HMM should use surplus cash to double size of its box ship fleet
HMM should use the earnings from the Covid-19-powered shipping boom to double its box ship ...
© Razvan Ionut Dragomirescu
By Mike Wackett
There remains a significant disconnect between ocean freight rates and the containership charter market.
Although box ship owners are not achieving the sky-high hire rates and lengthy time charters of 18 months ago, demand for tonnage is healthy and daily rates continue to exceed vessel operating costs, thus extending ship working life cycles and deferring scrapping options.
While freight rates on many tradelanes have collapsed to record lows, daily hire rates for chartered tonnage have stabilised at above pre-pandemic levels – and for certain sizes, the rates are showing signs of firming up.
Indeed, the latest assessment of average charter rates from Maersk Broker records an uptick in the 5,500-7,000 teu sector from $33,333 a day in Q2 to $36,000 a day in the third quarter.
The blinkered over-ordering of large container vessels in the past few years by carriers contrasted with the dearth of orders for sub-10,000 teu ships, making carrier fleets top-heavy.
It follows that orderbook deliveries in the 2m teu of newbuild tonnage scheduled to hit the water before the end of the year are dominated by large vessels, as well as the further 2.4m teu stemmed for delivery during 2024.
It was only in the later stages of the newbuild ordering spree that carriers, obsessed with operating the largest 24,000 teu vessel afloat, began placing orders for mid-sized ships.
However, orders for the replacement of the elderly, smaller ships were scarce, with little investment in the smaller sizes. And, as many of these gleaming new ultra-large ships face the ignominy of finishing their sea trials and going straight into lay-up, carriers will continue to compete aggressively on the charter market for the right-sized ship for specific trades.
“Owners can still find lucrative employment when they have the right ship at the right time,” said Maersk Broker.
A London-based broker contact agreed, and told The Loadstar: “Despite the downturn on the main trades, there is still a healthy appetite for charters in the smaller sectors to cover secondary and niche trades.
“Also some owners have their ships out on long-term charter deals that were struck at the height of the boom, so apart from some sub-lets coming onto the market, there are not that many ships becoming open in the next few months.”
He added he believed the supply situation would start to adjust next year when many of the longer-term charters start to expire.
Meanwhile, as an example of the healthy demand in the smaller sectors of the containership charter market, Japanese carrier ONE has just concluded a 12-month charter of a panamax ship for deployment between Asia and the west coast of South America.
The 2006-built 4,253 teu Xiamen was fixed by ONE at a rate of $18,200 a day, having recently been off-hired by TS Lines. According to Vesselsvalue data, pre-pandemic the ship was achieving daily hire rates in the range of $9,500 to $14,000.
The 17-year-old Xiamen has a current asset value of $15.5m and a scrap value of $9.2m, according to the data.
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