You are here
Home | Letter to the Editor | [Letter To The Editor] Is It High Time For MPV Rates To Catch Up Yet?

[Letter To The Editor] Is It High Time For MPV Rates To Catch Up Yet?

As its ocean freight counterparts in Container Shipping go in from strength to strength, spot prices for the Multipurpose sector have been playing a slow, delayed catch-up from the bottom. The Toepfer Multipurpose Index crept up another 1.25% to depict USD 12,683 as its quote for July 2024. The more averaged Drewry Multipurpose Time Charter Index had ended higher at USD 9,094 when the forecast was USD 9,054, bettering the same by about 0.5%.

While an improved vessel utilization scenario was seen ever since the Red Sea induced Supply Chain disruption outbreak, a spillover effect of catch-up seems to be happening for the MPV sector with respect to the container prices, but at a high lag.

A small chunk of the containerized cargo is being attracted by the MPV sector thanks to the over 60% bump-up in Container spot prices from Asia in May 2024 with June 2024 providing further impetus. The Drewry commentary maintained that there has been some demand in the larger vessel segment, a sentiment echoed by Toepfer who commented that “main trades are already well utilized with non-containerized cargoes”. As the container spot prices inch higher, container being booked on MPV vessels may have increasing share, especially with the kind of congestions that happen in the key Asian ports leading to container carriers skipping certain ports and with the Red Sea disruption meaning that the higher transit times would be there to stay for a while.

It is interesting given the fact that until the start of Q4, 2023, a fair share of the minibulk and loose bulk cargo were being booked on container vessels. However, since the Red Sea disruptions while the Drewry World Container Index has risen by 210%, the Toepfer’s Multipurpose Index has risen by less than 10%. This leads to ask the question, “Is it high time for MPV rates to catch up yet?” A peek back to the Supply Chain disruption scenarios happening in 2021-22 shows that while the Container rates peaked up in September 2021 with congestions and supply chain disruptions lasting till February 2022, the MPV rates continued their run up in a slow manner and actually exhibited a 65% rise at the composite level between September 2021 and its peak in July 2022. So, does that mean this would be mimicked again?

The factors are a little different, this time. The current throughput from Asia suggests that a lion’s share of this is contributed by cargo which would have ideally made to the American and European shores in September-October for the holiday season are being forwarded owing to fears of possible tariff hikes. There have been analyses from the street on how some sort of course correction can come into the container spot prices, but that there would be a downside cushion at levels seen around April 2024. For the MPV sector as such, Toepfer predicts P6 rates at 2.6% and a 12-month outlook at a 5.1% increase. As for Drewry, the expectation is for the next monthly quote to land up at USD 9,136.

Author of the article: Gautham Krishnan

Gautham Krishnan is a logistics professional with Fluor Corporation, in the area of project logistics and analytics, and has worked in the areas of Project Management, Business Development and Government Consulting. He has been bestowed the AntwerpXL 40-under-40 award for the year 2023, as one of the upcoming, future leaders in the project logistics space.

Print Friendly, PDF & Email

“Disclaimer: “Breakbulk News & Media BV (Breakbulk.News) assumes no responsibility or liability for any errors or omissions in the content of articles published. The information and or article contained in these articles is provided on an “as is” basis with no guarantees of completeness, accuracy, usefulness or timeliness…”