to meet climate targets.
In contrast, the Drewry Multipurpose Time Charter Index (which takes in both project heavy lift ships and non-geared shortsea vessels) has crept upwards over the past month and the October figure now stands at USD8,607 per day – up from of USD8,511 in September.
It apportioned the increase to an uptick in demand for smaller multipurpose vessels, and Drewry’s expectation is now for a slight increase in rates. Looking to the month ahead, the analyst said that the seasonal downturn in utilisation has ended and in combination with the continued support by the project market means rates are expected to increase by 0.3 percent.
Newbuilding activity in the multipurpose segment remains subdued. Toepfer believes that the general market attitude is that newbuilding prices will not fall in the medium-term, mainly driven by labour shortages and inflation. German owners Auerbach Schifffarht and Krey Schiffahrt have placed orders for F500 types with Taizhou Sanfu shipyard – with prices estimated in the high USD20 million range. A similar vessel in 2019 would have set customers back around USD19.5 million. The analyst added that “several other owners are negotiating with Chinese shipyards with some of them having already signed LOI’s in their hands, but there are no effective orders to report.”
On the sale and purchase market, activity is equally stagnant, the gap between prices the sellers and buyers expect too large to bridge. Compliance regulations are also holding the market back. Toepfer said: “Knowing your client (KYC) is an issue that causes increasing concern and very often it takes a longer time for a seller or sellers’ bank to find out who is standing behind a purchase enquiry and an unknown company name. In the Western world, a Russian background will no longer be supported due to imposed sanctions following the Ukraine war. Russian sellers that have been an important driver in the multipurpose sale and purchase market for many years have been withdrawn from the potential buyer list of major multipurpose owners and operators who intend to sell their ships.”
Scrapping activity, too, is near non-existent – the only vessel sent to the beaches recently was Shun Da Yun, a 50-year-old a 36-L Type.
