While the on-going disruptions in terms of blockage and geopolitical-risks seem to thwart the Suez Canal and the drought action impacting the Panama, the Multi-purpose vessel sector is yet to come to terms with the same, going by the rate action.
The Toepfer’s Multipurpose Index (TMI), which represents the monthly average time charter rate assessment for a 6-12 months’ time charter for a 12500 ton DWT MPP/HL “F” Type Vessel and established by a panel of operators. Owners and Brokers, read USD 11,660 for its first quote of 2024 further losing a further percent and a half, this month. This was despite the earlier forecasts that the rates would inch higher starting Jan-2024. The rates are around half the peak rates of USD 23,099 witnessed in July 2022.
The Drewry Multipurpose Time Charter Index had a stable month ending at USD 8,731 marginally higher on the back of a higher price action in the smaller vessel segment. The Shortsea market which had stalled its downwards dive in August 2023, has since appreciated by 20-23%. The onset of 2024 brings in the dimension of supply chain disruptions with two of the key global gateways stemming off a major portion of the access. The war-risk premiums associated with the MPV fleet are higher to the tune of USD 150,000+ for a typical 12500 ton DWT carrier in the Suez region. In the Panama portion, the bid amounts are often higher chugging to seven digit figures in dollars. As these supply chain risks and disruptions continue and with newer projects typically on the horizon, it has to be seen how the market factors them or if there would be a spill-over from the container sector, which has seen a sudden blip and boom in prices owing to its higher activity correlation with the canals.
Toepfer had commented that ,“The trajectory of the TMI remains unchanged. Due to the many market actors having enjoyed the holidays and maybe some additional days on vacation, the activity was low, and so is the amount of reference fixtures. We monitor that some mid- and long-term charters have been fixed above the index level, but it is yet unclear if or when these higher levels turn out to be trend.” Drewry too commented on similar lines with the next quote forecasted at USD 8,753. The year is to be keenly watched on geopolitical actions, infrastructure projects opening up and reforms in trade and environmental policies with several of the key global nations heading into polls too.
From the transactional perspective, there needs to be more frequent analyses of time v/s cost for shipment planning and detailed, pin-pointed discussions with the Logistics service providers to tackle uncertainties and understand regulatory needs and absorb measures such as the EU-ETS impacts on shipping.
Author of the article: Gautham Krishnan
Gautham Krishnan is a logistics professional with Fluor Corporation, who has expertise in the Supply Chain area focusing in the Project Logistics domain, analytics and the LogTech space. He has worked in the areas of Project Management, Business Development and Government Consulting. For his body of work in the mentioned areas, he was bestowed the AntwerpXL 40-under-40 award in the year 2023, and touted to be one of the upcoming, future leaders in the project logistics & supply chain function.