News / 'Biggest lines get the best deals' in a depressed containership charter market

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The four largest container lines are using their enormous buying power to keep charter rates at depressed levels, despite a tightening of supply.

The increased influence of Maersk, MSC, CMA CGM and Cosco during charter negotiations with owners has shown a disconnect between supply and demand, with daily hire rates continuing to disappoint owners.

There is also emerging evidence that the top carriers have been able to obtain better daily hire rates and terms and conditions than their mid-sized peers.

According to the latest data from Alphaliner, Maersk charters 51% of its 3.4m teu capacity, MSC 65%, CMA CGM 63% and Cosco 73%.

“Further weaknesses in charter rates have been seen in segments where the supply of spot tonnage is relatively tight, demonstrating once more the increasing bargaining power of the large shipping lines,” noted the consultancy.

One London broker told The Loadstar this week there were effectively now two divisions of carriers and that those in the “premier league” took it as read that they would be offered better terms than their smaller competitors.

He said that since the Hanjin bankruptcy last August, some owners have “felt more comfortable” in dealing only with the very biggest carriers, despite the lower hire rates.

One recent example reported was the $18,500 a day paid by Zim for the 9,954 teu Asklipios for seven-to-12 months, compared with the daily $14,500 paid by Maersk for sister ship Adamastos for a fixture of three-to-six months.

Nevertheless, it remains to be seen how long even the top four carriers can avoid paying higher charter rates, given the very tight supply, particularly in the 7,500-10,000 teu vessel segment.

“The supply of spot tonnage is getting thin, with only three ships in ‘spot’ position,” said Alphaliner last week, and according to a broker source this had been reduced to virtually no suitable ships in the early part of this week. However, he added: “A large number of enquiries are still coming in.”

And in the smaller, 5,300-7,500 teu sector, the scarcity of available tonnage cannot meet the strong demand reported the broker.

Notwithstanding the clout of the top carriers, if ships are simply not available, eventually charter rates will have to move up.

Carriers have become accustomed over the past two years to cover sudden cargo surges, port congestion and peak weeks by chartering ships cheaply with flexible options and convenient off-hire terms. If they are no longer able to do this, they will risk losing market share to other carriers that have the space.

It is a scenario that could prove a shot in the arm for the “virtually dead” orderbooks of the semi-redundant shipyards of China and South Korea, as those carriers with money to spend revisit their newbuild policy – not for ULCVs this time, but for the mid-sizes.