The Toepfer’s Multipurpose Index (TMI) which records the monthly average time charter rates, saw a seventh consecutive monthly dip as the index fell nearly 5% for the month to end at US$15,137. The index has now retraced 50% of its post pandemic period gains to the peak in just 7 months. The average for the TMI in the post pandemic period is at US$13,397, a good 11% below the current quote. The index had topped at US$23,099 in July 2022 and has corrected ever since. It must be noted that around the same time, the previous year, the index was edging higher, punctuated by supply chain disruptions across ports in the US, with a great chunk of containerized cargo being booked as breakbulk shipments too, in line with supply chain tightening, port disruptions and high container spot rates.
However, with the steeper decline witnessed in container rates ever since Chinese New year 2022 and with a bleak demand story across the globe, cargo owners and freight forwarders have pegged back on container carriers, with the schedule reliability picking up too. The lack of minor cargo items which make up a significant portion of the vessel volume have put a pressure on rates, alongside the added pressure of the sector joining the “slide” party late, compared to its bulk and container counterparts. The prices have dipped by 30% over the year, which is significantly lesser than container shipping at 75%. However, things aren’t entirely in the red yet. The Chinese Manufacturing seems to have picked up in January 2023, from the bottoms of 2022. We have also been seeing the offshore support sector and the offshore renewables space garner interest. The US offshore wind capacity for instance is estimated to grow at a robust CAGR of about 66% until 2035. These will play into the prices from medium to the long term.
The TMI’s cousin, the Drewry’s Multipurpose Time charter index, for instance, had a flattish start to the year ending at US$9,855 for January 2023. The general notion on the street is for the prices to behave a little subdued for H1 2023.
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
