MPV/HL rates buck gloomy outlook

MPV/HL rates buck gloomy outlook

Toepfer’s Multipurpose Index (TMI), which tracks charter rates for MPV/HL vessels, jumped 2.6 percent sequentially and 5.9 percent year over year in April. Photo credit: Shutterstock.com.

The multipurpose and heavy-lift (MPV/HL) market is looking a bit bearish at the moment, as macroeconomic trends show a slight slowdown ahead for the next 12 months, said Niclas Prehm, head of research for Hamburg-based broker Toepfer Transport.

Nonetheless, the monthly Toepfer’s Multipurpose Index (TMI), which tracks charter rates for MPV/HL vessels, jumped 2.6 percent to $7,610 from March to April and is up 5.9 percent from April 2018, recovering from some softness earlier this year.

Given the nature of the project cargo market, however, bearish sentiment may simply not have caught up with the project pipeline yet. “There’s always a little delay between the bad news and the impact on multipurpose rates … most projects have a long lead time,” Prehm said.

Prehm adds that the expected slowdown is a “not a real downturn” in Toepfer’s opinion but rather a stall in a long-term improving trend for the market. He points to improving levels of oil and gas investment, long-term investment in electricity generation, Chinese investment in Africa, and other positive economic indicators. On the other hand, trade tensions and geopolitical friction could undermine these trends.

MPV/HL vessels continue changing hands as ownership consolidation continues, but newbuilding contracts remain scarce to nonexistent. Operators are talking to the Asian shipyards, but they are not signing yet, Prehm said.

This is likely to change. An aging fleet and an escalating need for more operationally efficient ships in the face of ballast water regulations and the International Maritime Organization’s Jan. 1, 2020, requirement that marine vessels begin using fuel with a maximum sulfur content of 0.5 percent will have repercussions for the global fleet. “New vessels with lower consumption will have a clear advantage, so the next two or three years will be exciting,” Prehm said.

Toepfer’s index consists of an average of six-month to 12-month time charter rates per day for 12,500 deadweight ton MPV/HL F-type vessels, the most liquid section of the fleet. Toepfer collects the data that goes into its transport index from vessel owners, operators, and brokers, providing one of the only publicly available windows into charter rates for the privately held MPV/HL market.

Contact Janet Nodar at janet.nodar@ihsmarkit.com and follow her on Twitter: @janet_nodar.