Container freight rates and charter rates are once again trending in opposite directions.
This time, however, it is the turn of players in the charter market to get that sinking feeling.
Boxship charter rates have been dropping sharply as a malaise that started with smaller feeder vessels has spread to larger tonnage.
Further falls are deemed likely as the number of redeliveries and sublets grows, despite what is traditionally a busier period for chartering.
Contrast that with sentiment in the container freight market, where rates seem to have bottomed out.
After sharp declines in the first half of the year, the prices paid to ship goods in containers are experiencing a reprieve, albeit one that is likely to be temporary, as carriers benefit from peak season demand.
But in the charter market, slumping demand is leading liner operators to stay on the sidelines, or even to offload expensive vessels.
That is reflected by a slew of relets deemed surplus to requirements by carriers led by the likes of liner operator Zim.
The loss-making Israeli liner operator was recently involved in reletting another two baby-panamax vessels to AP Moller-Maersk.
The 4,253-teu Alexander Bay (built 2003) went for a discounted rate of $18,150 per day for a relatively lengthy period of nine to 12 months.
The 4,250-teu Kota Lagu (built 2006) has been relet for a shorter three to five-month fixture to Maersk at $19,125 per day.
“It is evident that the available supply of sublets continues to influence the achievable rates and durations,” shipbroker Braemar noted.
Defensive liners
The relets have accentuated a sharp drop in the charter market in the past six weeks, as liner operators take a wait-and-see approach.
Benchmark one-year charter rates for feeders and classic panamaxes dropped by 9.3% and 17.2%, respectively, between mid-July and mid-August.
One reason for the decline is “the fact that liners have now well-equipped networks to serve the current level of demand”, argues London-based Maritime Strategies International.
A second reason is the progressively worsening financial performance of liner operators.
That meant carriers were “a lot more worried about costs, thereby leading them to be less aggressive in the fixing of new tonnage”, the analyst said.
The pressure on the charter market is growing with more sublets appearing in other container vessel sizes.
Brokers attribute relets in the sub-panamax boxship sector to a difficult intra-Asia market.
That led Wan Hai Lines to sublet the 1,700-teu Kyoto Tower (built 2007) to its larger Taiwanese rival Evergreen Marine for up to nine months at unknown rates.
Larger vessels, which have so far been insulated due to the extreme dearth of available vessels, are also being relet.
Maersk is forking out $38,000 per day to take the 6,300-teu Bigli (built 2005) for two to three months.
The vessel has been chartered by Singapore-based SeaLead Shipping.
All eyes on 2024
Charter rates and subsequently asset prices are tipped to carry on falling until at least the first quarter of 2024, according to shipping consultant MSI.
There is already evidence of that with talk of a number of post-panamax boxships being circulated for sale at below last done, “something which has not been seen for a number of years”, Braemar noted.
The ongoing decline of ship values has provided opportunities for lines that continue to purchase vessels at cheaper prices.
Perennial buyer MSC Mediterranean Shipping Company is said to have purchased another two sub-panamax boxships.
The carrier is reported to have bought the 1,740-teu X-Press Irazu (built 2007) for $11m and 2,714-teu Ariana (built 2006) for around $15m.
That takes to 320 the number of secondhand ships the liner giant has bought since August 2020, according to Alphaliner.
Elsewhere, Hainan Yangpu New New Shipping has added to its growing fleet with the purchase of the 4,300-teu TS Kelang (built 2007) for $20.8m, said brokers.
Finally, Peter Dohle Schiffahrts has bought back the 13,371-teu Southampton Express (built 2011) from Denmark’s Navigar Capital Partners, albeit for an undisclosed price.
The vessel, to be known as the Amalia, joined the German owners fleet in July, according to database Equasis.
