A recent update by Drewry has shed light on a pressing issue within the multipurpose (MPV) shipping sector – despite increasing demand, newbuild orders remain scarce. According to Drewry’s analysts, the situation is poised to create a tight market and potentially higher time charter (TC) rates by 2026/27.
In a market update, Drewry says that the MPV sector has been witnessing a gradual increase in demand. In addition to this, Drewry’s Multipurpose Shipping Forecaster indicates that the industry has had to adjust its theoretical orderbook to balance the model, reflecting the growing need for new vessels. However, the actual newbuild orders have not kept pace, suggesting a future strain on fleet capacity.
As it stands, the near-term orderbook is set, with no additional vessels expected for delivery in 2024 and 2025. Even if new orders are placed soon, the lead time for building these vessels means they would not enter the market before 2027. Drewry states that this delay is significant, as it could lead to a tight market, particularly in the Project Carrier segment, by 2026/27.
Drewry’s model also explores a scenario where no additional orders are placed during the forecast period. This situation would result in higher utilisation rates and elevated TC rates, driven solely by sector-specific demand rather than external factors such as container shipping demand, which played a role in the previous upturn of 2021/22.
Consequently, Drewry states that the appetite for new MPV builds is expected to increase, though practical constraints might limit these additions.
While other sectors like dry bulk, cellular containerships, and car carriers might alleviate some of the anticipated supply crunch for MPVs, Drewry says that a significant increase in TC rates appears inevitable.
The shipping analysts also believe that competition for general cargo capacity across these sectors will play a crucial role in determining the extent of this relief.
Photo: Niels Johannes, CC BY-SA 4.0, via Wikimedia Commons