Multipurpose shipping hit by Panama Canal and Red Sea troubles

We have seen various shipping sectors hit by the weather-driven limited capacity of the Panama Canal and the danger posed by missiles launched at merchant vessels at the Bab-el-Mandeb Strait in recent months. When we look at what happened to multipurpose vessel operations, it is clear the sector has been no exception. Even larger vessels with heavylift capabilities (also known as project carriers) have shown a strong drop in the number of passings in the Panama and Suez Canals. These are some of the key findings from Drewry’s recently published Multipurpose Shipping Forecaster report.

Demand for project carriers has been strong due to the number and scale of industrial and energy projects, especially in the oil & gas and wind energy sectors. Hence, a drop in passings and an increase in voyage length by going South around America and Africa have added to tonne mile demand. This additional demand and utilisation have manifested in higher time charter rates, although increases have been slight so far.

At the same time, stronger vessel demand starting next year is expected due to more project work, leading to a tight MPV charter market in 2026/27, especially on the project carrier front. A continuation of the disruption of vessel routes at Panama and the Red Sea could make the situation even more challenging for shippers.

As the orderbook of newbuild vessels is still rather small with utilisation levels already high, we think analysing geographical chokepoints and geopolitical events surrounding them will be a key aspect of MPV market analysis, at least in the short- to mid term.
Source: Drewry