Shipowners Reluctant To Fix Long Term Charter Rates

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  • Shipowners back in the driving seat, with brisk business in the charter market.
  • Owners seem to be reluctant to fix for longer periods against rising daily hire rates.
  • Alphaliner’s idle fleet recorded around 62 vessels with some 300,000 teu employed due to high demand for tonnage.
  • Larger sizes of 7,500-11,000 teu ships are “sold out”, with no ships expected for redelivery in the next four weeks.
  • Daily rates spiked with a recent fixture for the 2007-built 3,388 teu Ortolan Gamma with CMA CGM at $10,200 a day for a period of 40 days.

Containership brokers report of “brisk business” though owners are reluctant to fix rates for longer periods, reports The LoadStar.

Brisk business

Although owners seem to be reluctant to fix for longer periods against rising daily hire rates,  containership brokers report of “brisk business”.

Alphaliner’s idle fleet assessment has recorded around further 62 vessels with some 300,000 teu employed due to high demand for tonnage, in the past two weeks.

The current 313 ships with 1.55m teu in hot or cold lay-up, representing 6.6% of the global fleet, is a vast improvement on the mid-May record of 524 vessels equating to 2.65m teu of idled tonnage.

Charter rates plummet 

The 11% of the laid-up global container fleet seeking employment amidst the coronavirus crisis saw charter rates plummet across all sizes. 

Some daily hires rates were taken by owners at well below operating costs to maintain cash flow.

Carriers back into market

Carriers rushed to off-hire tonnage as they announced a massive programme of blankings across their networks.

However, with the demand bouncing back and freight rates boosted by the lines’, carriers have bullishly gone back into the charter market.

No ships for redelivery

Alphaliner reported that, in the larger sizes of 7,500-11,000 teu ships, the market was “sold out”, with no ships expected for redelivery in the next four weeks.

However, a fixture that did get over the line was an 18-month charter of the 2015-built 9,288 teu Akadimos to Japanese carrier ONE at a reported average of $30,000 a day, some $5,000 higher than the market in April/May.

Post-panamax demand

According to a consultant there was “frantic demand” in the post-panamax, 5,400-7,500 teu sector. 

The ships “had been in high demand” over the past two weeks “with no fewer than a dozen vessels fixed, mostly for new business”.

Owners avoid longer commitments

Alphaliner said, “However, the durations fixed were generally for short periods, with owners increasingly avoiding longer commitments in the hope of better charter rates down the road”.

According to brokers, owners were no longer prepared to pay for ballasting.

“It doesn’t matter how big [the carriers] are, our owners won’t pay for the positioning of the vessel,” said one source.

Busy classic panamax

Alphaliner noted that the classic panamax segment had remained busy with 15 new fixtures concluded in the past two weeks. 

It said that at the last count there were only 10 panamax ships still seeking employment, down from a peak of 47 in May.

Reduced spot ships

All the open tonnage in the sector is in Asia, with the Atlantic “sold out”, and daily hire rates edging back up to near $10,000 a day from lows of $8,000 or below in May.

It was the same with the 3,000-3,800 teu segment, where the number of spot ships reduced from about 20 at the beginning of June to “virtually zero”.

Spike in daily rates

As a consequence, daily rates have spiked, with a recent fixture for the 2007-built 3,388 teu Ortolan Gamma being concluded with CMA CGM subsidiary ACL at $10,200 a day for a period of 40 days.

Spotted for scrapping?

Prior to the current charter market rally, the German owner of the 13-year-old ship with an asset value of just $5.47m and a demolition value of $4.62m would have regarded it as a prime candidate for scrapping.

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Source: The LoadStar

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