Charter market ends '18 poorly, sees panamax rescue in sulphur ban
THE short-term charter market outlook for non-operating containership owners is 'grim' according to Alphaliner, but there could be a silver lining from the IMO 2020 regulations next year
THE short-term charter market outlook for non-operating containership owners is 'grim' according to Alphaliner, but there could be a silver lining from the IMO 2020 regulations next year.
That's because the IMO 2020 virtual sulphur emission ban may well occasion a spike in spot demand for old panamaxes in the second half of 2019 because of the downtime needed for ships to retrofit scrubbers in preparation for compliance.
Otherwise, the 'container charter market is ending 2018 on a rather uninspiring note, with continuously weak rates across the board,' said the Paris-based research house.
It added that given the impact of the holiday season that will delay deals until the second week of January, and Chinese New Year following closely in early February, charter market activity is expected to pick up in the second half of February.
This will have a negative impact on daily hire rates as owners of spot tonnage will need to be 'creative' to find employment for their ships, said Alphaliner.
'We really don't expect much business in the next couple of weeks - the days when carriers would feed first and then worry about the cost are long gone,' one broker told London's Loadstar.
'Even if there is a last minute operational problem on Christmas Eve at a port they will just sail away leaving the boxes on board or on the quay,' the London broker said.
In the various sectors rates remain disappointing, despite tight supply in 7,500 - 11,000 TEU ships and smaller 5,300 - 7,499-TEUers.
After a surprising comeback, old 4,000 -5,300-TEU panamaxes are again in the doldrums now that the two-month pre-tariff Christmas rush for transpacific extra loaders has ended.
According to Alphaliner data there are now 23 panamaxes currently searching for new employment which could soon be in cold lay-up and/or sold for scrap.
Fifty-nine box ships totalling 104,000 TEU have been scrapped this year, compared to a total of 151 ships for 431,000 TEU in 2017, according to London broker Braemar ACM.
A pick up in scrapping is likely to be augmented because of the UN's IMO 2020 0.5 per cent sulphur cap regulations coming into force a year from now.
Thus, older 'dirty' ships will be uneconomical to employ after January 2020 given the radically different fuel costs at play by then.