Tonnage demand from liner operators remains anaemic and spot supply of tramp ships too high for hire rates to pick up. Only the feeder and shortsea markets west of Suez show some improvements.
While the liner shipping scene is buzzing with news and gossip about alliance regroupings (Ocean Alliance) and more liner mergers[ds_preview] (Hapag-Lloyd/UASC), developments in the container ship charter market have been the complete opposite: uneventful, uninspiring, boring. Those who had hoped that a spring rally would kick in with some delay were badly disappointed.
Although brokers reported some increase in fixing activity lately after a sluggish spell during March, demand continued to fall far short of what was needed to absorb meaningful amounts of spot tonnage. Given the persistent abundance of charter-free vessels in basically all segments above 2,000 TEU, it comes as little surprise that charter market rates remained virtually flat over the past four weeks, with the Hamburg ConTex only registering a marginal 1.0% increase. Rate levels for large gearless units have been under relentless pressure and have even slipped further (panamax) while the sub-panamax and feeder classes maintained their levels. The only areas exhibiting a firmer trend were the feeder ship markets on the continent, in the Mediterranean and the Caribbean.
Globally, the container ship market remains totally oversupplied as illustrated by the latest idle ship count by data analyst Alphaliner. It showed a stable level of 325 vessels or almost 1.5mill. TEU in idle fleet capacity (charter-free tramp + liner tonnage without service assignment) worldwide in early April. In view of continual newbuilding deliveries on the one hand and meagre cargo growth (estimated at around +1% during Q1 by leading freight forwarders Kuehne + Nagel and Panalpina) on the other hand, the chance that slack capacity in the world fleet can be significantly reduced this year is very slim.
More than 150 tramp-owned ships with slot intakes in excess of 4,000 TEU were believed to be chasing for employment off spot or nearby prompt positions in mid-April, according to one estimate. Most of the vessels are concentrated in Asia, and with such a choice of tonnage charterers were in a position to push rates even further down. Latest reports say that alliance partner Maersk and MSC each took ships of around 6,500-7,000 TEU for longer periods at only around 6,000$ per day while fixing levels in the panamax segment – still the worst affected sector with more than 50 spot/prompt units – dropped as low as 5,000$ per day for some units. With the pending inauguration of the new enlarged Panama Canal locks, there is a real threat that the backlog of unfixed panamax tonnage will grow even longer this summer as operators redeliver more units to their owners and upgrade services to today’s post-panamax size.
Premium rates for Atlantic delivery
Rate levels for geared and gearless vessels between 3,500 and 2,000 TEU have been more or less stable, holding up at around 6,000$ or a bit higher. Conditions west of Suez are somewhat firmer than in Asia due to a more balanced tonnage situation. Supply of charter vessels in the Atlantic always tends to be lower than in Asia which is the traditional delivery point for charter vessels due to the dominance of export flows from that region. However, comments by brokers suggest that there has also been quite an increase in charter demand in the Mediterranean and the Atlantic which contributed to the tighter tonnage situation. »It’s remarkable how the share of fixtures with delivery in the Atlantic has totally outstripped those with delivery in the east in certain segments (3,000-3,700 TEU, geared 2,500 TEU),« commented Ernst Russ Shipbroker.
The regional differences in market rates have become quite steep especially for B170 geared 1,700 TEU vessels (Mediterranean versus Asia), in the feeder ships classes of 1,000-1,300 TEU and also for the smallest types below 1,000 TEU. Premiums for Atlantic delivery versus Far East can exceed 1,500$ for the same vessel type.
London-based owner Lomar raised eyebrows when it was able to achieve a peak rate of 9,250$ per day for its latest generation geared 1,100 TEU vessels for 12 months trading in the Caribbean. The Mediterranean has become very tight on tonnage, too, with rates for both gearless and geared 1,100/1,200 TEU vessels reportedly pushing above 8,000$ per day while German-built 800-900 TEU units even obtained 9,000$ per day, reports said. Strong levels could also be maintained in the north continent market where gearless ice-classed 1,000 TEU units saw improved rates of more than 8,000€ per day lately. Some smaller gearless 800 TEU ships (CV 800) achieved a very respectable 6,900€ per day in six month periods with MSC affiliate WEC Lines.
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