HANSA 04-2017

Märkte | Markets

Märkte | Markets Charter markets turn hot Increased demand for larger vessels sees tonnage supply dwindle. Additional vessel requirements linked to alliance shuffe adding fuel to the fire, writes Michael Hollmann Is this just another short-term spike or the beginning of a sustained recovery? Shipowners and brokers have been left confused by a sudden turn in the charter market since the start of March when period rates began to increase by leaps and bounds for large and very large ships amid a sudden scramble for tonnage. What seemed to begin with positional gains only for highly-effcient wide-beam ships in excess of 7,500 TEU, has evolved into a broader upturn. New higher benchmarks are getting set week after week in all classes down to sub-panamax. Whether it is sustainable or not, the recovery follows the same pattern as in previous market cycles: from the top size classes down to the smaller segments. Rates first pick up for big ships when demand goes up because of the limited »liquidity« in these sectors (fewer ships, fewer charter requirements) in comparison with the feeder/ handy size classes. It is a more price-sensitive environment where even single fixtures can send rates trending either way. According to Alphaliner, the spot supply of tramp ships larger than 7,500 TEU had been slashed to just two units by the middle of March, versus 17 in mid-February. The pace of fixing of very large ships seen over the last weeks is believed to be unprecedented. Carriers are forced to fix already now forward positions several months ahead (May/June) to make sure they can match their requirements. Wide-beam, fuel-effcient 9,000 TEU vessels were spearheading the rally with fixing levels jumping by several thousand dollars within a week. During calendar week 10 the fixture of the 2015-built 9,030 TEU »Andes« at 17,000 $ per day for 12 months to Hapag-Lloyd raised eyebrows among all the chartering fraternity, only to be eclipsed the following week by the 9,034 TEU »Symi« (»UASC Jilfar«) extending with UASC at 20,000 $/day also for 12 months. In the meantime, even older 8,000 TEU class ships with a less effcient operating profile are obtaining rates in the high teens, as illustrated by the extension of US owner Seamax’ 8,063 TEU »OOCL Long Beach« (built 2003) for transpacific round voyage with OOCL at a reported 17,500 $/day. The Hong-Kong based line, which teams up with CMA CGM, Cosco and Evergreen in the Ocean Alliance as from 1 April, has TEU Name dwt Built Type Speed Cons. Charterer Laycan Period Rate ($) FEEDER / HANDY 698 Max Pluto 8200 2009 g’less 17.0 28 CCL Mar 2–4 m China /Japan 4250 936 Moliva 12045 2015 g›less 14.0 20 United Feeder S. Mar 5–7 m Intra-Med (ext) 5400 990 Warnow Carp 12082 2009 g’less 18.8 35 SITC Mar 15–35 days Intra-Asia 5600 1036 Nordic Luebeck 13200 2011 g’less 18.5 CMA CGM Mar 12 m Cont / Baltic 6900 1078 Macau Trader 16696 2001 geared 19.5 PIL Mar 2–5 m Intra-Asia € 6950 1118 Frisia Iller 13760 2007 geared 19.5 36 MCC / Maersk Mar 3–6 m Intra-Asia 5500 1550 RT Odin 20630 2001 geared 20.5 55 + 3 SM Line Mar 2–5 m Korea / Thailand 6100 1708 Kyoto Tower 21981 2007 g’less 19.7 57+2.8 MDO T.S. Lines Mar 1–3 m Japan / Thailand (ext) 7250 1730 Rita Schepers 23040 1997 geared 19.6 54.5 CMA CGM Apr 4–5 m Intra-Med (ext) 7000 1740 Wellington Strait 23367 2012 geared 20.0 54 + 3.5 Evergreen Mar 2–6 m Intra-Asia 6600 1740 Ludwig Schulte 23200 2008 geared 19.5 65.5 CMA CGM Mar 2–3 m Intra-Med trade 6950 SUB-PANAMAX 2546 ST Green 33417 2011 g’less 22.0 83 Samudera Apr 1–3 m S’pore / Vietnam (ext) 6000 2564 Pomeranian Sky 33800 2007 geared 22.0 84.5 Hamburg Süd Apr high reefer, 12 m Med / WCSA 9000 2564 Seoul Tower 34334 2009 geared 20.3 77 MCC / Maersk Apr 3–5 m Intra-Asia 6875 2742 Cape Magnus 37800 2008 g’less 21.8 88 + 4.5 Cosco Mar 40–50 days SE Asia / MidEast 7250 3534 Gerhard Schulte 42150 2006 g’less 16.0 49 + 5 Hamburg Süd Apr 6–8 m ECSA / West Africa (ext) 7500 TRADITIONAL PANAMAX AND WIDEBEAM 3842 Itea 48244 1998 g’less 23.0 130 ACL Mar 6-7 m NEurope / USEC (ext) 7200 4415 Jules Verne 50466 2010 g’less 20.0 75 Maersk Line Apr 75–90 days FEast / Mexico (ext) 8500 4738 Buffalo Hunter 64986 2005 g’less 23.5 Yang Ming Line Mar 40–60 days Transpacific 8000 5060 Margrit Rickmers 67550 2005 g›less 24.3 150 Seaconsortium Mar 2.5–4 m Intra-Asia trade 7500 5075 Atlantic Altair 66937 2005 g’less 23.5 145 Maersk Line Mar 5–7 m Far East 8750 5466 Christa Schulte 65100 2014 g’less 22.0 Maersk Line Mar 12 m Far East / WAfrcia (ext) 8800 LARGE AND VERY LARGE 5527 Allegoria 68228 2006 g’less 23.8 217 Hapag-Lloyd Apr 5–7 m US Gulf / ECSA (ext) 13500 5908 Ikaria 67470 2002 g’less 24.5 210 OOCL May 5–7 m transpacific trade 13000 5986 Tasman 67515 2000 g’less 25.0 200 Hapag-Lloyd Apr 9–12 m Far East 8500 6539 Pucon 81112 2006 g’less 25.5 OOCL Apr 12–14 m Far East 10750 6589 Maule 81002 2010 g’less 25.3 214 NYK Line Apr 70–90 days FEast / Med (ext) 12500 6882 Cape Chronos 79295 2015 g’less 22.5 101 NYK Line Mar 6–9 m Far East 13800 8063 OOCL Long Beach 99508 2003 g’less 25.0 OOCL Mar 1 transp. round voyage (ext) 17500 9034 Symi / UASC Jilfar 111890 2014 g’less 22.0 125 Hapag-Lloyd May 11–13 m Far East / Med (ext) 20000 10010 Seaspan Amazon 115177 2014 g’less 18.0 91 Hapag-Lloyd Apr 5–24 m FE / ME (escal. rate) 13500/20000 11010 Cape Artemissio 134869 2017 g’less 22.0 Hapag-Lloyd Jun 12 m transpacific trade 18500 Charter deals March / all information without guarantee 14 HANSA International Maritime Journal – 154. Jahrgang – 2017 – Nr. 4

Märkte | Markets been particularly active in the charter market of late, adding at least eight very large charter vessels to its fleet between mid-February and mid-March. The largest among these was a trio of brand-new 11,000 TEU vessels from Greek owner Costamare. OOCL’s »fixing frenzy« certainly helped push the market up, but some of the early fixtures it made look extremely attractive now. It was able to cover two 8,000– 8,500 TEU positions for flexible periods up to 7 months at rates below 9,000 $/day. Its competitors may have to pay twice as much today to secure the same type of tonnage. Another very active player over the past fortnight was Hapag-Lloyd whose latest transactions are reported to include a 12 month period on the 11,010 TEU newbuilding »Cape Artemissio« at 18,500 $/day and 5–24 month periods at escalating rates from 13,500–20,000 $ on two 10,000 TEU Seaspan ships. Hapag-Lloyd is in the lead at »THE Alliance« together with NYK Line, MOL, K Line and Yang Ming. Seeking capacity According to brokers, it comes as no surprise that those carriers who are deeply involved in the pending liner alliance shuffle emerge as the busiest charterers. Much of the activity today is driven by new alliance partners »seeking capacity to match their new service patterns«, as one British broker explained. Many operators seem to have temporized chartering requirements over the last six months as service networks were reconfigured among new alliance partners. Now they must bring in the required ships to make sure everything is up and running. The question – what happens next? Do operators only need more charter vessels for the transition period from old to new alliances – for contingency? Will they start to redeliver vessels again once the new alliance operations are streamlined? The fact that the number of east-west alliances gets reduced from four (2M, Ocean 3, G6, CKYHE) to three in the future (2M, Ocean, THE Alliance) suggests that slot efficiencies will generally be improved and slack capacities cut back. More effcient use of capacity could mean fewer chartering requirements – provided other things being equal. However, there is evidence that container trade growth is picking up, with cargo throughput growth at China’s top 8 container ports reaching nearly 5% in the first two months of this year. The RWI/ISL global container handling index also gained a considerable 6 points to 124.5 in February, in what »appears to be a solid upward trend«, the institutes concluded. Therefore, liner operators are likely to need additional tonnage to cover the trades – despite all productivity gains. Also, the other factor that helps capacity supply and demand to balance out is slippage of newbuilding deliveries and demolition, with scrapping outpacing fleet additions by some 50,000 TEU since the beginning of the year. Glass half full or half empty? Optimists find themselves vindicated by the fact that rate improvements are already filtering through to the intermediate size classes. Against all expectations, even panamax ships have seen charter rates almost double from low 4,000’s $ to high 8,000’s over the past weeks. High demolition sales and a rebound in chartering activity resulted in tonnage shortages, mainly in the Atlantic but also in the Asian-pacific region. The peak rate that has been confirmed so far is 8,750 $/day on a maxi-panamax in the Far East. Brokers even suggest that one baby panamax (4,250 TEU) has obtained 9,000 $ flat, but the deal still needs board approval of the charterer. Positive as it sounds, chartering professionals caution that even with these improvements charter rates are still far from cost-effcient for tonnage providers. Some are in fact frustrated by the slow pace of recovery. As one tramp shipping executive pointed out to HANSA: »We should see increases of several thousands on last done, not of a few hundred dollars!« Apart from raising their rate ideas, owners should make sure that tonnage availability remains limited through further scrapping of older units, brokers are urging. The danger is that idled panamaxes will be mobilized out of cold lay-up too fast, starting to compete for today’s improved rates and possibly undermining them again. »That could spoil it all,« one broker said. Still it seems that the rate hikes for panamaxes were enough to boost confidence in some of the sectors below. Gearless 2,700/2,800 TEU ships were struggling to achieve any meaningful gains for months despite a relatively tight tonnage situation. However, over the last weeks, fixing levels in the Far East gradually improved from high 6,000’s to over 7,000 $. Now it seems owners are shifting up a gear, with reports about a gearless 2,800 TEU Wenchong type vessel achieving 8,750 $ for short period with an major Asian charterer. M COMPASS CONTAINER SHIP T/C MARKET 340 23.03.17 320 300 280 25.10.16 Month on Month 341 +11.5 % CONTAINER FREIGHT MARKET WCI Shanghai-Rotterdam 1,542 $/FEU - 7.5 % WCI Shanghai-Los Angeles 1,356 $/FEU - 23.6 % DRY CARGO / BULK SHORTSEA / COASTER TANKERS Average rates spot/up to 4 weeks validity WCI = World Container Index, supplier: Drewry Baltic Dry Index 1196 + 39.7 % Spot time charter averages ($/day) Capesize 5TC average 16,966 + 86.5 % Panamax 4TC average 9,404 + 26.3 % Supramax 6TC average 9,838 + 15.8% Handysize 6TC average 7,644 + 24.0 % Forward / ffa front month April ($/day) Capesize 180k 16,400 + 82.6 % Panamax 9,840 + 16.0 % Norbroker 3,500 dwt earnings est. 2,600 €/d + 6 % HC Shortsea Index 16.58 + 2.3 % ISTFIX Shortsea Index 608 - 0.2 % Norbroker: spot t/c equivalent assessment basis round voyage North Sea/Baltic; HC Shipping & Chartering index tracking spot freights on 5 intra-European routes; Istfix Istanbul Freight Index covering spot freight ex Black Sea Baltic Dirty Tanker Index 816 + 4.3 % Baltic Clean Tanker Index 790 + 28.6 % BUNKERS IFO 380 Rotterdam $/t 268 - 11.3 % MGO Rotterdam $/t 431 - 9.3 % Forward / Swap price Q2/17 IFO 380 Rotterdam $/t 295.2 - 1.6 % Data per 24.03.2017, Alterations within four weeks HANSA International Maritime Journal – 154. Jahrgang – 2017 – Nr. 4 15