News / Long-haul vision blurred, intra-Asia carriers move into ship-chartering

Photo: TS Lines

Small and mid-sized intra-Asia carriers that ordered large newbuildings to enter long-haul trades during the Covid-fuelled boom have morphed into tonnage providers after their dreams were dashed.

They are undergoing a reality check after freight rates collapsed to seven-year lows.

Taiwan’s TS Lines and Thailand’s Regional Container Lines have each recently chartered two 7,000 teu newbuildings to Singapore’s Pacific International Lines. The charter terms are confidential.

When four 7,000 teu ships were ordered by TS Lines at Shanghai Waigaoqiao Shipbuilding in July 2021, container shipping rates were on an upward trajectory to all-time highs.

Transpacific rates were just under $10,000/feu for US east coast ports and just over $5,000/feu for the west coast. Asia-North Europe rates stood at over $7,000/teu, Asia-Mediterranean rates were just under $7,000/teu, while Far East-Australasia and Far East-Persian Gulf rates were both over $3,000/teu.

TS Lines founding chairman Chen Te-sheng said at the time the vessels, to be delivered between April and November 2024, would be the largest the company would ever own.

Today, Asia-USEC rates are at about a fifth of July 2021 levels, while Asia-USWC rates have fallen by 70% from July 2021; Asia-North Europe rates are languishing at under $600/teu; Asia-Mediterranean rates have plummeted to about $1,200/teu; Far East-Australasia rates have plunged to around $600/teu and Far East-Persian Gulf rates have dropped to $790/teu.

Linerlytica analyst Tan Hua Joo told The Loadstar TS and RCL could seek charterers for their other 7,000 teu ships if market conditions remain unfavourable for them to operate the ships themselves.

He explained: “RCL is already operating in the Persian Gulf, but its presence is small. In the case of TS Lines, these ships were originally aimed at the transpacific and Asia-Europe trades, but they had to change their plans following their withdrawal from the long-haul market. TS Lines said they could be deployed on the Australia/New Zealand and Indian subcontinent trades, but current market conditions are poor.

“Rates will be volatile over the next two years, but the overall trend is negative.”

RCL has two other 7,000 teu ships being built at Waigaoqiao, and two 12,000 teu ships on order at Nihon Shipyard for delivery in 2024. The Thai carrier has also chartered two new 12,000 teu ships to Zim Line for five years.

However, charter rates are coming under pressure from excess capacity. Rates for 6,500 teu ships peaked at under $130,000 a day in early 2022 and are now around $32,500.

China United Lines, whose co-CEO Raymond Chen was reportedly arrested after the company axed its final long-haul route, an Asia-Mediterranean service, also has 7,000 teu ships on order at Waigaoqiao. The two vessels were contracted in February 2022 for delivery in H2 24.

There has been speculation that, with CULines retreating to its intra-Asia focus, those ships could be sold or chartered out.

Uncertainty also surrounds a pair of 14,000 teu vessels ordered by BAL Container Line at Jiangnan Shipyard for delivery in 2025. This year the company stopped operating liner routes, carrying out shipments only as an NVOCC.