MÄRKTE | MARKETS
MÄRKTE | MARKETS Boxship market overheated or still heating? The rallye in container shipping showed no signs of easing in the past weeks. Scarce as it is, charter tonnage gets committed for ever longer periods far in advance. By Michael Hollmann The familiar haggling about $ 50 freight more or less per TEU looks like a silly game of the past as the abnormal capacity and equipment squeeze continues. Those who hoped that the situation can only improve were badly disappointed as the week-long blockage of the Suez Canal by the grounded »Ever Given« caused another escalation. Vessel systems and equipment logistics in European trades got disrupted to such an extent, it will take container lines until the third quarter to restore their schedules, experts warn. Freight rates had just been sliding for a few months only to surge again from late March, with market sources reporting steep rises of 50 – 75 % also for contract freight rates that make up the lion’s share of liner business. Sure enough the first quarter was another pinnacle in liner profits. In this regard, the ongoing voracious appetite for charter tonnage looks plau - sible despite growing concerns that the market could overheat. Charter rate levels measured by the New ConTex rose by almost 18 % during the past four weeks. If only half that momentum be maintained, then the previous all-time highs of the mid 2000’s will be in reach soon – something no one thought ever possible again. Just as staggering as the rate increases is the rapid lengthening in periods, providing tramp owners with cover into the mid 2020’s in some cases. Three Germanowned Northern »J« types (8,800 TEU) are reported to have secured four-year periods with MSC at almost $ 45,000 off forward positions. But it is not just the major global ope rators daring such long commitments. A geared 3,600 TEU ship (»Chopin«) even secured five-year cover at $ 20,000 with Spanish niche carrier Marguisa. The gearless 2,800 TEU segment sees standard durations increasing from two to three years while the smaller feeders have almost established two years as standard. Recent fixtures include the extension of the »Nordleopard« (1,756 TEU) at mid $ 23,000’s for 24 months to CMA CGM and the 925 TEU »Contship Joy« at 11,500 $/day for three years (!) to Zim. With some many vessels disappearing for long periods, it is no surprise that prompt tonnage availability six months out is less than half what charterers were accustomed to on average over the past decade, according to London shipbroker Howe Robinson. Almost everything that floats is put to use by liner operators as the peak shipping season is yet to come. Alphaliner reports that the (commercially) idle fleet has shrunk to 0.8 % of total worldwide capa city, down from 1.1 % four weeks earlier. Tramp ships immediately available for charter have remained absent for weeks. Although both charterers and shipowners seem to be benefiting the VIEWPOINT »Firm markets beyond corona« Tonnage shortages won’t suddenly disappear if the world goes back to normal after the pandemic, says Burak Cetinok, head of research at Arrow Shipbroking in London. However, new environmental regulation will aggravate a two-tier market, the trained economist and engineer explains. The pandemic and its socio-economic effects are causing turmoil in most shipping segments. For some (containers) it turns out favourable, for others less so (tankers). How quickly will market conditions readjust if corona gets brought under control? Burak Cetinok: I don’t expect abrupt changes in the market in the second half – rather a gradual stabilisation. Containers benefited from surging pandemic-related exports last year. Demand Burak Cetinok, Head of Research at Arrow Shipbroking in London for stay-at-home goods and PPE is likely to ease as economies reopen. However, general consumer goods demand is © Arrow Shipbroking likely to revive, with the latter effect far outweighing the former. I also expect congestion to persist, increasing inefficiencies and keeping fleet utilisation high. With Chinese demand at multi-year highs and the rest of the world coming back to life, I expect global dry bulk demand to remain strong. Coupled with slowing fleet growth, dry bulk earnings should remain firm for the rest of the year. The outlook for oil demand is more uncertain. Transport demand is key to recovery but with restricted international travel we expect jet fuel demand to lag and be the main drag. Hence a recovery in tanker demand is likely to be gradual and uneven. Shipping is just emerging from a decade of extreme distress (post-Lehman), with buying interest for vessels exploding recently. Are investors right to assume today is the start of a sustained boom or even super-cycle? 8 HANSA – International Maritime Journal 05 | 2021
