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RATES SLIDE OVER COMPETITION, WITH CUSHION FROM PROJECT CARGO AND CAUTION IN THE WINDS

The Breakbulk sector has had a near constant story over the past few months- An intact demand for Project cargo and for Module carriers. A sentiment further echoed by the recent movement of the Market Sentiment Index (MSI) maintained by One World Shipbrokers, wherein Q2 2023, saw a minor resurgence to 53.8 after four straight quarterly declines. But the demand for loose and mini bulk cargo seem to be jostling over the rates than the space. The container carriers, Ro-Ro sector and bulk have tried to take in whatever they can, courtesy a larger depreciation in rates over the past year, that sees rates on-par with the pre-pandemic phase. Moreover, there has been a lull phase as far as the MPV newbuilding is concerned, despite occasional orders, mostly targeting the short-sea market. The latest quotes from the indices bear the same reflection of these scenarios.

The Drewry’s Multipurpose Time Charter Index for MPV, has had one straight year of monthly declines, ending at USD 9,069 as per the latest quote, losing about 19% in the process. The commentary has been in line with the scenario above, declining rates led by competition from other segments of ocean freight while Project cargo demand acting as a cushion. The effect of the former can pull rates down further, with the expectation that the next quote would be around USD 8,989, breaching the USD 9,000 mark on the downside, as the rates are now comparable with those in July 2021, though they are still a third higher than the pre-pandemic quotes.

The Toepfer’s Multipurpose Index (MPP) slipped another 1.61% for the month to end at USD 14,360, about 6.5% higher than the post-pandemic average, though, it has shaved over 38% from its peak. The short-sea market too has been hanging in a status quo since August 2022. While the general sentiment is that the pre-pandemic rates are unlikely to be seen, the unprecedencies in demand is likely to play a bit more into the rates for the short-term. Well-rounded pricing and logistics execution strategies will be key for cargo planning across various lanes, going forward.

We acknowledge and thank our guest writer Mr. Gautham Krishnan for his valuable contribution to this piece of content.

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