Charter rates have dropped by 11 percent on average in the past three months
Containership charter rates are tumbling as ocean carriers re-asses their tonnage requirements amid slowing cargo growth and weakening freight rates.
Charter rates have dropped by 11 percent on average in the past three months, with all ship sizes affected, and current trends suggest they will slip further by the end of the year, according to Alphaliner. The number of fixtures and the length of fixtures have also declined significantly since April, the container market analyst said.
Rates are likely to drop further in the coming months as demand from charterers has cooled. In June the number of reported fixtures reached the lowest level this year.
The daily charter rate for container ship of 4,250-foot equivalent units capacity has slipped to $23,459 from $26,113 a month ago, according to the Hamburg Shipbrokers Association. A 2,700 TEUs vessel on a 24-month charter is fetching $15,629 a day against $17,481 at the end of June.
Rates are still above levels of the past two years when the charter market sank to historic lows. A 3,500 TEU gearless Panamax ship is currently earning $19,000 a day compared with an average $13,250 in 2010 and $6,575 during the container shipping slump of 2009, according to Clarkson, a leading London shipbroker.
The average length of charter fixtures has fallen from 10 months at the beginning of the year to seven months currently, according to Alphaliner.
In the light of a less certain market outlook, charterers are obviously less willing to commit to longer term charter periods. Furthermore, owners are forced to accept shorter periods in an increasingly fragile market with weakening demand.
The three largest ocean carriers Maersk Line, Mediterranean Shipping Co. and CMA CGM remain active in the charter market.
But Chiles CSAV, the next most active charterer over the past year, has curbed its appetite for hired tonnage and is re-letting numerous surplus ships. The carriers successive service closures will remove around 100,000 TEUs of slot capacity from its fleet by the end of August, which will be looking for new employment.
This is putting pressure on a market already impacted by a continued high level of new ship deliveries 777,500 TEUs in the first half of the year and a low deletion level just 45,500 TEUs since the beginning of the year.
The top four charterers account for over 25 percent of all fixtures and any slowdown in their chartering activity will have a significant impact on the market, Alphaliner said.
Container ship owners likely will start to idle increasing numbers of jobless vessels in the coming months if the charter market remains depressed.
Source: Journal of Commerce
