[110617.EN.SEA] Container Ship Charter Rates Slide, Reversing Uptick in February

THE strong rally that started in February is beginning to lose momentum as containership charter rates are sliding or stalling, depending on the vessels size.

Rates for ships more than 5,500 TEU are "nose-diving," and the 7,500-1,000-TEU segment has been hit by a "sudden meltdown," industry analyst Alphaliner was cited as saying in a report by IHS Media.

Although a recent report found that the rise in global container volumes is likely to outpace the addition of new tonnage to the market, overcapacity is expected to remain a defining feature of the market until 2019 or 2020.

"The rest of the market is following an uninspiring course, with stagnating charter rates, and an uneven demand across most vessel types and sizes," said Alphaliner.

Rates for panamax vessels of 4,000?,100 TEU have declined by 15 per cent in recent weeks to between $8,500 and $9,250 per day, depending on ship type and trading area.

The oversupply of Panamax tonnage is rising again, with 37 vessels currently seeking employment compared with 34 two weeks ago. Twenty-five of the jobless ships are laid up, mainly in Southeast Asia, leaving just nine on the spot market, of which five are in the Atlantic.

Maersk Line fixed a 4,256-TEU vessel for two to six months at a daily rate of US$8,900 to trade between the Far East and Australia, and OOCL chartered a 4,252-TEU ship for one month at $9,250 per day to join the new weekly North Europe-Turkey service jointly operated by Cosco Shipping Lines and Hapag-Lloyd.

The 7,500?1,000-TEU segment has been active, with Maersk Line particularly busy fixing tonnage, but this has not been reflected in daily charter rates, which have declined by several thousand dollars compared with earlier deals for 8,000?,000-TEU vessels.

Maersk chartered or extended fixtures of four 8,814-TEU ships for two to six months at rates believed to be around $14,500 per day, significantly down from the $20,000 Hapag-Lloyd paid in April to extend the charter for a sister vessel for 10-12 months.

There is limited availability in the 5,300-7,500-TEU segment, with only seven ships currently seeking employment, according to Alphaliner.

Despite this low availability, charter rates have plunged in this segment, with Maersk paying $10,000 per day to extend the charter of a 5,992-TEU vessel in the Far East-Australia trade compared with the $14,000 Hapag-Lloyd paid in mid-April to extend the charter of a sister ship for four to six months, partly owing to the lack of tonnage in the region.

"Since the flurry of activity from the launch of the new east-west carrier alliances on April 1 has mostly subsided, new requirements in the charter market are expected to remain muted in the short term," Alphaliner said.

Meanwhile, the idle container ship fleet crept up slightly to 518,650 TEU on May 29 - equivalent to 2.5 per cent of global capacity - from the 20-month low of 502,900 TEU two weeks earlier.

Source : HKSG.