HANSA 02-2022

MÄRKTE | MARKETS New

MÄRKTE | MARKETS New year, new benchmarks Upward pressure on charter rates and second-hand values of container ships has increased again amid vigorous tonnage demand at the start of the year. By Michael Hollmann Confidence in the container market is unwavering as 2022 is off to a brisk start. Those who expected the market to have hit a ceiling were proven wrong, with operators willing to up the ante on long-term employments for ships coming open not until the second half of the year in some cases. The trend is illustrated by a rebound of the New ConTex since end of December. It gained almost 15 % over the past four weeks, bringing it back to almost 3.000 points by 20 January. It had peaked at 3.267 in October after a spate of shortterm and round voyage fixtures for ships up to panamax class at unprecedented levels reaching around 200,000 $/day. This time the gains are driven mainly by improved long-term hire rates of 3–5 years, brokers say. Hapag-Lloyd was reported to have secured the largest ship available so far this year, paying a firm 39,000 $/day for 60 months on the 4,200 TEU »Amalthea«, but with delivery not until July/August. Given the extremely tight supply situation in this segment throughout the year, »this fixture could look attractive for the charterer in the coming weeks with imminent increases on the horizon,« one broker commented. Only around a dozen units of a similar size are believed to come up for charter renewal in the next six months. A number of carriers have already posted requirements for panamax vessels, with top operators and smaller operators all fiercely competing for the rare positions this year. Some charterers would rather buy outright than charter in a bid to contain costs although ship values are hitting eye-watering levels as well. Demand cascades down … One Greek-owned Hanjin 4300 type is said to be attracting buying interest at a whopping 90-100 mill. $ with charterfree delivery in spring. The firming sentiment is also rubbing off on slightly smaller vessels as tonnage demand cascades down into the 3,500 and 2,500–2,800 TEU sectors. Highlights in the opening weeks of the year include a 3-year period for MPC Containerships’ 3,586 TEU »AS Nadia« at 61,000 $/day with US carrier Pasha Hawaii. Not to be outdone, sub-panamax types saw rates edging higher quickly in a succession of deals in the first 2–3 weeks. Operators are already scouring for vessels in this class for lay-can dates as far ahead as the third quarter, say brokers who expect further improvements. In the geared 2,500 TEU class, activity kicked off with the extension of a quartet of ships by Maersk at $ 45,000 per day basis 16-18 months, a relatively short commitment. Below 2,000 TEU, there were a number of short and mediumperiod fixtures for 1,700/1,800 TEU at very strong levels. Taiwan’s Yang Ming Line reportedly took the Wenchong 1700 »Bindi Ipsa« (1,815 TEU, gearless) at 80,000 $/day for a 1-2 month employment in Asia from March. Longterm interest remains strong as well, with 3-year periods on standard geared 1,700 TEU’s forecast to breach the 30,000 $/day-barrier soon. Latest indications are that container loadings continue to grow at an average annual rate of +3-4 % compared with 2019 while effective fleet capacity remains heavily constricted by port and intermodal congestion. Amid the growing backlog of cargo and increased urgency to secure premium slots on sailings ex Far East ahead of Chinese New Year, freight rates recorded further increases up until VIEWPOINT »Less upside potential but still opportunities« With a lack of capacity in a number of shipping sectors, there is a good case for shipowners to keep adding tonnage via second-hand purchases or newbuilding projects, says Christian Zachariassen, managing director of shipbroking house Andreas J. Zachariassen. However, competition is fierce, hence quick decisionmaking will be key this year. With hindsight, what were the best S&P-transactions over the last year, what were the worst? Christian Zachariassen: Of course all deals done via us were the best! Jokes aside, in terms of purchasing, all deals done in the container and MPP sectors were extremely good as the market has continually risen over the last 1.5 to 2 years. Consequently, I would call most selling deals »less good«, but I would strongly condemn the use of »worse« transactions as selling in a rising market and turning over profits is never a bad thing. On a concrete note, it brings to mind the purchase by my former company Leonhardt & Blumberg, where I did my apprenticeship as a young man, of two Aker 1,700 TEU vessels built 2008 for a rather low price as a prime example of timing and courage. Christian Zachariassen – Managing Director, Andreas J. Zachariassen © Zachariassen 10 HANSA – International Maritime Journal 02 | 2022

Orders & Sales – Container Ships New Orders While German MPC chose Hanjin for building four 5,500 TEU units, the new liner market leader MSC placed an order for 6 x 15,000 TEU LNG-ships at HHI for 182 mill. $ each. Maersk declared an option for 4 x 16,000 TEU methanol-fuelled units at HHI at 175 mill. $ each. Also some smaller sized vessels were contracted, e.g. by Sinokor (4 x 2,500 TEU), Capital (3 x 1,800 TEU) and ASL (3 x 1,800 TEU). Secondhand Sales What a »surprise«: Among the buyers is MSC, securing three feeders from German management: »Victor« (2,754 TEU) from Zeppenfeld, »Vega Sagittarius« (997 TEU) from Vega and »Fas Dammam« (847 TEU) from Armin Klingenberg. Among the various other transactions was a acquisition of two 1,800 TEU units by Wan Hai. Following the transfer of 12 feeder vessels at the turn of the year, Ernst Russ is now selling the 800 TEU vessel »Dance« to an initially undisclosed buyer. Demolition Sales »The same procedure ...«, as a popular TV show on New Year’s Eve says: Tight capacity means high demand for tonnage, high rates and low to no incentive for demolition of container ships. No sales have been reported. the middle of January. In the wake of escalating spot rates, long-term rates for annual and multi-year contracts leapt higher as well, providing carriers with enhanced income certainty. As Norwegian freight benchmarking platform Xeneta reported, long-term contract rates (minimum 3 months) for liftings from the Far East to North Europe were averaging 9,300 $/FEU at the start of January, close to a three-fold increase from levels at the start of 2021. With further covid outbreaks and partial lockdowns in or around major port cities in China, delays in China are expected to keep container turnaround times stretched and equipment availability tight. Many commodity sectors are reporting enornmous backlogs of cargo that cannot be moved due to lack of containers. Shipments of US cotton are lagging scheduled commitments to such an extent that markets are worried contracts could be cancelled due to non-performance, the Bremen Cotton Exchange has warned. Plenty of produce in Brazil also remains off-limits for European buyers, it said. Container ship t / c market 3500 3000 2500 2000 19.08.21 Container freight market WCI Shanghai-Rotterdam WCI Shanghai-Los Angeles MÄRKTE | MARKETS COMPASS ConTex 14,053 $ /FEU 11,197 $ /FEU 20.01.22 Month on Month 2,995 +14.6 % Dry cargo / Bulk Baltic Dry Index 1,474 Time charter averages / spot: $ /d Capesize 5TC average 8,547 Panamax 5TC average (82k) 18,220 Supramax 10TC average (58k) 19,503 Handysize 7TC average (38k) 20,195 Forward / ffa front month (Feb 22): $ /d Capesize 180k 11,536 Panamax 82k 18,347 MPP TMI – Toepfer's er's Multipurpose Index +3.0 % +9.5 % -33.6 % -56.2 % -19.5 % -23.0 % -24.1 % -38.5 % -24.0 % January '22 20,875 $ January '21 7,005 $ What kind of opportunities do you expect this year? Anything left or emerging? Zachariassen: Sure, there are many opportunities left for owners. However, these will be more challenging. First and foremost, major liner companies have emerged as the premier buyers of container and MPP tonnage and new opportunities might come by with less upside potential, due to higher initial investments, technological uncertainties, and perhaps longer remaining time charters on the vessels. But those who boldly order new tonnage, which the market will surely devour, will reap the benefits. Will German buyers play a bigger role as buyers as balance sheets get strengthened again? How are your local clients doing? Zachariassen: Bigger role, we would probably say a clear »maybe«, as there are simply fewer owners than in the past. However, I do see that role being more significant for our owners. With strengthened financial stability and thus greater autonomy, owners have achieved what is now required, the ability to execute deals quickly in this highly competitive environment. I therefore expect more deals to be done here, maybe not so much on the second-hand buying market, but rather on newbuildings and branching out into other sectors. Interview: Michael Hollmann 12,500 tdw MPP/HL »F-Type« vessel for a 6–12 months TC Tankers Baltic Dirty Tanker Index Baltic Clean Tanker Index 692 567 -12.2 % -28.9 % Shortsea / Coaster Norbroker 3,500 dwt earnings est. € HC Shortsea Index BMTI/EUSSIX Black Sea route ($/t) 5,000 30.36 34.25 +11.1 % +5.0 % -20.5 % Norbroker: spot t/c equivalent assessment basis round voyage North Sea/Baltic; HC Shipping & Chartering index tracking spot freights on 5 intra-European routes; BMTI/EUSSIX: 3,000 t Odessa to Sea of Marmara Bunkers VLSFO 0.5 Rotterdam $ /t MGO Rotterdam $ /t Forward / Swap price Q2/22 VLSFO 0.5 Rotterdam $ /t 663 773 586 +22.1 % +3.7 % +16.0 % Data per 20.01.2022, month-on-month HANSA – International Maritime Journal 02 | 2022 11