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Containers As September fades away there are signs that a boxship plateau of dizzying heights has been reached in both the charter and spot rate markets. Last week, the Shanghai Containerized Freight Index edged up 0.5%, while Drewry’s World Container Index remained unchanged and the FBX, compiled by Freightos and the Baltic Exchange, was down 1.4%. The spot market easing comes as Hapag-Lloyd and CMA CGM both publicly stated they’ve stopped seeking spot rises from customers for the coming months. As spot rates peak, so too are charter prices. Alphaliner suggested last week that charter rates are approaching their peak, with prices increasingly plateauing across the board, especially for long period charters. “Standard tonnage in particular seems to be struggling to improve on last done deals, while higher specification units and smaller ships under 1,000 teu continue to record significant gains,” Alphaliner explained. While a plateau might be just around the corner, Alphaliner suggested there is no sign of a big drop in the charter market any time soon, since demand continues to far outstrip supply, with the situation unlikely to change until at least Q1 2022. UK consultants Drewry expects rates and charter prices to slow, but to still remain high, at least for the duration that supply chain disruption lasts. Dry Bulk Capes are back in 2008 territory. Port congestion is high, demand is solid - Q4 looks very positive. Could owners start to dream of $100,000 a day rates? “Major global iron ore exporters continue to ramp up production and sell their cargoes, China has continued to purchase cargoes at much lower prices than just a few weeks ago, and the spot supply/demand vessel balance remains very tight,” Commodore Research stated in a recent note to clients, going on to point out that China’s reliance on thermal coal has continued to grow. So far this year, thermal coal-derived electricity generation has contributed to 72.1% of China’s total electricity generation. During the same period last year, it contributed 71.3% of total electricity generation. Braemar ACM, meanwhile, has observed that cape queues in China today are 117% higher than the five-year average. On the supply side, Jefferies is most bullish, observing that the current orderbook-to-fleet ratio is only 6.2% with 58m dwt on order, leading analysts at the American bank to believe dry bulk fleet growth will remain below 2% in the coming years. Shipyard consolidation also means there are less places to buy new ships. In 2010, there were 43 yards engaged in the construction of capesize dry bulk vessels versus just 20 today, Jefferies pointed out. Tankers Tanker owners, suffering one of their worst years in a decade, will have to wait until the end of next year for demand to return to pre-pandemic levels, multiple analysts suggest. Alphatanker is estimating that by the end for this year, global tanker demand will stand around 2.3% below its pre-pandemic peak and even by the end of 2022, the lag will stand at 0.6%. Alphatanker projects that clean tanker demand will recover ahead of crude tanker demand. “The first half of 2022 is likely to remain difficult. Global tanker demand is set to wane seasonally in tandem with oil demand and not expected to surpass 4Q21 until 3Q22. In fact, it is only in 4Q22 that demand is expected to grow significantly,” Alphatanker predicted in its latest weekly report. Tanker demand is the worst of all the sectors in terms of how far behind it is to pre-pandemic levels, research from Clarkson Research Services shows, with car carriers the second worst. Clarkson’s overall seaborne oil trade index was down 9.5% in January to July, compared to 2019 levels, with the broker citing in a recent report continued pressure on oil demand, OPEC+ supply curbs, and drawing down of inventories dragging on trade volumes so far this year. Cleaves Securities held a tanker webinar earlier this month in which it too said it would take through to the end of 2022 for oil tanker demand to return to 2019 levels. On the plus side, as the month ends tanker sentiment is improving, while on the supply side more ships are heading for scrap, with plenty more vessels likely to follow suit. It turns out that around one in four tankers are approaching retirement age, something that could increase with impending new green regulations from the International Maritime Organization (IMO). According to UK tanker broker Gibson, depending on the segment, between 20% to 30% of the tanker fleet is over 15 years old and will be approaching their natural retirement age over the next few years. Looking to the 2023 implementation of IMO’s Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) regulations, Gibson noted this month: “As ageing tankers on average consume around 20-25% more bunker fuel than the latest designs, the approaching IMO’s EEXI and CII rules will only speed up the removal of the least completive and least efficient tankers.” Many ageing tankers with limited trading opportunities have moved into sanctioned Iranian and/or Venezuelan trade over the past 12 months.

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