The short-term market sentiment seems to have taken a hit according to the breakbulk fraternity, with the Q3, 2023 figure on the Market Sentiment Index (MSI) reported lower at 52.8. The Market Sentiment Index (MSI) has been an indicator index of activity in the MPP industry. After a reversal-of-sorts in Q2, 2023 post four back-to-back quarterly dips, the index is now at an a eight quarter low, punctuated by softened market demand, even as the fraternity believes this to be a short-term scenario, expecting rates and demand action to pick-up starting from the quarter following, with the advent of winter and rising energy prices. The general consensus has been the stable outlook w.r.t project cargo which is believed to be in the brink of a new breakthrough, owing to shifts seen in the offshore renewable energy space.
The latest reports from the agencies Drewry and Toepfer, put forth how Breakbulk operators have been moving with respect to their incumbent fleet. A handful of operators have been mulling to take some of their older constituents off the fleet for disposal. The move would help should there be no demand shoots and with the IMO 2023 regulations and the revised net-zero targets coming in. However, the newbuilding activity for the sector, which has reported to have picked up from the trough that it has been in, needs to catch up in order to service the various projects and initiatives in the offshore and project cargo sectors. However, while there seems to be optimism about the long-term, the near-term/ medium term looks undecided with a section of the market adopting the ‘wait and watch’ stance over the wave of optimism, trying to identify the demand shoots. It must be noted that when the MSI hit a high of 58.8, the estimate was for the index to hit 59.4 in the next quarter, but then the demand dynamics and rate actions from other sectors led to the MSI diving downwards, for four successive quarters. The MSI forecast for Q4, 2023 point to a level of 53.5.
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.
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