Container ship charter rates stabilising, led by a rebound in fixing of large vessels. Trade growth maintained. By Michael Hollmann
July/August has never been an exciting period in container ship chartering as staff thins out due to summer holidays[ds_preview]. Over the years, rate levels often weakened considerably between mid-June and early August. This year conditions have been more stable so far: The New ConTex, that covers the charter market for the most liquid segments from handy to panamax, is down by less than 2.0 % over the past four weeks and even remained steady during the 29th calendar week. In our previous issue, the ConTex was showing a more significant decline of 4.7%. The more benign trend coincided with a slight drop in overall idle container ships capacity down to circa 515,500 TEU (2.5 % of global TEU capacity), as per Alphaliner’s latest idle count. There have been further improvements in the very large gearless sector which had seen rates beaten down to around 10,000 $/day in June. The bargain levels that were suddenly available saw various operators return to the market and snap up ships, causing another tightening in tonnage supply and pushing rates up again by several thousand dollars. Two Greek-owned 10,000 TEU units (»Asklipios« and »Aristomenis«) lifted the benchmark in this sector to 18,500 $/day in flexible periods up to one year with Zim – 4,000 $ higher than what a sister ship achieved in June. The 8,500TEU segments also recorded an increase, with the fixture of the 2011-built 8,586 TEU »Gulf Bridge« at 14,500 $/day to Maersk for 2–6 months period in the trade between Asia and West Coast Central America. According to Alphaliner, only three units were available for charter in the 7,500–10,000 TEU segment at short notice by the middle of July, so expectations of further rises in charter rates in the next round of fixtures seem reasonable.
The traditional »post-panamax« sector of 5,300-7,500 TEU recorded a steady flow of period fixtures, with spot availability down to three units as well, according to Alphaliner. Tramp owners proved unable to secure meaningful rate improvements, with vessels fixing in a range between 9,500$/day to 14,500 $/day for the very modern designs of circa 7,000TEU capacity.
Trade growth on the large headhaul east-west routes (Far East, transpacific, transatlantic) continues to be quite vibrant at low-to-mid or mid-to-upper single-digit percentage growth in the first five months, based on latest available figures. It’s not like in the old days of the early mid-2000’s but respectable nonetheless. According to the RWI-ISL container handling index, the growth momentum carried over into June while some big ocean freight forwards (K+N, Panalpina) estimated the growth in global loaded container traffic all over at +4% during the first half. One might therefore conclude that charter tonnage demand from the liner operators should remain strong at least in the short run until the cargo low season kicks in in the fourth quarter. However, carriers continue to take delivery of ultra-large newbuildings which satisfy some of their growth requirements. Also, the benefits of consolidation following the ramp-up of the new liner alliance networks is likely to unleash greater slot efficiencies.
Meanwhile, the market segments from panamax down to feeder class, continue to show mixed fortunes. The key facts are that panamax hire rates remain desperately low after breaching through the 7,000 $ per day-barrier on the way down, with over 30 baby panamax units (4,250 TEU) in spot position or prompt two weeks forward only in Asia. 3,500 TEU class and gearless 2,700 TEU, by contrast, keep enjoying good demand, allowing them to maintain rates at circa 8,000 and up to 9,000 $/day in Asia. 1,700 TEU-type vessels see stable rate levels between high 6,000’s and mid 7,000’s $/day for standard designs.
The feeder vessel sectors below 1,200TEU continue to show a patchy performance, with rate levels between mid 4,000’s $/day for 700TEU ships and up to 9,000$ for advanced 1,100TEU designs in the Caribbean. Fixing activity keeps taking place, but at muted levels, and the key challenge for owners is secure cover and to avoid idle times that drag average earnings down.
Fleet utilisation did improve a bit but that is nothing to write home about, as close to 60 units under 1,000TEU remain idle worldwide. The challenge for owners is to find the right trade for their ships, as Alphaliner pointed out.
Michael Hollmann
