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Slight Rise is MPP Index – What Happens Next?

The Drewry Multipurpose Time Charter Index is out and has increased to $10,987 per day in February, representing a rise of 1.7% compared to the 2.2% rise seen in the previous month.

Rates were in line with expectations over February, with a slight slowdown in rate growth. That said, Drewry’s Index is up 69% since February 2021. Whilst the geopolitical situation casts a huge cloud over all of us, the short-term implications are unclear. There remains very little spot market availability so any further rate increases due to the conflict are likely to be slow to hit the market. We do expect rates to continue to rise over March but again at much weaker growth rates of just 1.0% to $11,100 per day.

The Short-sea market saw little change in sentiment over February, indeed for last 6-9 months the question has been more about availability in this sector than rate paid. However, the significant upturn in bunker prices at month end, caused by the appalling geopolitical situation, bring a huge amount of uncertainty to the market. This sector is likely to be directly affected with the trades to and from Ukraine and Russia, particularly steel and grain, causing a shift in demand and potentially mode, as hundreds of bulk carriers are impacted. There is also a significant Russian flagged fleet, but it is still too early to assess the longer-term implications of the impact of sanctions.

For the more heavylift capable fleet, events in the Black Sea region are having a muted effect compared to the ongoing supply constraints for container carriers in both the US and Asia. However, the general uncertainty in the market coupled with rising fuel prices are also disrupting what was a far-from-normal market anyway. Our expectation is that the current situation in Ukraine might provide further demand to the sector in the medium term, hence our subdued outlook for the coming month.

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