Containership supply tight, but carrier clout brings charter rates back down

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Despite a limited supply in several sectors, daily hire charter rates for container vessels are again heading south.

In its latest charter market review, Alphaliner reports that the “flurry of activity” associated with the April launch of the new east-west ocean carrier alliances “has mostly subsided”, and with the benefit of more time to negotiate, charterers are regaining the upper hand.

Alphaliner notes a “sudden meltdown” in charter rates for tonnage over 5,500 teu in the past month, which the analyst attributes not only to lower demand, but also to the increased buying power of charterers.

As a consequence of the dash for consolidation in the liner industry – in the past year in particular – there is now a “growing bargaining power of an ever smaller number of increasingly large and powerful charterers able to dictate their business terms”, it says.

Indeed, one broker told The Loadstar recently his owners were becoming concerned about the impact on charter rates of the forthcoming merger of Japanese carriers K Line, MOL and NYK.

Alphaliner cites the example of a recent fixture by Maersk Line which chartered, or extended, four 8,800 teu sister ships from German owner Norddeutsche Reederei H Schuldt that “reflect a substantial weakening in the VLCS [very large containership] segment”.

According to the analyst, the Danish carrier has chartered the 8,814 teu Northern Jamboree, and Northern Julie and extended sisters Northern Jasper and Northern Justice for periods of two to six months at hire rates reported at around $14,500 a day.

By comparison, Alphaliner notes, in April Hapag-Lloyd extended the hire on another sister vessel, the Northern Jade, for a 10-12 month period at $20,000 a day.

Elsewhere charter rates have also plunged, notwithstanding the tight supply in the 5,300-7,500 teu LCS (large containership) sector, that according to Alphaliner data has only seven ships currently seeking employment.

Once again it was Maersk that succeeded in chopping the daily hire rate on a 3-5 month extension of the 5,992 teu ER Kobe to $10,000 a day, which follows Hapag-Lloyd’s four-to-six-month charter of a sister vessel in April at $14,000 a day.

And the recovery in charter rates for the beleaguered classic panamax segment of 4,000-5,300 teu vessels appears to have come to an abrupt end.

From below-operating-cost daily rates of $5,000 or less at the end of 2016, charter rates for panamaxes had doubled this year, but now seem to be running out of steam, with recent fixtures at $8,500-$9,250 a day.

This, notes Alphaliner, is despite the ‘spot’ availability of ships being limited, given that 25 out of the 37 open vessels are in long-term ‘cold lay-up’ and thus not immediately ready for employment.

Greek containership owner Danaos said recently that although it saw “signs of the market tailing off”, it “does not expect the market to return to the lows of 2016”.

And in the light of the insolvency of 180-year-old German shipowner Rickmers last week, it is in the long-term interests of container lines to have access to a stable charter market; which means owners must at least cover their operating costs on any fixture.