Splash Extra: Boxships, charters, and what happens as the sector unwinds

With many analysts suggesting container shipping’s incredible, record-breaking run has passed its peak, it’s not just shippers who are looking at their long-term contracts with the carriers.

The lead story in the June issue of Splash Extra looks at what might happen to the huge swathe of boxship tonnage tied to expensive, long-term charters as the container cycle inevitably runs out of steam.

In previous downturns many tonnage providers have been left high and dry as carriers claimed insolvency risks in shredding their agreed charter deals. This time, however, liners are cash-rich with most container shipping experts contacted by Splash Extra expecting the lines to see out their contracts even in the event of a severe drop in freight rates.

“We are indeed at a turning point in the market,” Peter Sand, chief analyst at freight rate benchmarking platform Xeneta, told Splash Extra. However, Sand said the key difference this time compared to previous turns in the cycle is simple: “Liners are loaded with cash. No one is at the brink of bankruptcy.”

In 2021 and 2022, container shipping operators are on track to record all time high combined profits in excess of $400bn, with operating margins in the most recent quarterly reports on average above 50%.

“The kind of money operating owners have made in 2021 and will make in 2022 and 2023 have already paid for future charter hires,” Sand said.

The latest weekly report from Alphaliner makes clear that the container charter market remains undeterred this month by the weaker sentiment across the global container shipping industry and remains extremely strong.

“Charter rates continue to evolve at historic highs with, remarkably, some further gains achieved by certain sizes,” Alphaliner noted.

Elsewhere in the monthly subscription title there is debate on the validity of sanctions against Russia, regular markets commentary on the main shipping sectors, the key drivers in S&P while the June in-depth feature looks at available financing for smaller shipowners during the industry’s green transition.

Published on the last Wednesday of every month and priced for as little as $200 a year, Splash Extra serves as a concise monthly snapshot, ensuring readers are on top of where the shipping markets are headed.

To access the June issue, click here. For more details on Splash Extra subscriptions, click here.


Splash is Asia Shipping Media’s flagship title offering timely, informed and global news from the maritime industry 24/7.
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