Rates for bigger boxships have surged by 50% this year as the number of spot ships dries up.
The shortage is causing problems for some liner operators, which have been forced to take smaller vessels on services where larger ones are needed.
A raid on larger containerships by several operators earlier in the year left barely any vessels over 7,500 teu available for charter.
This has continued to be the case since early April and is expected to last for a few more weeks, according to Alphaliner. The inevitable result has been a sharp rise in charter rates for larger vessels.
The 8,533-teu Lloyd Don Giovanni (built 2006) was fixed for 10 to 12 months with Evergreen Marine at $27,000 per day. That is more than double the $12,500 per day that TS Lines paid for the Lloyd Don Giovanni last November, when it became the largest vessel operated by the Asian carrier.
The rate is also up on the $24,000 per day that Evergreen paid last month to take the 8,585-teu SM Savannah (built 2011) for 10 to 12 months.
Demand for larger boxships is also being fuelled by lines upsizing ships on services. One indication of that is the fixture of the 6,881-teu Skiathos (built 2013), which has been taken by Marfret for 12 months at $25,250 per day. The wide-beam, fuel-efficient vessel is the largest ship operated by the French company.
Another factor contributing to the shortage is the increasing number of vessels being taken out of service to be fitted with scrubbers. Retrofitting a large containership is expected to put it out of action for two or three weeks, but brokers report these projects are taking longer.
MSC has led the pack in finding replacement tonnage for scrubber-fitting projects. Its fixtures include the 8,667-teu GSL Tianjin (built 2005) and OOCL Qingdao (built 2004) for five years at unreported rates.
‘They were fixing left, right and centre’
“MSC were fixing left, right and centre because they needed ships for temporary replacement for their own scrubber-fitted fleet,” one broker said.
Similarly, China Cosco Shipping is said to have extended the employment of several 9,500-teu vessels for periods of about three years at rates not short of $30,000 per day.
Charterers have had to switch to smaller ships, even if they would have preferred bigger ships. In some cases, they grab at what they can get, but the partner in the service disapproves
Shipbroker
That has benefited large containership owners such as Ship Finance International, which confirmed a charter extension on six boxships of between 5,800 teu and 8,700 teu through to 2024 or 2025.
One deal for four ships involves the 8,700-teu San Felipe, San Felix, San Fernando (all built 2014) and San Francisca (built 2015), all taken on charter by Maersk Line or its subsidiary Hamburg Sud. The other deal is understood to include the 5,800-teu MSC Vidhi (built 2001) and MSC Margarita (built 2002) and includes a purchase obligation.
The shortage of large containerships has fuelled demand for intermediate-size ships.
Increase in rates
Six to 12-month daily rates for 6,800-teu vessels have risen from $14,000 in February to $19,000, according to Clarksons — a 36% increase.
The latest fixture of the 6,966-teu RDO Concord (built 2009) at $19,500 per day for 12 months with Orient Overseas Container Line is “a real step forward”, another broker said.
But the lack of large containerships of 8,500 teu and upwards could be proving problematic for liner operators that are forced to take 6,500-teu ships.
“Charterers have had to switch to smaller ships, even if they would have preferred bigger ships,” another broker said. “In some cases, they grab at what they can get, but the partner in the service disapproves.”
Such problems have led Shipping Corp of India to cancel one of its sailings, the broker said.
So far, owners of smaller ships can only look on with envy at the improved fortunes of the larger boxship sector.
Rates for traditional panamaxes of 4,250 teu and smaller ships have yet to benefit from the tightening market for larger units, according to a New ConTex commentary. “The question is when the demand will filter through to the smaller segments, benefiting the 4,250-teu segment,” according to a report by New ConTex. “Based on the current activity level, it may take a while.”
