Demand for tonnage in the multipurpose vessel (MPV) space is expected to grow, but the newbuild order activity is still not following the expected trajectory. According to the shipping consultancy Drewry, the growing demand outlook could incentivise further orders. 

The consultancy has had to add more vessels to its theoretical MPV orderbook to balance other elements in its model. “These additional vessels do not yet exist; however, it is our expectation that the growing demand outlook will incentivise further real-life newbuilding orders,” said Peter Molloy, Senior Analyst, Multipurpose Shipping (Associate) at Drewry.

“With low slot availability and the time required to build the various types of vessels that make up the MPV fleet we see the near term orderbook as set and have not added any additional vessels for delivery in the years 2024 and 2025. Even if we see an uptick in newbuild ordering in the next two years, it is unlikely those additional ships would get delivered before 2027, leading to a tight market in 2026/27, especially in the Project Carrier segment,” Molloy said.

Using its forecast model, Drewry have examined the scenario where there are no additional orders during the forecast period. This resulted in rising utilisation and time charter rates.

“We expect that the nature of the upcoming upturn will be different from 2021/22 in a sense that the high utilisation and TC rate levels will be achieved exclusively by demand generated in the sector, without the additional “help” from container shipping. This should increase the appetite for more MPV newbuilds,” according to the analyst.

However, going forward, it is expected that theoretical additions of vessels may not be possible. Drewry expects to adjust its model each quarter and fore-estimate TC rates. This is all a result of slot availability showing later and later delivery dates, slippage and the normal time taken to build a vessel.

“It becomes unlikely that vessels will be delivered by the time we forecast they are needed,” Molloy adds.

Some help from the sectors competing for general cargo, like the dry bulk or car carriers, could alleviate the expected supply crunch of the multipurpose vessels, the jump in time charter rates seems to be unavoidable.