“There is a positive sentiment and so despite uncertainties, the fillip in demand and constraints in capacity are pushing the rates higher”. This was the summary for the Market Sentiment underlined by the Market Sentiment Index (MSI) for Q2, 2024. The Index had surged to 53.6 amidst “the combined impact of the war in Gaza prompting carriers to take the longer Cape of Good Hope
voyage from East to West and vice versa, and the still limited access through the Panama Canal”, as quoted. The underlining was further denoted by the index rate movements and while Toepfer’s Multipurpose Vessel index (TMI) and the Drewry’s Time Charter Multi-Purpose Index (MPP) reflected signs of bottoming out, the latest monthly figures point out that the metrics are aligned and that the scenarios have indeed pushed up rates.
The TMI continued its uptick for the third straight month, led by better vessel utilizations owing to the effect of added miles owing to the Red Sea situation, with the index clocking USD 12,483, an appreciation of 1.83% for the month, and 7% since the level of USD 11,660 that it hit in January 2024, as part of its corrective trend. The larger fillip in container freight rates also meant the section of Breakbulk cargo being carried on containers was slowly coming back to the MPV segment. The Drewry MPP Index, scaled past USD 9,000 as a composite level for the first time since June 2023, ending at USD 9,048 much higher against the expectations of USD 8,850, registering a 2.3% upside month-on-month. Echoing the sentiment aligned with the market, the estimate for the next quote is to land closer to USD 9,054.
The projections for the next 6 months according to TMI, point out to a 4-8% upside over the next 6-12 months, buoyed by possible demand shoots and the higher vessel utilization rates continuing. Also while there have been activities in the New-Building Market, the orderbook quantum is still pegged close to 3-5% of the existing fleet. It must also be noted that a third of the global MPV fleet have an age of >15 years and with the long-term alignment towards environment and emissions control, this will have to be kept in check, provided there are enough green shoots from the demand POV.
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.
