Containers

Caution urged as boxship charter bonanza rolls on

There’s no let-up in the booming boxship charter scene with vessels breaking further records not just in prices paid, but also durations. Nevertheless, some analysts are beginning to question how much longer the red-hot conditions can last.

The most eye-catching recent deal sees CMA CGM taking the 8,814 teu Northern Juvenile for a 60-month charter, with Alphaliner suggesting the French liner giant is paying $48,500 a day for the ship, which is $3,500 higher and 12 months longer than deals agreed on sister tonnage at the beginning of March.

Israeli carrier ZIM is also reported to have extended the 4,253 teu Zim Luanda for 36 months at $35,000 per day – a day rate which would have been previously negotiated at around $30,000.

CMA CGM has taken the 8,814 teu Northern Juvenile for a 60-month charter at $48,500 a day

A surge in secondhand sales activity, especially in the larger sizes, has removed key tonnage from the charter market, as strong prices offered by buyers have simplified decision-making for owners, Clarksons noted in its most recent weekly report. Charter market activity is currently focused on the smaller sizes, with rates still rising and periods continuing to lengthen.

Alphaliner observed charter rates in the 3,000-3,800 teu segment are now approaching the $30,000 mark.

As an example, CMA CGM has reportedly extended employment of the 3,426 teu Burgundy for 27-29 months, settling at a daily rate of $29,750.

In the 2,700-2,900 teu segment, ZIM is setting new highs by paying $25,000 per day for the 2,714 teu Ariana‘s 36-month charter.

In Asia, Taiwanese containerline Wan Hai has fixed the 1,440 teu Cape Felton for 24 months at $2,000 higher day rate than what a sister vessel fixed for the same duration in early April.

Also in Asia, Alphaliner highlighted a $15,500 daily rate for the 653 teu Heung-A Singapore fixed for a short term of three to four months.

It is unclear how carriers’ bottom lines might be impacted down the road

The Clarksons Containership Charter Rate Index rose 3% last week to reach 156 points. There have been only eight months on record – across 2004-05 – in which the index has reached a higher level.

Alphaliner estimates that the container charter market will remain unchanged in the medium term, possibly extending until the autumn. Nevertheless it pointed out the uncertainty of these high charter rates effecting carriers in the long run.

“It is unclear how carriers’ bottom lines might be impacted down the road by the skyrocketing charter costs and the long charter commitments they are taking, especially when cargo demand and freight rates start fading,” Alphaliner said.

Germany’s ConTex said that while sentiment remains very positive and all signs point to a rising market for the time being, there are question marks as to whether or not it can continue firming throughout the summer, irrespective of significant external influence or change.

“Other than those being marketed and currently discussed there are many more ships on charter which expire within the next 2-3 months, we are unsure if all these operators and services will be able to extend for 2-4 years at higher rates than today,” ConTex noted in a report out last Friday.

Adis Ajdin

Adis is an experienced news reporter with a backgroud in finance, media and education. He has written across the spectrum of offshore energy and ocean industries for many years and is a member of International Federation of Journalists. Previously he had written for Navingo media group titles including Offshore Energy, Subsea World News and Marine Energy.

Comments

  1. There seems to be some irrational exuberance in the air. Of course, some charterers have been known to think twice about rates they have agreed to pay, when times calm down. Naming no names, but thinking of the Atlantic Hotel…

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