Tonnage demand in the multipurpose/heavy lift sector has rebounded. However, the recovery remains patchy, says Arne Kühn, Managing Director[ds_preview] of the Hamburg office of BRS and one of its leading mpp shipbrokers..
Has the MPP time charter market bottomed out after its steep fall? How do you assess the current situation?
Arne Kühn: Shipping activity in the mpp segment has returned to some extent. Hire rates have stabilized well above OPEX and all tramp vessels are trading again with only a small number of spot positions. Charterers are busy trying to develop and execute cargo business which wasn’t possible for some time. However, they remain cautious as illustrated by increased period flexibility. They take ships for 3-7 or 4-8 months to make sure they can rid themselves of tonnage should trades get disrupted again.
Is the cargo trend showing up, or will volumes be hit again with a delay?
Arne Kühn: Throughout the last two months we saw a rash of fixing of wind energy equipment ex Far East and India which sent charter rates back up. More recently the market has cooled down again as freight budgets at wind energy clients came under pressure. There appears to be a standoff right now. The other problem is that other project and general breakbulk volumes are still lacking and that competition with handysize bulkers for smaller parcel stems remains fierce.
What’s going to be the »shape« and time frame of the recovery?
Arne Kühn: I am afraid the prospects for the rest of the year aren’t rosy. Still, as long as Europe, the Middle East, Southeast Asia and Australia don’t end up in lockdown again, there should be enough market activity to keep the mpp fleet relatively busy.
Will the market structure look much different a few years ahead?
Arne Kühn: It was encouraging to see that all ships that got redelivered due to the retreat of a major charterer were able to find new cover in a short span of time. It showed that there is still enough liquidity and potential in the mpp market. However, the renewal of the mpp fleet will get more and more urgent in the coming years to make sure it stays that way. Operators today are not in the condition to offer long-term charter cover of 5 years or more as backing for newbuilding projects.
