Toepfer Multipurpose Index gains in August

Toepfer Multipurpose Index gains in August

Iron ore mining in Pilbara, Western Australia. A similar mining project, recently awarded, is expected to require shipments of 450,000 freight tons of project cargo. Photo credit: Shutterstock.com.

Toepfer’s Multipurpose Index drifted upwards in mid-August to hit $7,547 per day, a 0.9 percent increase from mid-July’s $7,476 daily charter rate and a 3.5 percent increase year over year. 

Late summer is typically a slow period for the multipurpose/heavy-lift (MPV/HL) industry. However, Hamburg-based carrier Zeamarine recently announced it has been awarded the ocean transport contract for about 450,000 freight tons of cargo, the majority heavy and oversized modules, for the BHP South Flank mining project in Western Australia. Schenker is the project forwarder and Fluor is the engineering, procurement, and construction company. 

The project overall is worth approximately $3.4 billion, according to Yorck Niclas Prehm, head of research with Hamburg-based broker and shipping analyst Toepfer Transport. Tendering for LNG Canada, a mega-project that will generate up to a million tons of freight cargo, should also be announced soon, Prehm said.   

Toepfer’s index, an average of six- to 12-month charter rates per day for 12,500 deadweight ton (dwt) MPV/HL F-type ships, has been moving in a narrow range since late 2018, with a low of $7,457 in February and a high of $7,610 in April. 

The competition 

Positive movement in the dry bulk and container shipping sectors may be helping to steady MPV/HL rates. The Baltic Dry Index, which measures dry bulk shipping demand, has ticked upwards as demand for iron ore recovered following Vale’s South American dam disaster last January. Charter rates for larger container ships are also on the ascent, according to Toepfer’s July container market report. These healthier rates percolate through to the MPV/HL fleet in that they lessen the competitive jockeying for breakbulk and project cargoes that can flow between vessel types and that occurs when markets are weak.  

However, the container market remains over-supplied with capacity and at least some market uptick can be ascribed to larger ships, including container vessels, being pulled for scrubber installation ahead of International Maritime Organization (IMO) 2020. Some 49 vessels now have scrubbers installed, 31 are in the yards for installation, and another 550 are on the waiting list, according to Toepfer. 

Carriers not installing scrubbers ahead of Jan. 1, 2020, when the IMO’s mandate requiring ocean shipping to switch from burning high-sulfur (3.5 percent) to low-sulfur (0.5 percent) fuel, are preparing their ships for the big switchover — and this includes virtually the entire MPV/HL fleet, with the exception of Netherlands-based Spliethoff/BigLift. 

Many carriers that JOC has spoken with remain uncertain about the availability and reliability of new blends of low-sulfur fuel and are planning to rely on marine gasoil (MGO) for at least a short interim period. Few have published formal bunker policies beyond general statements saying that they will be adjusting for higher bunker prices. Carrier Zeamarine has announced that all its tramp bookings will be subject to a new IMO 2020 bunker adjustment clause for voyage quotations as of Sept. 1, while liner service clients will be charged a low-sulfur surcharge of $35.00 per freight ton for all bookings. 

The monthly TMI focuses on the most liquid section of the MPV/HL fleet, in Toepfer’s assessment. Toepfer collects the data for 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.