Containership Charter Rates Rising.
Containership charter rates are rallying as ocean carriers scramble for tonnage in response to a stronger-than-expected rebound in cargo volumes as the industry emerges from its deepest recession. The surge in ocean freight rates on the key Asia-Europe and trans-Atlantic routes since the turn of the year is encouraging charter ship-owners to hold out for better terms.
Larger vessels are leading the rally but all ship sizes, including feeder ships, have benefited from higher carrier demand in recent weeks.
A gearless Panamax vessel with 3,500 20-foot equivalent units capacity is earning $7,000 a day, up 19 percent from $5,450 in December and $425 above the 2009 average, according to London shipbroker Clarkson.
Rates for larger ships have risen even more sharply, reflecting higher cargo demand on the major long haul routes. French carrier CMA CGM, for example, reportedly paid $13,500 a day in February to extend the charter of a 7,000-TEU vessel for 12 months compared with $8,500, which similar-sized ships were fetching in November.
Smaller vessels, which have lagged the rally, are now commanding fatter fees in response to increased demand for tonnage in regional and feeder markets. A 2,500-TEU ship on a two year charter is fetching $6,696 a day compared with $4,912 at the beginning of the year, according to the Hamburg Shipbrokers' Association.
A 1,100-TEU ship is earning $4,325 a day for a 12 month charter against $3,976 in the first week of January and a 1,700-TEU vessel is going for $4,671 a day for a one year fixture compared with $4,130 at the start of the year.
The Hamburg Shipbrokers Association's closely watched ConTex index rose to 281 this week from 239 in early January.
The rally still leaves charter rates well adrift of levels seen during the 2006-2008 bull market. The $7,000 daily rate for a 3,500-TEU ship compares with an average of $26,125 in 2008 and the $29,958 peak in 2007, according to Clarkson.
The recent upturn also is too little and too late to help owners that chartered out their vessels during the bear market of the past eighteen months or have been forced by cash strapped major carriers like Hapag-Lloyd, Zim and Chile's CSAV to significantly reduce rate. As a result, charter owners are struggling to make money. Euroseas, a Nasdaq-listed ship-owner, has covered around 45 percent of the capacity of its nine container ships for the year at rates that "just about" cover operating costs. By contrast, 100 percent of its bulk carrier capacity has been covered and at profitable levels.
But the rate rally and increasing carrier demand have boosted sentiment across the charter sector, prompting owners like Germany's Dr. Peters to recently re-activate five ships of 600 TEUs-1,500 TEUs capacity.