Demand for charter container ships begins to ease off a bit, with market rates eroding in a number of segments. Concerns growing, that box freight slump will dampen appetite for tonnage.
The upswing in the container ship charter market has hit a snag. Following robust gains over the previous months, charter[ds_preview] rates started to regress over the past weeks. The Hamburg ConTex with rate assessments for classes from 1,100 to 4,250TEU is back to where it was four weeks ago and weekly losses seemed to become larger. Especially sub-panamax vessels (2,500 to 2,800TEU) (both geared and gearless) are struggling to maintain last done rates as the number of spot/prompt ships in Asia goes up. Demand in the Atlantic also steadied a bit following the recent boom in enquiry linked to the introduction of new transatlantic services.
The post-panamax and panamax classes have recently experienced a slightly firmer rate trend, after a lot of spot and prompt units were hoovered up by carriers. Maersk reportedly fixed the last remaining 9,000–10,000TEU newbuildings (seven in total) that were left without charter cover for forward delivery from autumn 2015 into 2016 at 38,500$ per day for five year periods, while Japan’s K Line entered the spot market with a more urgent requirement, fixing the 8,400TEU »Northern Jamboree« at a reported 37,000$/day for six months trading on the Asia-Mediterranean route. At the start of June United Arab Shipping Co. was reported to have extended the »Agios Dimitrios« (Hanjin 6500) for another 12 months at a firm 20,000$/day. Other subsequent fixtures in the 6,500–7,000TEU segment tended to be concluded at steady levels between 16,000$/day and upper 17,000s $, depending on position, trade and charterer. Market opinion is clearly split as to which direction rates will be taking in the post-panamax segment. Some service realignments in the Asia–Mediterranean trade, as illustrated by the downsizing of a 2M service from super-post-panamaxes to 6,500TEU post-panamaxes due to lack of Black Sea volumes, could play in the hands of tramp owners. On the other hand, employment opportunities on a number of secondary east/west and north/south trades may begin to dwindle if the slump in freight rates continues. Much has been written about the relentless decline of spot freights on the Far East/North Europe route. But the Far East/East Coast South America and the Far East/Middle East trades, which are still important for post-panamax ships, are under massive pressure, too. Spot freights on these routes are stuck below cost-efficient levels, as the Shanghai Containerized Freight Index (SCFI) shows, and the spectre of capacity cuts is looming ever larger.
In the panamax segment, fixing activity gained momentum again, following a spate of redeliveries of ships fixed for short-term business during the first quarter. Maersk pushed ahead with its chartering programme for wide-beam (over-)panamax ships and fixed the Oaktree-owned 5,370TEU »Wide Alpha« at a firm level of 21,700$/day for two years. Availability of the largest panamax units (panamax-max) became very thin again following a recovery in tonnage demand and rates were seen ticking up again to around 15,750$/day. This was the level at which ships like the 5,044TEU »Serena P« or the 5,042TEU »Sydney Trader« fixed short and medium term durations with Hapag-Lloyd (in the Atlantic), respectively CMA CGM in Asia.
The baby-panamax class (4,200/4,300TEU) enjoyed good enquiry too, with rates stable at mid 13,000’s to 14,000$/day. Some brokers reported that a number of charterers’ requirements have yet to be covered in this size class so the near-term outlook should be steady to firm.
Sub-panamax market
running out of steam
The market segment between 2,000 and 3,000TEU has come off the boil after spectacular rises during April and May as demand in Asia cooled down, leaving more ships in spot or very prompt positions. One Hamburg broker advised its principals in the middle of June that seven gearless 2,700/2,800TEU and nine geared 2,500TEU units were coming open in the Asia-Pacific region within 14 days. The bigger gearless designs were seen fixing at slightly lower levels between 12,000 and 13,000$/day in Asia while positions in the Atlantic/Mediterranean continued to attract juicy premius, as illustrated by Hapag-Lloyd’s fixture of the 2,732TEU »Meta«for very short period in the Mediterranean at 13,750$/day. Geared 2,500 TEUs saw market rates edging sideways. Various standard ships in this class were reported to have fixed short periods at around 12,000$/day in the Far East while in the Atlantic the same type could achieve 13,000–13,500$/day due to scarcity of tonnage.
Activity in the segments below 2,000TEU was characterised by continued high demand for 1,700/1,800TEU vessels and stronger enquiry for smallest feeder classes below 1,000TEU. Of note, the geared 1,700TEU type was the only one of all Contex-type vessels still achieving slight gains. In Asia, charterers were paying very close to 12,000$/day for shorter periods. Bengal Tiger Line reportedly extended 1,740TEU »Hansa Nordburg« at 11,950$/day for three to four months while in the Med the geared 1,740TEU »EM Spetses« secured 10–12 months period cover at 10,700$/day.
Rates for geared 1,100TEU units in Asia firmed up by a few hundred dollars to 8,750$/day with the fixture of the »Helmut Rambow« for two to four months to Seaconsortium but some market participants expressed doubts whether further increases could be obtained. There were anecdotal reports of fixing and failing in this size class in the Far East and fresh requirements for tonnage were slow to emerge, brokers said.
Michael Hollmann
