The recovery in charter hire rates accelerated over the past weeks
although freight revenues for liner operators have seen an alarming
decline
Tramp container shipowners can breathe a sigh relief as the charter market moves closer to a balance between supply and[ds_preview] demand. The last four weeks saw the pace of hire rate increases pick up further momentum with an almost 23% rise in the ConTex, against a 6% increase during the previous four week-period. The driving force continues to demand for sub-panamax vessels of 2,000–3,000TEU capacity whereas demand for post-panamax and for panamax vessels has eased off – probably just temporarily, though, as forthcoming peak shipping season in summer should still stimulate more enquiry from the lines over the coming weeks, brokers say.
Charterers have been forced to compete hard to secure more gearless 2,700/ 2,800TEU vessels given the shrinking pool of available tonnage. Charterers had »to move swiftly to secure certain vessels«, as one major broker pointed out. Worldwide less than a handful of units were estimated to be in spot/prompt position two weeks ahead towards the end of April. Charter rates for standard 2,700TEU vessels have meanwhile arrived at 14,000 $/day, surpassing market levels for gearless 3,500TEU ships and approaching rate levels for baby panamax tonnage. Many requirements in the segment are related to intra-Asia container trades which continue to exhibit good growth, according to market participants. A number of new services have recently been launched after start-up costs for new loops had dropped significantly due to the steep fall in bunker prices. According to Alphaliner, total container ship capacity deployed on intra-Far East services has increased by 20% since last year, »and the vast majority of this incremental capacity involved ships of 1,000–3,000TEU.« A top rate of 14,100 $/day was paid by Evergreen in a 10–12 month extension of the gearless 2,646TEU »Pontresina« in Northeast Asia. Some other vessels are believed to have been fixed on subjects at levels exceeding 14,000 $/day, waiting for approval by charterers. Owners are pushing for longer period durations with some holding out for 24 months, according to brokers. After a circa 40% increase in charter rates within only one month, further improvements are likely going to be more difficult to achieve as operators may seek to hire panamaxes as alternatives. The upswing in the geared 2,500TEU segment continued as well, with prompt tonnage in the Far East and in the Atlantic fixing employment at around 12,000 $/day. In the east, the geared 2,474TEU »Wehr Bille« obtained 11,959 $/day net of address commission for a 4–6 month period with Wan Hai. The acute shortage of available ships in the Caribs meant that owners there have been to command juicy premiums. The 12 month period rate assessment by the ConTex panel for this class is up over 43% month on month.
Midsize and feeder ships join upswing
Finally, the positive trend has filtered through to the geared segments between 1,000–2,000TEU, with 12 month periods on geared 1,700TEU vessels marked up by almost 25% and on geared 1,100TEU units up by more than 13.4% since mid-March. The increases reflect the improved fleet utilisation in these segments. As per beginning of April, only seven tramp container ships with intakes between 1,000 and 2,000TEU were counted as idle/charter-free, according to Alphaliner. While demand for tonnage has gone up particularly in the Far East, tonnage supply has become tighter due to demolition sales. Total fleet supply (both operator/non-operator controlled) in the 1,000–3,000 TEU size range shrank from 3.6mill. TEU to around 3.3 mill. TEU since 2011, according to Clarksons.
Wenchong 1700 type ships with their own gear saw rates progressing to $10,000 during the past weeks, including the 2010-built »Hansa Steinburg« which agreed a three month period with Puhai Shipping in the Far East at this level. A gearless Aker type, the 1,706TEU »King Bruce« even achieved 10,500 $/day in a 3–4 month period with Evergreen. By the time the HANSA went to press, rates of 11,000 $/day were under discussion. The market for geared ships in the Med continued to improve as well, albeit not as fast as some were hoping, with Wenchong 1700 types fixed at rates in the high $ 8,000’s.
The picture in the post-panamax and panamax segments was a bit more subdued and rate levels for both classes were seen easing a bit amidst growing redeliveries of ships that had been fixed for round voyages and short periods in the transpacific trade. Current expectations are that demand for large gearless ships should pick up again during the coming weeks as lines bolster their capacity for the peak shipping season. However, the recent weakness in European inbound traffic growth has cast doubts on charter demand for large ships. As evident from the WCI Shanghai/Rotterdam benchmark freight rate in our compass and a similar development of the SCFI spot freight rate over the past weeks, carrier revenues on the all-important Asia-Europe route are under severe pressure again. Carriers have been struggling with a shortfall of cargo bookings since Chinese New Year, forcing them to continue to blank (cancel) numerous sailings despite increased deliveries of ultra large newbuildings. All attempts to restore freight rates failed. Another general rate increase of 800 to 1,300 $/TEU has been announced for 1 May but the chances of success look slim as long as carriers refuse to cut back slot capacities, according to Alphaliner.
Michael Hollmann
