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Falling freight rates, increasing lay-ups depress charter market prices

THE charter market for containerships is slipping fast in the face of sliding freight rates and increasing lay-ups, according to Alphaliner analysts, which adds that current trends indicate charter rates will fall even more by the end of the year.

Falling freight rates, increasing lay-ups depress charter market prices
27 July 2011 - 22:45

THE charter market for containerships is slipping fast in the face of sliding freight rates and increasing lay-ups, according to Alphaliner analysts, which adds that current trends indicate charter rates will fall even more by the end of the year.

Maersk, MSC, CMA CGM continue to be active charterers, but CSAV is re-chartering surplus ships. Alphaliner says CSAV's continuous cutting of services will result in the Chilean carrier removing 100,000 TEU from its slot capacity by the end of August.

Further capacity could be lost if rates continue to fall. The top-four charterers - Maersk, MSC, CMA CGM and CSAV - account for more than 25 per cent of all fixtures. Any slowdown by any of them will have a significant impact on the market, it said.

Because of uncertain market conditions, more charterers are unwilling to sign longer-term deals. This trend is aggravated by the fact that owners have had to accept short charters in an increasingly fragile market as demand weakens.

Both the number of fixtures and the fixture periods have declined significantly since April. Charter rates have dropped by 11 per cent on average in the last three months, with all size segments affected.

Rates are likely to drop in coming months as demand slackens. InJune, the number of reported fixtures reached at the lowest level this year. The average duration of fixtures was cut from 10 months at the beginning of this year to seven months currently.

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