With a promising project pipeline and a supply side that favours the market, the multipurpose shipping segment is in a stable state, despite 2023 landing somewhat flatter than expected.
While impossible to accurately gauge multipurpose shipping rates, given the diversity of said tonnage, position, age and capability, it’s fair to surmise that rates have wilted over the last year. Toepfer’s average multipurpose time charter rate for a 12,500 dwt/F-type heavy lift vessel stood at USD15,900 at the start of January and dropped to USD12,208 by November 2023. Drewry’s Multipurpose Time Charter Index logged a similar decline: decreasing from USD9,946 at the start of the year to USD8,640 in November.
While some carriers have reported full ships over the past year, others have said that 2023 has proven to be something of a damp squib. And, after a particularly bad European summer season, sentiment on the market took a hit. At 51.5, the Q4 2023 edition of One World Shipbrokers’ market sentiment index (MSI) stood at its lowest level since its inception in March 2021 – continuing a decline that started at the peak in April 2022 and has persisted ever since, except for a short-lived bounce in April 2023.
However, the multipurpose shipping market is in better health than it found itself pre-covid – which is promising – and a couple of carriers have reported that they have been a little more selective in when it comes to what cargoes to carry, or not carry.
This begs the question as to whether we are at the bottom of the market. One thinks, with a degree of uncertainty, that it is there or there abouts. Toepfer expects multipurpose rates to increase by around 5 percent from now to mid-2024. The demand signals look good.
A large factor in the declining sentiment is the number of projects that have moved to the right, tempering optimism. The impact of high inflation, particularly on the wind energy sector, has hit the market, along with supply chain disruption.
Another concern is that the depth of the issues facing the container shipping sector are still not fully understood – and the drag of these lines going after project cargoes should be a concern for multipurpose carriers. Maersk, for instance, is reportedly laying off 10,000 staff this year with its ceo reporting that its logistics division is battling major headwinds. Masses of newbuild tonnage ordered at the height of the market continues to enter the sector globally, albeit some is replacing old vessels. In the West, falling consumer demand and confidence will continue to hurt Asian exporters, and in turn pile more pressure on the lines that carry these goods. Meanwhile, general freight forwarders are feeling the squeeze – one replying anonymously that thousands of job losses are expected.
The multipurpose market will, however, be supported on the supply side with limited tonnage scheduled for delivery in the coming few years. Those that had already placed orders for newbuilds saw progress in 2023, with Spliethoff taking delivery of DP2 B-type vessels Bloemgracht and Brouwersgracht, and construction commencing for Jumbo-SAL-Alliance’s Orca newbuilding series at the Wuhu Shipyard in China as well as for AAL Shipping’s six Super B-Class newbuilds the CSSC Huangpu Wenchong Shipyard in Guangzhou, China.
During May, meanwhile, deugro and Siemens Gamesa entered into a long-term charter agreement for two newbuild vessels – Rotra Futura and Rotra Horizon – in cooperation with Amasus Offshore. Building upon the existing Rotra concept (Rotra Mare and Rotra Vente), the newbuilds are scheduled for delivery in the spring and summer of 2025.
Other activity in the segment saw ForestWave complete its acquisition of Symphony Shipping and its fleet of multipurpose Ecobox vessels; BBC Chartering line up the addition of three F500-type heavy lift vessels; and Norden acquire Thorco Projects to diversify its offering into the breakbulk, wind energy and steel shipping business.
In the super heavy lift/deck carrier segment, Guangzhou Salvage and United Heavy Transport (UHT) end their commercial management agreement for the former’s semi-submersible fleet, with Guangzhou Salvage instead opting to form a joint venture with COSCO Shipping Specialized Carriers – forming an entity that now controls a fleet of what will be 18 semi-submersible vessels. SAL Heavy Lift, meanwhile, chartered two semi-submersible deck carriers – Zhong Ren 121 and Zhong Ren 122 – on a long-term basis, in collaboration with its partner Shanghai Salvage (China).
On the ro-ro side, Höegh Autoliners exercised its option to construct an additional four multi-fuel Aurora-class vessels, bringing the total number of vessels in the programme to 12. Wallenius Wilhelmsen also signed a letter of intent for four methanol-capable and ammonia-ready ro-ro vessels, with options for an additional eight vessels.
In the fourth quarter edition of the MSI it was surmised by one respondent that there will likely be a continued lack of new multipurpose orders until the situation regarding future fuels becomes clearer – or rates in the sector improve significantly.
As we near the end of 2023, eyes are firmly fixed towards the January 1, 2024, introduction of the EU emissions trading system (ETS) for shipping. A number of carriers have shared how they plan to pass on these taxes to customers. What will be of interest, going forwards, is whether said customers are prepared to pay.
