- Non-operating containership owners (NOOs) are enjoying a strong market, with robust demand despite a cautious outlook from charterers.
- Charter periods are shortening as operators grow cautious, but rates remain high, especially for certain ships.
- The demolition market remains inactive as shipowners opt to keep ships running due to high charter rates.
Non-operating containership owners (NOOs) are having a great year with high demand for tonnage continuing into the third quarter. However, charterers are showing caution when it comes to signing longer charter periods, reflecting an uncertain future for the freight market, reports The Loadstar.
Shorter Charter terms in Trend
Copenhagen-headquartered MB Shipbrokers noted in its weekly review that “terms are softening slightly”, with “a trend towards shorter periods becoming more apparent.”
London-based Braemar said, “While demand remains strong, operators were cautious about committing to vessels that will only be available several months from now, especially under the terms dictated by owners.”
Despite the caution, Hamburg and Bremen Shipbrokers’ Association do not expect charter rates to drop significantly in the near future, stating, “A substantial reduction of rate levels does not seem to be on the cards for the remainder of the year.”
High Charter Rates
For containership owners like Greece-based Euroseas, the market has been excellent, driven by factors like disruptions in the Red Sea and an early peak season.
Euroseas’ CEO Aristides Pittas mentioned, “The second quarter was a good quarter for the containership markets, with charter rates continuing their increase and, on average, more than doubling over their levels at the end of 2023.” With 75% charter coverage for the coming year, Euroseas feels insulated from any potential downturn in freight demand and it was “sufficiently insulated from market developments”.
Strong Demand for Ships
There remains a strong demand for panamax ships (4,000 – 5,400 TEU), with brokers describing competition among carriers as “a beauty parade” for securing the right vessel as informed by Loadstar. Self-sustaining (geared) ships are also in high demand, with French carrier CMA CGM aggressively pursuing these vessels.
“The owners have certainly made hay this summer, and although charterers are getting a bit nervous regarding the length of periods, they are still prepared to pay top dollar for the right ship,” said the broker.
Braemar reported that the French carrier had extended its option on the 2,194 TEU geared vessel Haris for an additional five to six months, at a daily rate of $23,000. The 2015-built ship is planned to be deployed on the Greece-Turkey-Libya route.
The second-hand containership market is expected to pick up as buyers return from their summer break. However, the demolition market remains inactive, with no vessels sold for recycling recently.
As one broker explained, “Why would any owner send a ship to the scrapyard when he can easily get hire rates of three times its operating costs?” Shipowners are holding onto their vessels to capitalize on the high rates.
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Source: The Loadstar
