Nov 14 | 2019
Charter Rates Stagnant Untll March 2020
Time charter rates for multipurpose vessels have increased slightly over the last month, but the medium term outlook is for further stagnation, according to research from shipping consultancy Toepfer Transport.
The firm calculates that the average six- to 12-month time charter rate hit US$7,578 per day in early November, the first time they have reached that level since April and the third-highest level in the history of the index.
However, Yorck Niclas Prehm, head of research with the Hamburg-based ship broker, notes that despite this fillip, there is "still a sideways trend" that will continue well into 2020.
LNG to Boost Demand
The findings are published in Toepfer’s most recent Multipurpose Shipping Report, a monthly report which is based on a 12,500 deadweight-tonne multipurpose /heavy-lift F-Type vessel for a six to 12-month charter period.
The firm predicts that liquefied natural gas, or LNG, projects will provide a boost for project cargo carriers in the short term as well as increased demand for decommissioning offshore facilities.
A slowdown in second-hand sales of multipurpose ships has also hit margins as oversupply is depressing rates and market pressure continues to make bank financing challenging.
IMO Legislation Weighs on Outlook
Charter rates have remained flat since the latter half of 2018, according to data from Topefer, and forecasts suggest that global trade uncertainty is likely to weigh on margins for the medium term.
Ongoing trade wars between the U.S. and China have depressed shipping demand and upcoming IMO low-sulfur fuel regulation limits are also creating hesitancy from an investment perspective.
As such, Toepfer expect the sector to “continue trading essentially sideways through March or April of 2020” until a clearer picture of the global regulatory outlook is established.
The firm calculates that the average six- to 12-month time charter rate hit US$7,578 per day in early November, the first time they have reached that level since April and the third-highest level in the history of the index.
However, Yorck Niclas Prehm, head of research with the Hamburg-based ship broker, notes that despite this fillip, there is "still a sideways trend" that will continue well into 2020.
LNG to Boost Demand
The findings are published in Toepfer’s most recent Multipurpose Shipping Report, a monthly report which is based on a 12,500 deadweight-tonne multipurpose /heavy-lift F-Type vessel for a six to 12-month charter period.
The firm predicts that liquefied natural gas, or LNG, projects will provide a boost for project cargo carriers in the short term as well as increased demand for decommissioning offshore facilities.
A slowdown in second-hand sales of multipurpose ships has also hit margins as oversupply is depressing rates and market pressure continues to make bank financing challenging.
IMO Legislation Weighs on Outlook
Charter rates have remained flat since the latter half of 2018, according to data from Topefer, and forecasts suggest that global trade uncertainty is likely to weigh on margins for the medium term.
Ongoing trade wars between the U.S. and China have depressed shipping demand and upcoming IMO low-sulfur fuel regulation limits are also creating hesitancy from an investment perspective.
As such, Toepfer expect the sector to “continue trading essentially sideways through March or April of 2020” until a clearer picture of the global regulatory outlook is established.
