Hire rates for smaller boxships picking up again after months of sustained pressure. Fortunes for smaller tonnage in the dry cargo trade improving, too. By Michael Hollmann
The weeks following Chinese New Year in early Febuary have seen mixed blessings, with only very large gearless tramp container[ds_preview] ships initially benfiting from a resurrection of tonnage demand and climbing rate levels. During March, the market finally began to brighten up also for the feeder and handy classes below 3,000TEU. The improvements are mirrored by the New ConTex (capturing 1,100-4,250TEU type vessels) which posted its first modest month-on-month gain (+1.0%) during the last four weeks since our July issue last year. Growing levels of tonnage availability made sure that pressure on rates was maintained for more than half a year. However, in early/mid March chartering activity for smaller vessels started to surge across Asia and the Far East as well as the Mediterranean.
7,600 $ per day for 1,740 TEU
The result was a sharp fall in spot/prompt vessels – by as much as 50% in some segments such as 2,700/2,800TEU gearless and 500-800TEU – and a stabilisation in charter rates. Some classes are now seeing a tentative firmer trend in fixing levels as borne out by the New ConTex: The geared 1,700TEU type saw its 12-month period assessment lifted from 7,389 to 7,695$/day between 26 Febuary and 21 March, the index rate for 6 month durations rose from 7,163 to 7,430$/day.
At the time of writing there are growing reports of fixtures of standard geared 1,700TEU ship at mid/upper $ 7,000’s compared to flat 7,000$/day during the previous weeks. Hanseatic Unity reportedly fixed the »Hansa Freyburg« (1,740TEU geared, built 2003) to CMA CGM Group at 7,600$/day for 9-12 months, it also extended the »Hansa Coburg« (2007) for 5-7 months with the same charterer for the Australia/New Zealand trade, brokers said. The first designs to witness fresh demand were modern economic and Bangkok-max types at levels from mid $ 10,000’s to mid $ 11,000’s but supply has almost dried up, prompting more Asian operators to consider standard vessels again.
»The general sentiment is definitely more positive as spot ships get scarcer or disappear completely«, noted one broker. Another one stated, »owners have regained their confidence, they are able to command premiums on last done again.«
There is also more optimism among owners active in the 2,500-2,800TEU sub-panamax sectors where spot tonnage supply started diminishing fast during the first half of March on the back of increased fixing. Demand in Asia was pivotal in bringing down overall spot availability although interest also picked up in the Med (g`less and geared) and in the Caribbean. Rate levels in Asia and the Atlantic continued to show quite an imbalance, with the latter providing significant premiums: 800$ and more for gearless 2,800TEU and 500-1,500$ for geared 2,500TEU vessels.
Hope for cascading
Perhaps the most active player in the 2,500TEU segment was Maersk with a rumoured package deal for period extensions of six vessels plus further fixtures in the Mediterranean and the US Gulf. Still, the rate improvements in the sub-panamax arena look pretty marginal so far, with the 12-month period assessments of the ConTex broker panel only up a smidge for geared 2,500 and gearless 2,700TEU designs at 9,157$/day and 8,804$/day as per 21 March.
Owners will be keenly watching events in the traditional post-panamax sector above 5,500TEU hoping that the sustained upward momentum will finally filter down to the smaller sizes. With the supply of standard 8,500TEU ships drying out, rate levels rose by another 3,000$ to circa 22,000$/day last done, but that figure may already have been outstripped by a couple thousand dollars as this copy of HANSA lands on your desk, brokers predict. With the shortage of very large gearless vessels tightening, it was the next-smaller post-panamax types of 6,000-6,500TEU that suddenly found themselves at the centre of attention. Increased activity saw period rates nudging up by a few thousand dollars both east and west of Suez. The latest available benchmarks are the extension of the 6,039TEU »Long Beach Trader« (built 2007) at 13,750$/day for 5 months with KMTC in Asia and the extension of the 5,762TEU »E. R. Seoul« (built 2000) at 15,000$/day for around one year trading between the US Gulf and the East Coast of South America for Hapag-Lloyd.
Positive outlook with caution
The positive trend is widely expected to continue over the coming months, with the second quarter usually the most active in the boxship charter market. However, some caution may be prudent given the latest wobbles in the liner freight markets. Cargo volumes have not recovered as expected since Chinese New Year, even increased blanked sailings in the Far East could not save box spot rates from steep falls over the past weeks (see »compass« side bar). Port throughput and cargo data for February are not yet available, though. For the time being, the consensus remains that global container trade growth is heading for +4% or more this year.
Bulker spot market divided
The dry cargo market continues to go through a difficult period, with the capesize segment suffering badly from a lack of iron ore spot business ex Brazil while the panamax and geared bulker types have enjoyed a bit of a recovery.
The Baltic Dry Index achieved a 10% increase over the past four weeks, spurred mainly by rising activity in panamax chartering. Brokers pointed to two areas of strength in the market. First of all the East Coast of South America where the grain export season gets underway with 82,000 dwt kamsarmaxes now achieving 15,300$ plus 530,000$ ballast bonus for trips to the far East and over 16,000$/d for trips to Europe, both for mid/end of April dates. Secondly, there has been a reported increase in coal liftings from Indonesia to India in the first months of the year, benefiting both panamaxes and supramaxes (52,000-58,000 dwt).
Handysize: Substantial gains
The handyisze market recorded substantial gains across Asia and on the East Coast of South America, with the 6 route-time charter average for the 28,000 dwt type increasing by almost 30% to over 6,600$/d. Bigger modern 38,000 dwt vessels are netting almost 8,600$/d on average in time charter trip business. Business from ECSA to the continent or Mediterranean improved to high $ 9,000’s/mid $ 10,000’s by the middle of March. East of Suez, activity was the strongest in southeast Asia and Australia with a steady flow of all kinds of cargoes from minerals, salt, sugar to alumina. The positive sentiment in this segment is also mirrored by the period market, with short/medium durations concluded at levels way above 9,000$/d with delivery in the Atlantic.
Michael Hollmann
