In recent editions of the One World Shipbrokers’ Multipurpose Sentiment Index (MSI), carriers reported ebbing confidence in the short-term markets backed by expectations of improvements later in the year. In the MSI’s 10th incarnation, this theme continues.
Justin Archard, managing partner and founder of One World Shipbrokers, explained that whilst the overall index has slipped to 52.8, it is again the short-term weighing more heavily than the longer term – especially in Asia and North America. “Traditionally, the summer months in the Northern Hemisphere is a softer trading period, and with the breakbulk market having fallen precipitously from the stellar highs of 2022 the combination of the summer vacation season and the correcting market, sentiment in the multipurpose sector has reason to be subdued.”
He siad that several carriers have cited the weakness in the handysize and container markets and the cross trades – now more evident than earlier in the year – as the main drag on the short-term multipurpose market. Nevertheless, shipowners are generally unwilling to reference today’s levels for anything other than short-term time charter business, believing that the multipurpose sector is going to benefit from an increasingly active project market in the mid-term, led by a resurgent wind energy business.
“That said, several carriers have expressed some caution against over optimism and whether the future can match anticipation. Still, with the newbuilding book still at low levels and the impact of the incoming EU emissions trading scheme likely to drive some older or less capable vessels out of service – or out of range – there can be no case made for an influx of new tonnage upsetting current supply either in the long or short term,” said Archard.
“Demand is the driver. The sentiment outlook should therefore remain relatively stable with near term confidence levels likely to remain in a narrow range before the higher activity levels of the year’s latter months kick in and likely lead the index higher.”
MSI – ninth edition, published May 2023
One World Shipbrokers’ ninth edition of its market sentiment index (MSI) recorded its first rise in a year – up from 53.1 to 53.8.
According to the April MSI, sentiment improved for all inputs that comprise the index, but this is tempered by ongoing caution in the shorter term and the upcoming summer period, which is notoriously hard to predict.
“Whilst carriers believe recent falls in activity and freight rates have now stabilised, pressure remains high in general breakbulk where vessels are running closer to spot than at any time since late 2021,” said One World Shipbrokers.
“Carriers are reporting that freight rates ex-Asia are currently especially variable in response to what is described as confusing local signals, which is reflected in lower short-term confidence than in other markets.”
Longer term, the index is forecast to rise based on expectations of a broad-based recovery remaining intact. Major projects in both renewables and oil and gas throughout the world are set to substantially increase multipurpose demand and tighten supply, especially for the heavier lifting vessels.
USA-based carriers, One World Shipbrokers continued, appear demonstrably more confident in the longer term than elsewhere underpinned by a slew of new projects slated to begin later this year.
With no new newbuilding orders reported in the deepsea multipurpose segment this quarter or deliveries scheduled that will add any meaningful capacity to the world fleet, demolition activity is unsurprisingly low. Yet with an average vessel age of over 15 years and the impact of new and upcoming emission regulations set to add surcharges to the less efficient older vessels, carriers note there is uncertainty about the impact its introduction will bring – especially in Europe.
“Fleet supply readings this quarter show a marginal tip towards shippers. But the outlook for later this year is that this will reverse towards carriers,” the company added.
