Ocean Carriers Race For Tonnage Amid Soaring Charter Rates

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Ocean Carriers Scramble

Ocean carriers are “scrambling for any tonnage” to provide additional capacity on east-west services. Still, the tonnage providers are “taking advantage” as the cost of chartering vessels has recently risen rapidly.

On Tuesday, French carrier CMA CGM announced its French Peak Service, which will see seven additional sailings of 7,000 teu vessels from Asia to North Europe and the Mediterranean.

They will start with the 30 June departure of the 6,350 teu APL Oregon, calling at Yantian-Cai Mep-Singapore-Le Havre-Antwerp, followed by a sailing every two weeks from China to alternating European destinations. The extra sailings to the Med will be called Shekou-Cai Mep-Singapore-Fos-Malta.

Alphaliner noted in its weekly analysis: “It is not the first time that CMA CGM provides extra capacity from Asia to French ports. In the last quarter of 2021, when space was tight during the Covid pandemic period, the French carrier deployed three extra sailings from Chinese ports and Singapore to Fos, Le Havre and Dunkirk.”

MSC’s New Services

MSC is also expanding its services with the launch of the Brittania service on 1 July, featuring the 9,640 TEU MSC Denisse X, which will connect China and Vietnam to the UK, the Netherlands, and Germany, with Liverpool as its first European call.

MSC also announced yesterday it was reinstating its Mustang transpacific express service on 8 July, the 2023-built 16,000 teu MSC Lella calling Yantian-Ningbo-Shanghai-Long Beach.

The Geneva-headquartered carrier said: “In response to increasing transpacific market demand, the Mustang service will provide increased capacity and faster transit times between east Asia and the US West Coast.”

Market Analysis and Charter Rates

Maersk’s head of ocean product UK and Ireland, Joe Knight, said at this week’s Multimodal exhibition in Birmingham: “Vessels are fully utilized and that’s why new services are coming online, which honestly is great for the industry, to get as much pressure out as possible.

“They are tiny vessels, in relative terms to the Far East norm. So, you’d be expecting to run 20,000 teu or 14,000 teu vessels, and we’re seeing 3,000 teu ships being deployed,” he added.

Peter Sand, chief analyst for analytics platform Xeneta, told The Loadstar tonnage providers were “taking advantage” of the stronger market by charging a higher charter rate and demanding longer tenures.

According to Mr Sand, Maersk recently chartered a 4,600 teu vessel for two years at $40,000 a day, and CMA CGM a 7,100 teu vessel for around three months at $80,000 a day.

Impact on Shippers

CEO of Vespucci Maritime Lars Jensen said this was “yet another example of the return to pandemic-level conditions”, which could be taken as an indication that the carriers believe the current tight conditions would last at least a few more months.

For comparison, Mr. Jensen noted that the benchmark average rate for 2024 year-to-date from MB Shipbrokers was $32,000 for the 5,500-7,000 teu segment.

Mr Sand added: “All carriers fight for the same ships – either you buy, or you charter – and they are all scrambling for tonnage now. There is big money to be made, at the expense of shippers who get only to pay more and more for deteriorating service levels.”

Singapore-based carrier Sealead announced a new direct service connecting China and South Korea with California. The first sailing is scheduled for 16 June, with calls at Nansha, Ningbo, Shanghai, Qingdao, Busan, and Long Beach. This rotation closely mirrors a former transpacific loop launched by Sealead in August 2021 during the COVID-19 pandemic, when spot ocean freight rates were high, and cargo demand was strong.

At this week’s TOC Europe event in Rotterdam, Mr. Jensen said the relaunch of these extra loaders was part of the same trend that has seen smaller carriers return to deepsea trades as spot rate levels soar

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Source: The Loadstar