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HANSA 05-2020

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BunkerTrace | Shipmanagement & COVID-19 | Griechenland | Tanker-Schifffahrt | Offshore-Wind | Briese Chartering | Interview Thomas Press | United Heavy Lift | MPP-Schiffe & Ladungen

Märkte | Markets

Märkte | Markets Pandemic knocks down boxship rates The impact of large-scale lockdowns on the container trades intensifies, with tonnage overcapacity surging and employment prospects dwindling. By Michael Hollmann Although the freeze of western economies is gradually thawing thanks to cautious lifting of quarantine measures, the immediate prospects for shipping continue to worsen. Up until April, cargo flows in the container sector appeared to be holding up relatively well. A lot of merchandise, ordered and produced before the pandemic, still had to be shipped. Now the grace period is over, cargo volumes are disappearing at an alarming rate. By how much trade volumes are going to be slashed this year is everyone’s guess. Shipping analysts have come up with estimates of -7% to -10% for global loaded container traffic. However, these can be considered no more than »spur of the moment« projections given that the global economic implications of the pandemic are still hard to grasp. The situation is so volatile that even multinational agencies are making large caveats to their forecasts. The World Trade Organisation (WTO) expects world trade to drop anywhere between 13% and 32% this year, the International Monetary Fund (IMF) ventures a more modest -11% contraction for trade. The short-term impact is far more severe, with purchasing manager indices for Europe and the US – the biggest import markets for container shipping – dropping like a stone in April. Freight rates still up year-on-year Container lines are blanking more sailings by the week. The tally of withdrawn sailing capacity has reached 30% in the Far East/Europe trade for the coming weeks. As freight forwarders currently report tight space availability for cargo bookings, the fall in actual trade volumes might well be around the level of the blanked capacity. The carriers’ efforts have been reasonably successful in maintaining freight rates, with the World Container Index (WCI) by Drewry assessing average spot rates in the east/west trades almost unchanged month-on-month as per end of April, but up 11% year-on-year. To prevent a collapse in revenue, it is absolutely essential for container lines to efficiently manage their capacity and maximise freight rates. In unserem Portal HANSA+ vereinen wir eine Übersicht wichtiger Kennzahlen der Märkte. Sichern Sie sich den Zugriff auf Fracht- und Charterraten in der Container-, Bulk- und Tank schifffahrt, Bunkerpreise, MPP-, Shortsea- und Umschlagindizes, Ölpreise und vieles mehr … Erfahren Sie mehr über alle Optionen jederzeit unter Much of the burden of overcapacity will be passed on to non-operating owners. After a prolonged period of resilience, the charter market for container ships came under intense pressure during April. Redeliveries of charter ships gathered momentum as carriers prioritise their own vessels. In line with another surge in idle fleet capacity, the pool of unemployed spot ships expanded rapidly. As per 20 April, Alphaliner counted 183 container ships available on spot basis, against only 115 four weeks prior. Panamaxes, gearless 2,700/2,800 TEU, midsize 1,600- 1,800 TEU and the smallest feeder vessels below 1,000 TEU recorded the steepest increases in spot tonnage. Consequently, charter rates began to slip more quickly, with the New ConTex showing a 6% drop month-on-month for »normal« periods. Fixing levels for shorter and flexible periods which are the order of the day, are dropping even faster. Big ships – big falls Notably, large gearless vessels of post-panamax dimensions are coming under heavy pressure now. The latest reported fixture was the 7,241 TEU »Adrian Schulte« at 18,000 $/day for 4-6 months to Global Feeder Shipping – down 30% on market levels during February. Further, another modern 6,900 TEU ship reportedly accepted upper 17,000’s $/day for 2-3 months which was 10,000 $ less than a sister had fixed in late February. London broker Howe Robinson saw charter rates for post-panamax ships drop by a staggering 7.5-9.1% within just one week. MSI predicts rate levels for 8,500 TEU and 6,500 TEU ships to fall to 12,500 $/day and 11,400 $/day by August – half of what they were back in February. Pressure on rates for these big vessels is likely being compounded as carriers offer their own ships as relets and as more units return from scrubber installations at shipyards, brokers warn. For most of the classes below 5,000 TEU, the downward trend has not been quite as sharp. Baby panamax container ships of 4,250 TEU capacity suffered a deterioration from high 11,000’s $/ay to around 10,000 $/day in Asia over the past month. Owners of gearless 2,700/2,800 TEU ships – described by brokers as the most active segment despite a rise in tonnage availability – managed to limit losses to around 500 $. Aker/Thyssen types were still achieving around 9,000 $/day in Asia, Hyundai Mipo types around 8,500 $/day – all still comfortably above opex. For the smaller handy types below 2,000 TEU, market conditions are deteriorating rapidly now driven by tonnage redeliveries in the Atlantic as well as in Asia. Owners of modern economic 1,700 TEU ships like the Topaz type are forced to back-pedal, with fixing levels sliding below 10,000 $/day in Asia just after having recovered to 10,500 $/day. n 8 HANSA – International Maritime Journal 05 | 2020

Märkte | Markets Orders & Sales New Orders Container Not surprisingly, the Corona crisis has the market for container ship newbuildings fully under control. No orders have been announced recently. Therefore, the last reported transaction still is the order of four Bangkokmax type ships (1,686 TEU). They will be built for an unkown price by Chinese Yangfan Group (formerly known as Zhoushan Shipyard) for Zheijiang Haigang, a joint venture of Ningbo Zhoushan Port Group and Zhejiang Seaport. Since then, shipping companies and their financial partners are very tentative on investments as further market developments and thus the demand for tonnage as well as the sitution at shipyards remain unclear. Secondhand Sales Also the second hand market for container ships has more or less come to a standstill. However, brokers expect the crisis to have an impact, that more ships are coming onto the market whose owners could get into financial difficulties. Prices are rumoured to be falling already. Demolition Sales On the large scrapping markets, little or nothing has happened in recent weeks either as many locations have been closed. It is unclear when the standstill will be lifted. Only then any price trend will be visible. MM Container ship t / c market 450 400 350 24.10.19 Container freight market WCI Shanghai-Rotterdam 1,490 $/FEU - 13.0 % WCI Shanghai-Los Angeles 1,558 $/FEU + 5.3 % Dry cargo / Bulk 23.04.20 Month on Month 364 • - 6.0 % Baltic Dry Index 672 + 18.1 % Time charter averages / spot: $/d Capesize 5TC average 8,531 + 123.4 % Panamax 4TC average (82k) 6,832 + 6.1 % Supramax 10TC average (58k) 4,208 - 43.3 % Handysize 7TC average (38k 4,556 - 39.0 % Forward / ffa front month May’20 ($/day) Capesize 180k 9,275 + 112.4 % Panamax 74k 7,205 + 7.7 % MPP April ’19 $ 7,610 TMI Toepfer’s Multipurpose Index April ’20 $ 6,863 12,500 tdw MPP/HL »F-Type« vessel for a 6-12 months TC Tankers Shortsea / Coaster Norbroker 3,500 dwt earnings est. 2,300 - 20.7 % HC Shortsea Index 16.84 - 8.4 % ISTFIX Shortsea Index 455 + 5.5 % Norbroker: spot t/c equivalent assessment basis round voyage North Sea/Baltic; HC Shipping & Chartering index tracking spot freights on 5 intra-European routes; Istfix Istanbul Freight Index covering spot freight ex Black Sea Bunkers COMPASS Baltic Dirty Tanker Index 1525 + 42.7 % Baltic Clean Tanker Index 1831 + 113.6 % VLSFO 0.5 Rotterdam $/t 178 - 20.9 % MGO Rotterdam $/t 213 - 25.0 % Forward / Swap price Q3 / 20 VLSFO 0.5 Rotterdam $/t 119 - 23.3 % Data per 23.04.2020, Alterations within four weeks Dry Bulk: A bit of relief only for capesizes The Baltic Dry Index recovered by 18% over the past four weeks but that headline figure masks the true state of the market. The only vessel class benefiting from higher rates is capesize bulkers. A revival of iron ore chartering activity ex Brazil and – to some extent – by South Africa pushed time charter earnings for 180,000 dwt ships back above ,000, but only for a brief moment. By the time HANSA goes to press, levels were down to 8,500 $/day, which is still 123% better than four weeks ago. Panamaxes also staged a bit of a recovery on the back of grain business on the East Coast of South America, however for all the smaller geared bulkers spot earnings collapsed. Handies suffered the worst market since 2016 as business across the Atlantic dwindled while the Pacific continued to be even worse, further depressed by the lockdowns in India and South Africa. The multipurpose/heavy lifter segment faced massive pressure, too. The Toepfer Multipurpose Index for F-type 12,500 dwt ships dropped by 5% to 6,863 $/day in April – its first reading below 7,000 $ after two years. Plenty of breakbulk parcel cargoes are getting cancelled these days, disrupting voyage operations for carriers. Spot/ © Oldendorff Carriers prompt vessel positions 1-2 weeks ahead have surged, according to brokers, forcing operators to renegotiate charter rates or redeliver ships. Although waiting and commercial off-hire times have increased, more or less all mpp vessels still get employed, as single time charter trips continue getting fixed in greater numbers, market insiders report. The European shortsea market also took a hit as business disruptions across Europe weighed down on cargo flows. »Freights are collapsing in every corner of the market«, commented market research firm BMTI. The European Short Sea Index fell by 13% month-on-month (22 April). After a prolonged period of stability, the North European routes suffered the steepest drop. The average freight rate for 3,000 t stems from the Baltic states to the ARA region dived by 25% to just 19 €/t since end of March, according to BMTI. n HANSA – International Maritime Journal 05 | 2020 9

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