MPV Sector Faces Financing Difficulties

(Global) Recovery to Be Driven By People and Cargo

The multipurpose shipping sector is on the brink of a massive shift in value distribution, but will face difficulty over the medium term raising finance for change, according to shipping consultancy Toepfer Transport.

The impacts of the Covid-19 pandemic are likely to create "difficult weeks and months ahead," but underlying trends to introduce new environmental regulation and digitalise operations will prevail, ultimately strengthening the sector.

“We clearly see that the current situation will make it more and more difficult to finance the inevitable transformation and fleet renewal. We also have to keep in mind that the current small orderbook in the short term mitigates the difficulties caused by the current drop in demand,” Topefer said in a recent report.

Rates Below US$7,000

The firm reports that multipurpose time charter rates fell sharply in April, sliding beneath the US$7,000 mark for the first time in well over a year.

“Our Multipurpose Index, the TMI, falls below US$7,000 within a small spread. The decline is caused by the uncertainties created by both the Covid-19 outbreak as well as the low oil price,” Toepfer states.

The firm notes that that year-on-year growth as measured by TMI was -9.83 percent, while the three-year compound annual growth rate of the TMI was 3.67 percent.

Valuable Lessons

Topefer’s Multipurpose Shipping Report index is based on a 12,500 deadweight-tonne multipurpose /heavy-lift F-Type vessel for a six to 12-month charter period.

“The enforced departure from our comfort zone gives us the chance to refocus and the various obstacles that currently keep us away from our usual decade-old work routines seem to be boosting digitalization in various ways. A crisis also provides opportunities, and can teach us valuable lessons,” Toepfer’s analysts note.

Headquartered in Hamburg, Germany, Toepfer Transport is one of the largest S&P brokers in the city and its research department has a particular focus on the MPP/Heavylift Market.