Car carrier time-charter rates have hit their highest level since the demise of US bank Lehman Brothers 13 years ago — and experts believe the rally could continue.
Broking sources said tonnage provider Eastern Pacific Shipping has fixed out two scrubber-fitted panamax-class pure car/truck carriers to South Korea's Hyundai Glovis at rates that were last seen in 2008.
Hyundai Glovis is said to have extended the charter of the 6,302-ceu Lake Fuxian (built 2009) for three years at $38,000 per day and the 6,178-ceu Lake Geneva (built 2015) for six months at $40,000 per day.
That is more than double their previous rates of between $15,000 and $16,000 per day, brokers said.
An Eastern Pacific executive declined to comment on market reports, while Hyundai Glovis did not respond to emails.
Car carrier brokers described the sector as very strong, with rates returning to "pre-Lehman shock" levels for the first time.
Tight tonnage supply is cited as the key driver behind the spike in charter rates.
"The improved global Covid situation has helped in the recovery of the automobile industry. Car sales have resumed due to pent-up demand and economic stimulus," a broker said.
"South Korea, Japan and China are increasing their automobile exports to Europe and US. Congestion at ports and logistical inefficiencies have caused vessels to spend longer waiting times at ports and this has led to a shortage in supply of car carriers."
Car makers won't be happy
TradeWinds has learned that there are no vessels available for charter in the market and the tonnage squeeze could continue into spring.
"With the new Omicron variant, it could make the situation worse if more lockdowns are to take place and further aggravate port congestion," added the broker, who is expecting PCTC charter rates to continue to surge.
"There were very little ordering activities for PCTC newbuildings in the last few years and we saw some tonnage suppliers phasing out their older vessels amid the poor market," he said, explaining the tonnage shortage.
Shipowners will welcome the spike in rates but it will not go down well for operators, said another broker: "Car makers will be resistant to [the] rise in freight rates and car carrier operators will be sandwiched between their clients and shipowners."
According to Clarksons' Shipping Intelligence Network, there are 41 car carriers on order, of which 37 were contracted this year. Some 88% of the vessels will only be delivered between 2023 and 2024.
Companies that have ordered newbuildings include Zodiac Maritime, Eastern Pacific, K Line, NYK, SFL Corp, H-Line Shipping, China's SAIC Motor and Wallenius Lines. They have all booked LNG dual-fuel ships.
Shipbuilding sources said there are still enquiries for PCTC newbuildings, but shipping companies are facing challenges due to the late delivery dates available. Most shipyards in the Far East have packed their orderbooks until late 2024 and are not yet marketing 2025 berths.
