Tramp container tonnage below panamax class see hire rates firming up but the larger gearless types are struggling with increased prompt supply
May is usually one of the strongest months in container ship fixing as container lines soak up more charter capacity[ds_preview] for the cargo peak season starting in summer. Owners’ expectations have not been disappointed, with average charter market rates pushing up another 7% during the period from mid-April to mid-May, according to the Hamburg ConTex. However, The picture became more fragmented than in the first months of the year: Today it’s the sub-panamax, handy and feeder classes below 3,000TEU that show the strongest performance whereas rate levels for post-panamax and panamax type vessels have come under more pressure as prompt demand failed to keep up with growing redeliveries and higher tonnage availability.
The growing divergence between large gearless and smaller geared and gearless designs might well reflect the imbalances in the »end-user« freight markets which the respective ship types serve. The Far East westbound trades (to North Europe, Mediterranean, Persian Gulf) which employ the biggest available gearless ships have been under enormous pressure, with cargo liftings from Asia to North Europe apparently sliding for the first time in years during the first quarter, according to data collected by UK-based Container Trades Statistics. Consequently, spot freights per TEU fell even faster than bunker prices, dragging core base freight rates down. Lines have »blanked« (skipped) many sailings ex Far East to stabilise freight prices but the rate restoration efforts have only shown modest results. The high slot utilisation levels of 95% that are needed to turn things around in the freight market are still far-off. The East Coast South America (ECSA) trades look pretty distressed, too, with slower demand in the shaken major economies of Brazil and Argentina depressing inbound volumes. Market sources are reporting that the key automotive cargoes on the route from North Europe to ECSA are dwindling while northbound reefer liftings are under pressure due to high stocks of fruit in Europe. The situation in the Asia/ECSA trade does not look much better, with SCFI spot freights pushing up last month only to experience a fast erosion over the following weeks.
By contrast, the transatlantic trade has seen encouraging growth on the back of a strong US dollar and increased import demand in the US which did benefit vessels with intakes up to around 4,000TEU. Also the intra-Asia trades have been quite busy, with carriers launching more than two dozen new services in the region this year and thus absorbing dozens of sub-panamax units up to 3,000TEU.
Under these circumstances, the supply of spot and prompt panamax and post-panamax ships in the charter market continued to build up over the last weeks, with Alphaliner counting a hefty 53 idle units of over 3,000TEU (tramp tonnage without charter and liner-controlled units with service assignment) against only 21 units in the 1,000–3,000TEU classes.
5,500 TEU segment stabilising
In the post-panamax field, rate levels for some smaller designs stopped falling as fixing activity perked up again while others still sustained reductions on last done. Maersk Line is reported to have fixed the 7,241TEU »Anton Schulte« at a low level of 19,000$/day, albeit only for a round voyage of 60–80 days. The 6,622TEU »Cardiff« also had to accept below last done when it extended its employment with Cosco in the Far East/Red Sea trade for another 5–6 months at 20,000$/day with Cosco. Its previous fixture with the same carrier at the start of the year had been concluded at 22,000$/day, brokers said. Meanwhile the 5,500TEU class saw market rates stabilising at around 17,000–17,500$/day while the wide-beam panamax class bucked the trend and achieved a slight improvement, as illustrated by Hansa Shipping’s fixture of its 4,957TEU »HS Everest« to Hong Kong-based TS Lines at 21,600$/day for 4–6 months.
Fixing activity for panamax ships remains fairly high but not high enough to absorb all the vessels redelivering out of transpacific rounds fixed during US West coast congestion crisis earlier this year. Generally, maxi-panamax tonnage of around 5,100TEU continues to perform better than the smaller designs. Latest transactions were concluded at levels in the low to mid 15,000’s $/day with delivery in the Far East. The 5,042TEU »Shanghai Trader« is believed to have agreed 15,500$/day for a 9–12 month period with NYK while Maersk paid the same level for the 5,047TEU »Felixstowe Bridge« for a 4–7 month period. By contrast, baby-panamaxes of 4,200–4,400TEU were forced to make greater concessions to charterers, with rate levels slipping as low as 13,000$/day in some cases.
Atlantic improving strongly
The trend for gearless 3,500TEU and for gearless 2,700/2,800TEU lately has been similar, with market rates levelling off in Asia but still firming up in the Atlantic. Maersk Line, for instance, took the 3,534TEU »Northern Debonair« at an improved 13,750$/day for a short period with delivery in North Europe. Meanwhile the gearless 2,797TEU »Andino« reportedly extended its employment with Maersk in the Mediterranean for 9–12 months also at 13,750$/day – higher than some latest fixtures in Asia. The high-reefer 2,851TEU »Hammonia Antofagasta« achieved 14,500$/day in a 4 months extension with Maersk Line on the route between West Coast South America, East Coast Central America and North Europe.
In the geared 2,500TEU class, rate levels in the Atlantic have now outstripped those in Asia, with the 13,000$/day barrier expected to be breached on the way up shortly. By contrast, in Asia owners have to put up with around 12,000$/day.
The large fleet segment of 1,700/
1,800TEU vessels keeps enjoying a rally, too. Although rates are the highest in Asia with last done of around 10,500$/day for B170 and Wenchong types and 13,000$/day for new optimised designs (SPP 1700), the strongest relative increases have lately been recorded in the Mediterranean. According to brokers, Portline’s fixture of the geared 1,700TEU »Manatee« for 4–5months at 10,000$/day represents a jump of 1,000$ within one week.
Geared 1,100TEUs saw period rates firming up from mid 7,000s $ to 8,000$/day in the Mediterranean while in the Far East the upward trend continued, too, with gearless Dae Sun 1000 types achieving 9,000$/day, up from around 8,500$/day. Worthy of note, the CV1100 »Maren S« (geared 1,118TEU) obtained a strong 9,400$/day from PIL-affiliate Mariana Express Lines for 4–6 months trading between Asia, Guam and other Pacific islands.
In Europe, rate levels for SSW 1000 type ships finally moved up, as evidenced by the 10–12 month period fixed for the 1,036TEU »Nordic Stani« at 7,700$/day with Maersk Line.
Michael Hollmann
