Liner operators kept adding larger charter ships to their fleet at a rapid pace. Their service capacities are trending back to pre-Covid levels now.
The container vessel charter market is working its way out of the doldrums perhaps faster than expected. While the classic[ds_preview] post-panamax segments had already seen some positive momentum back in June, the firmer trend grew broader during July, filtering through to the sub-5,000 TEU classes.
This is borne out by an almost 6.0% increase in the New ConTex since end of June. The rate barometer for the feeder-to-panamax sectors posted rising consecutive gains over the past weeks, driven mainly by improving fixtures of 4,250 TEU baby-panamax vessels. These saw average hire rates for 6-12 month durations in Asia pick up from low/flat 7,000’s $/day to around 9,000 $/day as tonnage availability tightened.
According to Alphaliner, the number of spot vessels was more than halved to just 12 units worldwide between mid-June and mid-July. Tonnage demand for transpacific and intra-Asia deployments appeared to be the major drivers of activity in the panamax sector, complemented by requirements for a new Asia-Africa service by CMA CGM.
Activity remained very strong
Further up, in the post-panamax classes, chartering activity has remained very strong as well. Although the 8,500 TEU class did not produce any fresh fixtures due to non-availability of ships, London broker Clarksons Platou lifted its period assessment for this type by around 19% to 19,000 $/day. Lack of spot/prompt supply in this segment saw liner operators shifting their focus to the 6,500/7,000 TEU class, with activity culminating in a dozen fixtures for ships of this size on a weekly basis in mid-July.
Rate levels quickly picked up from around 10,000 to 13,000-14,000 $/day for 6,000-6,500 TEU types as spot supply dwindled to just »a handful of units«, as one major broker explained. Maersk and MSC were among the most active charterers. »The upward trend is obvious now. There are more uncovered requirements out there, therefore we expect the positive momentum to carry on for a while,« another market source pointed out.
Notable fixtures included an outright 12 month period at 13,500 $/day for the Samsung 6000 type »NYK Libra« (6,178 TEU, built 2020) for Far East delivery with MSC. Further, US owner Seamax Capital managed to conclude a 12 month period at 16,000 $/day with SCI for its Hyundai 7500 type »Seamax Norwalk« (7,455 TEU, built 2005). Maersk Line took several vessels including the 7,240 TEU »Anton Schulte« (built 2009) for 2-3 months at 16,250 $/day for delivery in the Mediterranean.
The increased tonnage demand from liner operators suggests that cargo volumes continued to recover over the past weeks and that the near-term expectations are quite upbeat. The global idle container ship fleet is reported to have shrunk from 2.61 mill. TEU (11.2% of world fleet capacity) to 1.84 mill. TEU (7.9%) within a month. So far, the reactivation of capacity appears to be in line with demand recovery, otherwise container freight rates would have weened. However, the Shanghai Containerized Freight Index (SCFI) even went up by nearly 5% to an average of 1,035 $/TEU between mid-June and mid-July.
The increases are mainly driven by rate hikes in the transpacific eastbound (Far East/North America) trade where cargo volumes are currently recovering faster than expected due to inventory rebuilding. Latest data from Danish research firm Sea-Intelligence shows that liner carriers have restored most of the capacity which they had »blanked« in the east/west trades due to Covid-19.
Capacity adjustments work
Average weekly sailing capacity over the next 12 weeks is down by just -3% year-on-year in the Asia-Europe and the transatlantic trades, it reported. However, for transpacific eastbound sailings, liner capacity will even be 7.2% higher over the coming weeks than it was during the same time last year, according to Sea-Intelligence. The capacity reinstatements have had only very limited effects on the smaller container ship classes below 2,000 TEU, though. The tonnage oversupply in the charter market could not be reduced enough for charter rates to pick up significantly. Generally, brokers are reporting major imbalances between the Pacific and the Atlantic.
While market conditions in Europa and the Mediterranean continue to be subdued with lots of idle ships, typhoons and port congestion in the Far East are creating plenty of short-term demand for feeder ships there. Even so, market rate increases for vessels in Asia have been modest, with standard Wenchong 1700 types (1,740 TEU, geared) fixing at just above 6,000 $/day and modern economic Bangkokmax types with similar TEU intArne Kühnes (Topaz 1700 etc.) at high $8,000’s – up by 500-1,000 $/day from the lows of June.
Michael Hollmann
