One World Shipbrokers’ quarterly Market Sentiment Index (MSI) showed an improvement in Q1 2024 rising to 52.4, up from the Q4 2023 level of 51.5.
For Q1 2024, carriers report that optimism for an improving cargo market is more muted. However, the impact of conflict in the Red Sea area, and the ongoing water shortage at the Panama Canal, is that more ton miles are being sailed around the two Cape’s thus shortening supply and increasing freight. Given that neither issue looks set to be resolved quickly, carriers and shippers are facing the consequences of additional costs.
A straw poll among carriers showed that roughly half of those asked said they were avoiding the Red Sea if possible. The other half felt that “they were not a carrier with characteristics of political interest against which aggression might be launched and will continue to maintain schedules by transiting the Suez Canal”. However, with war risk premiums rising sharply and, in some cases, armed escorts accompanying the vessel, the cost of maintaining a service via the Red Sea is not without a financial impact to shippers.
58 percent of respondents have the Q4 2024 MSI indicated improving sentiment over the previous edition, with 35 percent lower and 7 percent unchanged. All of the metrics used to compile the MSI have risen – yet with this slightly improving sentiment in trading conditions going forward, indicators continue to point at the multipurpose fleet being more or less in balance with demand – if anything slightly favouring the shipper. “This might feel in friction with the idea of supply shortening due to the additional ton miles being sailed but with cargo volumes not expected to increase in the near term and the Baltic Handy Index halving in value from its December highs, cross trades remain a potent threat and a point of concern for some multipurpose carriers particularly on the long haul trade lanes,” said the index.
The Market Sentiment Index is a leading indicator index of activity in the multipurpose shipping industry. It averages the responses from an anonymous group of multipurpose vessel owner and operators to a set of breakbulk shipping-related questions. A reading of 50 is neutral, indicating a static market; scores below 50 show pessimism or wariness, and a score above 50 indicates optimism. The MSI can be downloaded in full here.
