Rising container rates bump up MPP index, but bubble is expected to burst

Rising container rates bump up MPP index, but bubble is expected to burst

Photo Hartman Seatrade

Container rates have seen a surge recently, which has resulted in positive development of the MPP charter rates as well. According to Xeneta, prices for 40 ft high-cube containers in China rose 45 per cent in May, compared to April, primarily due to Red Sea diversions stretching carrier networks.

As for the multipurpose (MPP) sector, the Hamburg-based shipbroker Toepfer Transport is seeing the “close to Covid rate levels” positively impact the rates and its Multipurpose Index (TMI). In its monthly report, Toepfer Transport said that the TMI value for June 2024 has reached $12,639 per day. This is an increase of 1.25 per cent compared to the previous month.

Looking ahead, Toepfer Transport expects the TMI value to move up by 2.57 per cent in the following six months, and 5.07 per cent in June 2025.

Rising container rates bump up MPP index

“The “close to covid rate levels” and the robust demand for capacity in the container sector have contributed to the positive development of the MPP charter rates. This is reflected in both container carriers’ interest in chartering MPP vessels and shippers’ requests for quotes for shipments of containers from breakbulk carriers,” researchers at Topfer Transport said. “This trend is valid for the main trades, which are already well utilised with non-containerised cargoes, while the impact on regions with weaker demand remains limited.”

Newbuilds vs second-hand MPP tonnage

The shipbroker has also reported a slight upward movement in the prices of newbuildings. Prices for 9,000 dwt,12,500 dwt and 30,000 dwt vessels have gone up from $21.50 million, $30.75 million and $51 million, respectively, in May 2024, to $21.75 million, $31 million and $52 million, respectively, in June 2024.

The second-hand tonnage prices remained at $10.25 million, $14.50 million and $18.50 million, for the 9,000 dwt,12,500 dwt and 30,000 dwt vessels, respectively.

Container bubble expected to burst

However, Xeneta expects the container market’s current bubble to burst in the second half of the year, as it is not supported by strong underlying demand. According to Christian Roeloffs, co-founder and CEO of Container xChange, ” Shippers are pulling shipment dates forward, resulting in a temporary demand for shipping capacity. This is reflected in higher throughput volumes, despite underlying consumer demand and factory orders being weak.”

The ocean and air freight rate benchmarking and market analytics platform expects high-interest rates and labor market concerns to reduce consumer spending and put pressure on shipping volumes.

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Author: Adnan Bajic

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Rising container rates bump up MPP index, but bubble is expected to burst