Overcapacity making waves in the containership charter market
Owners of mid-sized containerships, 7,500-11,000 teu, are suffering from the traditional slack season lull in charter ...
Non-operating owners (NOOs) are bearing the brunt of the overcapacity in liner shipping, now controlling nine out of ten laid-up ships, according to the latest update from Alphaliner.
As at 26 June, there were 202 vessels recorded as idle – inching up from 195 two weeks earlier – of which, 182 were registered to NOOs.
However, in terms of total cellular capacity the percentage is slightly lower. Of the 536,108 teu in lay-up, 457,020 teu, or 85%, is NOO capacity.
Ocean carriers have been able to better manage their owned fleets and newbuild deliveries and are still enjoying the flexibility of being able to fix and off-hire charter vessels without difficulty to cope with peaks and troughs in demand.
This represents quite a turnaround from previous years. According to Alphaliner data, at the peak of the financial crisis in 2009 over 60% of laid-up box tonnage was owned by container lines and, even just a year ago, the figure for liner-controlled capacity was just shy of 40%.
“With the burden of idling now resting squarely on the NOO side, carriers have been able to retain much of their bargaining power in picking up new charters at rates that have continued a downward path,” said Alphaliner.
Brokers report that Maersk Line has been exceptionally busy in the charter market of late and has used its exceptional buying power and industry credibility to drive down rates. Alphaliner notes that in the past few weeks Maersk has fixed or extended “no fewer than 12 container vessels with capacities ranging from 5,500 teu to 9,900 teu”.
It said the Danish carrier had “concluded most deals at charter rate levels which Alphaliner believes could have been higher, considering the current supply environment”.
Examples given by the analyst of recent Maersk fixtures include the 9,954 teu Adamastos, fixed for three-to-six months at $14,000 a day; the 8,533 teu Lloyd Don Carlos, fixed for two-to-three months at $12,500, and the 8,189 teu Conti Annapurna, extended for two-to-four months at $11,600 a day.
These rates, said Alphaliner, “can hardly compensate their owners” – except for those that acquired distressed ships at rock-bottom prices.
Meanwhile, in the embattled classic panamax 4,000-5,300 teu sector, daily hire rates are continuing to head south after the brief rally in March and April, which was linked to the restructuring of the alliances.
In fact, the New ConTex weekly time charter index, published by the Hamburg Shipbrokers’ Association, recorded a further 1.9% weekly decline on 29 June; a typical 4,250 teu panamax fetching $7,700 a day for a 12-month charter.
Hire rates for this type have slumped from a high of around $10,000 a day in April, but nonetheless are still better than a year ago when panamax owners would consider themselves fortunate to obtain a daily $5,000.
Meanwhile, the demolition market continues to be slow, after initially softening in May, and is now being impacted by the advent of the monsoon season on the Indian subcontinent.
According to the latest report from London-based broker Braemar ACM, there have been just seven containerships sold for recycling in the past 30 days, bringing the cumulative demolition figure for the year to 102 vessels, for 308,000 teu.