Pandemic and war have broken traditional container ship market models, leading to great uncertainty among owners and charterers, German shipbroker Hanse Bereederung believes.
TradeWinds has reported freight and charter rates continuing to cool due to a drop in demand caused by the ongoing impact of lockdowns in China.
Manufacturing shutdowns, the closure of warehouses and trucking disruptions have led to a steep decrease in export volumes from Shanghai.
Alex Karydis, director of chartering and sale and purchase at Hanse Bereederung, told TradeWinds that spring and autumn were always traditionally busy periods as charterers bet on the development of future volumes, new tenders or Christmas inventories.
Conversely, summer and winter were considered slow and uneventful, with freight rates always expected to fall.
“This model doesn’t seem to be valid anymore,” the broker said.
“The new order of things in shipping has developed in such a way that variables such as port congestions, sanctions, pandemic and, more recently, war are anything but stable and appear to disrupt the otherwise balanced performance of the shipping market in the course of time,” he added.
Karydis explained that Chinese lockdowns have created a “very peculiar bottleneck” that limits the flow of goods, causing further delays and expense.
Despite this, the broker believes 2022 had the potential to be a “far more relaxing year” than 2021, until Russia invaded Ukraine.
He notes that the full effects of the war and lockdown congestion have yet to be seen.
What do charterers want?
But the broker said it all means more uncertainty over the length of period deals that charterers want.
“In the last couple of weeks, we have observed an adoption of [a] ‘wait and see’ attitude on the part of the charterers because many are indecisive whether they should go for shorter or longer periods, or if they should charter in any further vessels at all,” Karydis said.
“Thus, we see that there appears to be a shift from the ‘busy-slow-busy-slow’ market model to the ‘really busy’ or ‘really slow’ new market reality depending on the supply of more or fewer ships available for charter,” he added.
Compass broken?
“Last-done” fixture levels, which used to be the compass of every owner and charterer before fixing their next position, also do not apply any more, Karydis argues.
“This is a market of no ‘last-dones’. In fact, everyone’s focus is on the fresh and upcoming fixtures only. Greed aside, this is the ideal commercial environment to test and see what the market can bear," he said.
And the broker added: “Cautiousness is prevalent but the lack of available tonnage is still apparent. 2022 will be a very interesting year, albeit really slow for the container vessels segment.”
