Shipping markets are enduring heavy falls in the run-up to Chinese New Year, with only container shipping showing a fairly robust performance both on the cargo/liner side and in vessel chartering.
The New ConTex has only suffered a modest 2.3% decline in the period between end of December and Chinese New[ds_preview] Year on 25 January. Fixing levels are more or less stable except small reductions mainly in the handy and feeder classes below 3,000TEU. Tonnage availability in the charter market continues to be tight and dropped even a little further at the start of the year based on Alphaliner figures. The data showed that just 45 non-operator owned (»tramp«) vessels – all smaller than 3,000TEU – were in spot position in early January, totalling just under 66,000TEU of capacity. »The charter market for vessels above 3,000TEU is sold out,« Hamburg chartering broker Blue Net said in a research note.
More ships idled
The main driver for the shortage of capacity continues to be »time out of service« for scrubber installations. Ships with an aggreate capacity of around 1.04mill. TEU were undergoing retrofits or waiting for yard slots in early January, approaching 5.0% of global capacity. In addition, more liner-operated ships were temporarily idled due to blank sailings amid the winter low season. It caused the overall idle fleet (liner + tramp, chartered + unemployed) to 1.4mill. TEU or 6.1% of world fleet capacity as per 6 January.
Within the tight supply limits posed by the idle fleet, chartering activity was maintained at reasonable levels throughout most of January. Several brokers stated that albeit fixing volumes were not overwhelming, the market had seen much worse during the low season between Christmas and Chinese New Year.
Anecdotal reports suggest that forward enquiry for classic post-panamax vessels includig modern wide-beam tonnage (min. 37m breadth) for delivery post-Chinese New Year started to swell already. This was borne out by the fact that despite zero spot availability, a couple of post-panamax fixtures features already featured in broker reports early in the year.
The reported rates point to a stable market. The 8,241TEU »YM Utopia« is reported to be joining West Africa specialist NileDutch for two years at 28,000 $/ day, and the 8,586TEU »Mediterranean Bridge« got chartered by CMA CGM for twelve months at 29,750$/d.
The latter transaction is linked to a scrubber installation, fuelling speculation that there might be a further gain-share agreement in place on top of the headline charter rate. Further down the line, the 6,402TEU »Dimitra C« was fixed and failed by Zim at 25,000$/d, with a period employment believed to be under negotiation with Hapag-Lloyd now.
Following a (more than) doubling in rate levels for post-panamaxes throughout 2019, the outlook for this year is considered to be strong as well. Brokers are citing a slowdown in newbuilding deliveries in the 5,500-11,000TEU sectors and the ongoing drawdown of large tonnage for scrubber retrofits during the first half of the year as support factors.
Panamax chartering activity was fairly brisk during January as one operator after the other brought fresh requirements to the market, partly aimed at replacing ships berthed in shipyards for scrubber installations. Panamaxes are also filling in for larger post-panamaxes, with a growing number of »tandem« sailings, meaning two panamaxes replacing one post-panamax sailing.
While standard panamaxes continued to be fixed at stable levels in the mid-13,000’s–14,000$/d, mainly for very short periods, a growing number of scrubber-fitted units obtained significantly higher rates and for much longer periods. The most active charterer was MSC, which reportedly fixed the private-equity-owned 5,044TEU »MP the Belichik« at 19,000 $/d for minimum 2.5 years and the 4,363TEU »Mattina« at 17,000$/d for 24 months.
Rates down for sub-panamaxes
Trading in the sub-panamax segments was more muted, with mainly short requirements getting fixed for gearless 2,700/2,800TEU and for geared 2,500TEU ships. The latter suffered under a build-up of spot positions especially in the Atlantic where rate levels consequently slipped towards 9,000 $/d except for high-reefer units. Gearless sub-panamaxes saw rates deteriorating slightly towards the low $ 10,000’s.
The feeder segments below 2,000TEU provided a reasonable flow of fixtures but only for short employments in Asia, and business was not enough to prevent rates for 1,700TEU vessels from edging slightly lower. For the smallest feeders of 1,100TEU and less, brokers reported relatively steady conditions in the Med and in Asia, with rates moving sideways.
However, the continent/North Europe market appeared heavily overtonnaged. More than a dozen ships were in lay-up or spot position in mid-January and plenty of redeliveries coming up. Pressure on rates intensified as illustrated by the reported extension of the 1,084TEU »Sonderburg« by Unifeeder at 6000€/d for 2-4 weeks Baltic trading – down from 6,350€/d with the same charterer in mid-December.
Michael Hollmann
