Idle fleet capacity shrinks following tonnage scrapping and fresh charter requirements. Rate levels for smaller vessels holding above OPEX despite marginal falls.
November usually never brings an awful lot of good news for the charter market. With the onset of the cargo[ds_preview] low season in most trades, chartering activity tends to go into hibernation causing further increases to unemployed tramp tonnage until around Chinese New Year. Given the profound structural distress in the market this year, it comes as even more of surprise that the latest idle fleet count by Alphaliner shows the first decline in idle ship capacity for several months. The volume is reported to have dropped from 1.59mill. TEU or 397 vessels to 1.49mill. TEU or 363 vessels between end of October and middle of November. Increased demolition activity and some increase in chartering activity – partly for vessels previously operated by now-defunct Hanjin – were seen as driving factors for the decline. Demolition sales picked up further during November with more than 90,000TEU of cellular and TEU-capable capacity estimated to have been sent to the torch in the first three weeks.
Of course, 1.49mill. TEU of unutilized vessel capacity is still a near-record level, but some experts believe the figure is about to drop once more very soon as a string of nine 13,100TEU neo-panamax vessels, owned by German-led bank consortia, should be on the move out of the idle pool. Six of the vessels, which used to be chartered to Hanjin along with purchase obligations, have already been fixed to Maersk Line, the other three to MSC, brokers said, with rate levels rumoured to be over 40,000$/day. However, most of them have not been delivered to their new operators, yet. It remains to be seen if they get deployed straight away in a 2M transpacific or other east west service (or Asia/Africa?) in which case they will drop out of the idle count immediately. Another factor contributing to the drop in surplus tonnage was an increase in chartering activity for sub-panamax vessels between 2,000 and 3,000TEU which saw the number of unemployed tramp vessels in this size range drop from 46 to 29 units, according to Alphaliner. The most active charterer in this sector was Maersk which fixed or extended around 15 geared 2,500TEU units in the Atlantic and the Pacific, broker reports showed. One chartering manager of a German container ship owner expressed optimism that rates for this type have found a floor at around 5,500$/day and may actually edge up if the tightness in availability of open units in Asia intensifies a little more. »We are close to the point where charterers realize they cannot cover any requirement with the ideal vessel anymore,« the manager said.
The gearless 2,700–2,800TEU segment also inspires a bit of optimism as the list of spot vessels contracted to four ships. Somewhat paradoxically, charter market rates for this type have kept steady at around 6,000 $ despite the fall in availability so it remains to be seen whether owners can still manage to obtain a slight improvement before the end of the year.
One size class causing raised eyebrows is the 3,400/3,500TEU type due to the fact that rate levels remain rather stable in a range from 5,500 (gearless) to around 6,250$/day (geared). Although these are generally poor numbers, they still exceed going-rates for traditional panamaxes (4,000–5,100TEU) by quite a margin which is a bit surprising given the competition between both classes for similar kind of business. Traditional panamaxes continue to be fixed at 4,250–4,750$/day in most cases although some charterers are pushing hard to drive that down to 4,000$ and less.
In the handy and feeder sectors, period rates eroded a bit further for some types including Wenchong 1700’s (below 6,500 $/day in some cases) and CV 1100’s (from 6,000$ to 5,500$) in Asia while 700TEU stood their ground with fixtures in the mid 4,000’s $.
Market conditions in the Med have turned much tougher for owners, with an estimated 20 units with intakes around 1,000TEU in open position. Some geared 800–900TEU vessels achieved 6,000 $/day for short-term business. Rate levels in North Europe were around the same for 800–900TEU tonnage but with greater employment opportunities than in the Med. Gearless 1,000TEU vessels were able to secure stable rates between 6,000 and 6,500€ per day but only for very short employments of a few weeks.
Michael Hollmann
