Container ship charter rates are sliding or stalling, depending on the size of vessel, as the robust rally that began in February fizzles out, signaling that container lines are continuing their efforts to keep a lid on capacity.
Rates for ships more than 5,500 TEU are “nose-diving,” and the 7,500–11,000-TEU segment has been hit by a “sudden meltdown”, according to industry analyst Alphaliner.
Although a recent report found that growth in global container volumes is likely to outpace the addition of new tonnage to the market, overcapacity remains and is estimated to remain a defining feature of the market until 2019 or 2020.
“The rest of the market is following an uninspiring course, with stagnating charter rates, and an uneven demand across most vessel types and sizes,” says Alphaliner.
Rates for classic Panamax vessels of 4,000–5,100 TEU have dropped by 15 percent in recent weeks to between $8,500 and $9,250 per day, depending on ship type and trading area.
The oversupply of Panamax tonnage is rising again, with 37 vessels currently seeking employment compared with 34 two weeks ago. Twenty-five of the jobless ships are laid up, mainly in Southeast Asia, leaving just nine on the spot market, of which five are in the Atlantic.
Maersk Line fixed a 4,256-TEU vessel for two to six months at a daily rate of $8,900 to trade between the Far East and Australia, and Orient Overseas Container Line chartered a 4,252-TEU ship for about one month at $9,250 per day to join the new weekly North Europe-Turkey service operated jointly with Cosco Shipping Lines and Hapag-Lloyd.
The 7,500–11,000-TEU segment has been active, with Maersk Line particularly busy fixing tonnage, but this has not been reflected in daily charter rates, which have fallen by several thousand dollars compared with earlier deals for 8,000–9,000-TEU vessels.
Maersk chartered or extended fixtures of four 8,814-TEU ships for two to six months at rates believed to be around $14,500 per day, significantly down from the $20,000 Hapag-Lloyd paid in April to extend the charter for a sister vessel for 10–12 months.
The Danish carrier also chartered two 9,954-TEU units and a couple of 8,586-TEU vessels, limiting the availability of spot tonnage in this segment to one 9,954-TEU ship, down from six ships two weeks ago.
There is limited availability in the 5,300–7,500-TEU segment, with only seven ships currently seeking employment, with just one open in the Atlantic, according to Alphaliner.
Despite this low availability, charter rates have plunged in this segment, with Maersk paying $10,000 per day to extend the charter of a 5,992-TEU vessel in the Far East-Australia trade compared with the $14,000 Hapag-Lloyd paid in mid-April to extend the charter of a sister ship for four to six months, partly owing to the lack of tonnage in the region.
“Since the flurry of activity from the launch of the new east-west carrier alliances on 1 April has mostly subsided, new requirements in the charter market are expected to remain muted in the short term,” Alphaliner says.
No major new service launches have been announced in the past month, setting the stage for a quiet summer period with market demand and supply “delicately balanced”.
Meanwhile, the idle container ship fleet crept up slightly to 518,650 TEU on May 29 — equivalent to 2.5 percent of global capacity — from the 20-month low of 502,900 TEU two weeks earlier.
The ban on Qatari-flagged and owned ships entering ports in Saudi Arabia, the United Arab Emirates, and Egypt is not expected to have a significant impact on the container market, though some tonnage operated by Milaha, formerly Qatar Navigation, could be idled.
Container traffic at Qatari ports totalled just 561,000 TEU in 2016 compared with the total volume of over 33 million TEU handled by Middle East Gulf ports, according to Alphaliner.
“The situation is therefore not expected to have a large influence on the overall idle figures.”
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Source: JOC
