Largest gearless vessels continue to see strong demand while fixing levels for smaller
and midsize ships remain flat. By Michael Hollmann
The peak fixing season for container ships in the second quarter was losing steam earlier than expected during June, with[ds_preview] tonnage availability in the size classes below panamax continuing to expand. By contrast, big gearless vessels with postpanamax dimensions remain in high demand by liner operators. Thus, rates have been drifting further apart, with large tonnage raking in more gains whereas smaller vessels were facing some pressure. The New ConTex, which captures market activity for vessels with intakes between 1,100 and 4,250TEU, even registered a slight 1.0% fall over the past four weeks.
Further improvements of 1,000–2,000 $/day were seen for ships of 8,000TEU and larger, with market talk suggesting that the benchmark for standard 8,500TEU tonnage has progressed to 26,000$/day basis 24 months. Of note, operators were fixing ships for delivery as far ahead as autumn because of the extreme scarcity of spot/prompt ships. Demand for large vessels kept building since late 2018 already in a clear sign that operators are scaling up and consolidating tonnage where possible to contain the impact of higher fuel prices following the switch to 0.5% low sulphur towards the end of the year.
Latest futures prices confirm that the new fuel grades will cost around 200$ more per ton than today’s high sulphur fuel next year. Given the ongoing high levels of enquity, it is widely expected that hire rates for 8,000TEU class ships could rise further and that the seasonal slowdown during summer will hardly impact this segment.
The smaller postpanamax segment of 5,500 to 7,000TEU also recorded moderate gains amid tight availability over the past four weeks. Spot supply was down to just one unit during the first half of June, according to Alphaliner, with rates for 6,500TEU class ships edging up to 19,500$/day in Asia and for 5,900TEU ships to 16,000$/day. This segment also benefited from a recent restructuring of services in the Europe/Central America trade, superseding 2,500–3,500TEU tonnage.
Meanwhile the traditional panamax segment came under increased pressure following another build-up in spot tonnage during the second half of May. As a result, fixing levels dipped below 9,000$ in early June, but not for long. Another spate of fixtures led to a strong reduction in the spot tonnage list, prompting rates to recover to up to mid-9,000’s $/day for short periods in the Far East and South Pacific trades. Some of the activity was linked to replacements of other ships disappearing for scrubber retrofits, hence the fairly short periods.
In the sub-panamax sectors of 2,500–2,800TEU, rates remained steady overall, with popular gearless 2,700TEU designs such as the Aker 2700’s fixing at low $ 9,000’s and geared 2,500TEU types achieving mid/high 8,000’s $/day in Asia and mid 9,000’s $/day in the Atlantic. However, towards the middle of June, brokers noted a slowdown in tonnage demand and a severe increase in tonnage coming open 2–4 weeks ahead. In view of the approaching summer holidays, there was little prospect of staving off the anticipated rise in spot availability. Therefore pressure on charter rates is forecast to intensify over the coming weeks. One exception was the modern fuel-efficient SDARI 2100 type (2,200TEU, geared, »Chittagongmax«) which saw most spot units cleared out following a rash of fixtures, with rate levels leaping by around 10% to mid 12,000’s $/day.
Below 2,000 TEU, the scene remained rather bleak. Tonnage demand was reported to be sporadic and mostly for short flexible periods, with rates for the »workhorse« Wenchong 1700 type (1,740TEU, geared) stagnating at low $ 8,000’s in Asia and mid 9,000’s $/day in the Caribbean. The smaller feeder sectors of 1,000–1,200TEU got under greater pressure, illustrated by reports of a CV1100 (1,118TEU, geared) agreeing a short period at a rate just below the $ 6,000 benchmark in Asia. Equally, the smallest feeders below 1,000TEU were faced with a lull in demand both in the Atlantic and Asia. Fixing activity was still relatively strong in the Mediterranean although the influx of ballasting or positioning tonnage kept rate levels in check, brokers said.
Michael Hollmann
