News / Containership owners 'making hay' as demand for tonnage still shines

ID 18481035 © Gary Blakeley | Dreamstime.com

Non-operating containership owners (NOOs) are continuing to ‘make hay while the sun shines’, with demand for tonnage staying robust into the third quarter.

However, brokers report charterers becoming cautious about committing to longer charter periods, given the uncertain mid-term outlook for the freight market.

Copenhagen-headquartered MB Shipbrokers noted in its weekly review that “terms are softening slightly”, with “a trend towards shorter periods becoming more apparent”.

And London-based Braemar said that, while “demand remains strong”, operators were “cautious about committing to vessels that will only be available several months from now, especially under the terms dictated by owners”.

While agreeing with its broker peers that there was “definitely a reduction in periods fixed”, the Hamburg and Bremen Shipbrokers’ Association said it did not expect undue pressure on daily high rates.

It said: “A substantial reduction of rate levels does not seem to be on the cards for the remainder of the year.”

This is further good news for containership owners already enjoying an excellent year.

Greece-based Euroseas is typical of the smaller NOOs that have benefited from Red Sea disruption and an early peak season forcing liner companies into the charter market to cover commitments.

“The second quarter was a good quarter for the containership markets, with charter rates continuing their increase and, on average, more than doubling over their levels at the end of 2023,” said Euroseas chairman and CEO Aristides Pittas.

Notwithstanding the potential headwinds of a significant downturn in freight demand in the coming quarters, Euroseas said that with a charter coverage of around 75% for the coming year, it was “sufficiently insulated from market developments”.

Indeed, a broker contact told The Loadstar any panamax ship (4,000 – 5,400 teu) that unexpectedly became open was the subject of “a beauty parade”, with the top carriers all vying to secure a fixture.

“The owners have certainly made hay this summer, and although charterers are getting a bit nervous regarding the length of periods, they are still prepared to pay top dollar for the right ship,” said the broker.

He also noted there was “very strong” demand for self-sustaining (ie, geared) ships in the market, with CMA CGM being “particularly aggressive” in the sector. Braemar said the French carrier had exercised its option for five to six months on the 2,194 teu geared Haris at a rate of $23,000 a day, with plans to deploy the 2015-built vessel on its Greece-Turkey-Libya service.

Meanwhile, activity in the second-hand containership market is expected to resume in the coming weeks, as buyers and owners return to their desks after the summer break.

But there is no such hope for the moribund demolition market as, again in the past week, no vessels have been reported as sold for recycling. In fact, the broker contact said he could not remember when one of his owners had last spoken about a scrapping option.

“Why would any owner send a ship to the scrapyard when he can easily get hire rates of three times its operating costs?” he asked.