Tramp container ships are facing the toughest conditions since the world financial crisis. Rates seem to be bottoming out or below opex levels for bigger vessels and a large backlog of unemployed tonnage must be cleared out before they can pick up again.
The year 2015 started with high hopes but ends in despair for the tramp/non-operating container ship community. With[ds_preview] tonnage of all sizes today getting fixed at levels anywhere between 5,000 and 8,000$/day for periods with maximum flexibility, most will feel like they have been taken on a trip back into 2009. The major drivers of the charter market collapse over the last months are all familiar by now: lacklustre global cargo growth in the very low single digits, rapid deliveries of ultra large newbuildings to the trading fleet and only modest growth expectations for transport demand going forward.
Over the past month, the fall in charter market rates continued across all size classes as the idle container ship fleet (unemployed tramp plus liner tonnage without service assignment) grew and grew, finally surpassing the 1 million TEU barrier and still expanding. The ConTex is down 12% month on month as this issue of Hansa goes to press and thus by the same margin as in the previous four-week period. However, the rate of decline slowed down during November with a week-on-week fall in market levels of only 1.6% during calender week 47. Even so no one on the owners’ side can really breathe a sigh of relief given the paltry fixing levels they have to put up with, provided they find any employment opportunities at all. By and large, charter rates are now slightly lower (-4.0%) than one year ago but with huge variations across size classes and types. While the geared feeder and midsize container ships up to 1,700/1,800TEU are still earning a bit more in today’s spot market, rates for bigger gearless vessels have slumped far below last year’s levels – almost 40% in the case of baby panamax vessels as borne out by the ConTex panel’s 12 month period assessment for 4,250TEU ships.
The post-panamax classes continued to suffer under a complete lack of chartering requirements, with liner operators focusing on cancelling sailings and cutting back service loops on routes that larger vessels typically cater for. The complete relapse of freight rates during November following some hopeful gains at the start of the month rules out capacity increases and additions of charter ships for most operators. »Operators are understandably shedding chartered-in tonnage as soon as they can or only extending at rock-bottom rates«, as one broker pointed out. And the dilemma is not only confined to the major Far East westbound and Far East eastbound routes but also affecting other large north/south trades, that employ significant numbers of chartered-in tramp ships. Market conditions in the Asia-East Coast South America trade have worsened beyond belief, with 40 foot containers getting booked at pocket-money-levels of 50$ from China to Brazil, only providing a small contribution to bunker expenses on the trip. The little activity there was in the larger classes included fixtures of 8,400TEU tonnage at 8,000$/day (»Northern Jubilee«) by Hapag-Lloyd and of 6,700TEU at 7,500$/day by Maersk, both in the Far East. However, as spot availability of post-panamax ships is chiefly concentrated in the east, ships giving delivery in the Atlantic can still obtain firmer levels as illustrated by K Line’s fixture of the 5,750TEU »E.R. Los Angeles« for a transatlantic roundtrip at a reported 9,500$/day.
The panamax sector did see more activity than the post-panamax sector, with a few ships getting fixed every week. Hire rates for both baby-panamax and panamax-max tonnage were hovering at around 6,000 to 6,700$/day as the month drew to a close after charterers had already been able to secure vessels at rates below 6,000$/day in some previous charter transactions.
Michael Hollmann
