John Fredriksen-controlled SFL Corp has rescinded a container ship charter as evidence mounts that falling freight rates are making life tough for some shipping newcomers.
The shipowner has abruptly ended the charter of the 1,740-teu Green Ace (built 2005) with UK freight forwarder Allseas Shipping Company.
The vessel had been poised in August to start a lucrative two-year charter at rates just a shade shy of $50,000 per day.
But the shipowner emerged this week as having fixed the vessel with another operator, albeit for a shorter and lower paying charter rate.
Aladin Express, a Dubai and Hong Kong-based operator running regional trades, is paying just $23,000 per day to take the vessel for up to 60 days.
Allseas, which operates freight forwarder Allseas Global Logistics and liner agency DKT Allseas, had planned to operate the vessel on its Asia-Europe service.
But the company experienced lower volumes than expected and did not need the same container capacity, according to a source familiar with the deal.
Entering at the peak
Allseas entered the charter market at the height of the container shipping boom in mid-2021.
The Manchester-based logistics firm had planned to operate the Green Ace in its own-brand liner service on the Asia-Europe trade.
The trade from Asia to Europe has suffered in recent weeks from lower volumes and falling freight rates.
Freight rates from Asia to North Europe this week slumped to $7,878 per 40-foot container (feu), around 25% lower than the level held from May to early August.
Ocean carriers are cancelling sailings in an attempt to keep ships full, said analysts.
SFL chief executive Ole Hjertaker was unable to comment on the short-term charter decision.
Allseas, which was contacted, is listed with seven remaining vessels on short or medium charters, most of which are multipurpose vessels.
They include the 1,878-teu conbulker Allseas Pioneer (built 2003), which operates on its 30-day China Xpress service from China to the UK.
The company also operates from Bangladesh on its Asia Xpress service offering direct routes to reduce transit times.
Catching a falling knife
Transpacific ocean rates have fallen even further than those from Asia to Europe.
Freight rates from Asia to the US West Coast slid to $3,973 per feu this week, compared with $20,586 per feu a year ago.
That has raised fears for the health of other shipping newcomers on the trade between Asia and North America.
Despite these decreases in freight rates, ocean prices are still well above the norm.
Transpacific rates are about triple their level in September 2019 and Asia to North Europe prices are five times as high, according to Freightos estimates.