The trend in the container ship charter market has not turned after the summer break. Tramp owners are faced with dwindling employment opportunities as the winter low season approaches.
It is becoming more and more challenging for owners to prevent gaps in charter employment for their vessels, with the[ds_preview] number of ships in spot position climbing especially in the larger gearless classes above 3,000TEU. The summer period was already sobering and events since mid-August did little to lift spirits among tramp owners. The rebound in period market rates for cellular tonnage which many had hoped for did not materialise. Although chartering brokers recorded a return to higher fixing volumes in terms of reported transactions, daily hire rates have remained under pressure nonetheless. On a month-on-month basis, the New ConTex for the 1,100–4,250TEU charter segment dropped by 4.9% between 18 August and 17 September. This is a little less than in the previous four-week period, when the market fell by 7.5%, but definitely no reason to cheer. The most difficult period of the fourth quarter is still ahead beginning with China’s Golden Week national holiday and the associated large-scale closure of factories and drop in export shipping activity. Major charterers like the G6-operators are apparently more concerned with curbing capacity than hiring more vessels which comes as no surprise given the dire state of the box freight market. Latest idle fleet statistics from Alphaliner have revealed a sharp rise of unemployed container tonnage. It said that the share of idle ships (both charter-free tramp and laid-up liner-controlled tonnage) increased to 3% – by 100,000TEU to 580,000TEU in total (end of August – early September). »A weak peak season has deterred carriers from adding new loops since August while service withdrawals are picking up pace,« it explained. A further rise and additional pressure on the charter market are to be expected.
Looking at the ConTex assessments, it is evident that the spread of losses among the various size classes has somewhat narrowed. Monthly declines in the 12- and 24-month average period rates were in a relatively tight range of 3.1% to 7.8% (mostly between 4% and 6%) whereas during August losses per class and period type ranged from 3.6% to 11.5%. Reassuringly for owners the pace of decline has slowed down for the 2,500–2,800 TEU sub-panamax type vessels which had had their period assessments adjusted down by double-digit levels during August.
No enquiry for large and gearless
The post-panamax charter segment is still affected the hardest by the market slowdown as borne out by a complete lack of fixtures except some continuation business at poor levels. The few reported transactions date back to late August/early September and include Pacific International Line’s extension for 3–5 months of the 6,588TEU »HS Rome« at 15,000$/day in the Far East/US West Coast trade and Maersk’s fixture of the 6,969TEU »RDO Concert« at 13,500$/day for 40–100 days trading between the Mediterranean and the US West Coast. It is no surprise that the little business on very large charter vessels is linked to the North America trades given the relative (though somewhat diminishing) strength of the US economy and continued import TEU volumes.
A new direction has meanwhile been established in the panamax segment which earlier this year beat all expectations and served as a driving force for the entire market. Unfortunately for owners, the trend is now showing steadily downwards, with the ConTex 12 month period assessement for the bellweather 4,250TEU baby panamax type down by 5.2% since the end of August. This represents a faster deterioration for this sub-category than in the previous month. Some 16 panamax dimension tramp units are estimated to be in spot position seeking fresh or extended charter cover – a competitive scenario which charterers naturally exploit to press market rates down. Rumours say that one baby panamax may have accepted a level as low as 10,000$ per day for a flexible period while others were still obtaining low 12,000 $. It is important to point out, though, market conditions continue to differ significantly between Atlantic and Pacific, with ships able to give delivery in Europe commanding quite a premium due to scarce tonnage availability of large gearless units in this region. Despite the latest falls, average hire rates for the 4,250TEU type are still some 34% higher (12-month period basis) than this time last year.
Respite for sub-panamax ships
The situation in the sub-panamax segment remains difficult for owners, too. However, there were signs of stabilisation towards the middle of September as fixing activity for gearless and geared 2,500–2,800TEU units picked up. »This segment has been one of the most active,« commented one Hamburg broker. Higher-spec gearless 2,700/2,800TEU saw charters return to mid-9,000$-levels after dipping a little lower. KMTC reportedly paid 9,400$/day for a 5–7 month duration counting from October on the Mipo 2800 (2,824 TEU) »Delos Wave« for its Korea/China/Indonesia service and CMA CGM was reported as extending the 2,824TEU »Valerie Schulte« at 9,500 US$/day for six–eleven months for Persian Gulf trading. Charter rates for geared 2,500 TEU units seem to have steadied at 8,700–8,800$/day, with a slight uptick on last done in the Mediterranean on a vessel hired Messina Line.
But some brokers have voiced concerns about growing redeliveries of tonnage in this segment in the continent/Mediterranean area over the coming weeks which may lead to increased pressure again. The very liquid 1,000–2,000TEU segment has had to give in as well, as illustrated by weakening levels for Wenchong and B170 types inAsia and also for modern eco tonnage. Geared 1,700 TEU ships were fixing at high 8,000’s $ to low 9,000’s $ in the east when this issue of Hansa went to press. A young fuel-efficient unit (1,700TEU »Nordcheetah«) was concluded for a 4–6 month extension by TS Lines at 10,750$/day – down from market rates around 12,000$/day one month earlier. Apart from the general deterioration in supply/demand in this charter vessel segment, the sustained weakness in fuel prices (and reduced cost advantage) has translated into a reduced »eco« premium for these ships. The was also echoed by developments in the smaller class of 1,000TEU where the popular Daesun 1,050TEU type design was seen fixing at 8,500$ per day – 1,000$ less than last done, according to London broker Howe Robinson.
Michael Hollmann
