Charter rates keep falling
Daily charter rates for multipurpose vessels keep falling as a result of lower demand caused by the coronavirus. Rates have already fallen by 13% since the beginning of 2020 and the pace of the decline continues to accelerate.
On average, a 12,500 dwt multipurpose vessel is currently fixed for USD 6,441 per day in May, according to Toepfer’s Multipurpose Shipping Index. That is 6% less than last month’s average rate of USD 6,863.
That means the decline in charter rates is still accelerating. The charter rates began their decline in March when rates fell by 2.5% compared to February. In April the fall gained momentum and doubled in pace, falling by 5% in comparison to March. The acceleration continued into May with rates falling by another 6%, which reflects a 20% increase compared to the decline in April.
Drewry expects that a market contraction can still be prevented if countries manage to contain the virus by October. If this happens, we expect demand for this year to be on par with 2019 levels, Drewry analyst Susan Oatway wrote in the firm’s latest market assessment.
Demand growth for multipurpose and heavy-lift vessels is expected to stagnate in the two years to 2021, growing at an average annual rate of just 0.3%. Average annual charter rates are also expected to remain on 2019 levels.
Before the pandemic, Drewry had initially forecasted rates to grow by 2% and even raised its forecast in January to 6% as all segments were showing positive signs of growth.