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Shipowners 'see dollar signs' as charter market soars

THE latest Alphaliner idle tonnage report shows that a further 65 vessels, for a total of 155,350 TEU, have found employment in the past two weeks, driving charter rates to new highs

29 September 2020 - 04:54

THE latest Alphaliner idle tonnage report shows that a further 65 vessels, for a total of 155,350 TEU, have found employment in the past two weeks, driving charter rates to new highs.

According to the Alphaliner report, just 163 containerships were idled as at September 14, which includes 21 which are out of service for scrubber retrofits.



At 644,293 TEU, representing 2.7 per cent of the global containership fleet, idle tonnage has slumped from around 1 million TEU just a month ago, reflecting the aggressive strategy of ocean carriers to charter virtually any size ship to take advantage of skyrocketing freight rates on many trades.



The strength of demand for tonnage from the liners has resulted in daily hire rates for some sectors hitting all-time highs, with, in particular, adaptable panamax 4,000-5,000 TEU vessels able to command rates of up to US$20,000 a day, nearly 200 per cent higher than the market rate at the start of the pandemic, according to UK's The Loadstar.



'The strong cargo demand on many routes, particularly on the Pacific and Asia-South America trades, as well as the shortage of larger tonnage, is driving this rally,' said Alphaliner.



'Short employments are commanding especially healthy charter rates, as carriers are keen to cover their high-paying spot cargo requirements, but longer charters are also seeing fast-improving figures,' it added.



Brokers told The Loadstar there was 'virtually no availability' in the larger-size containerships, of 6,000 TEU and above, with visibility on vessels becoming open in the next month to two months 'not looking good'.



'Rates are irrelevant if we can't get the open ships,' said one broker, 'and those ships that have options are all being extended.'



Moreover, the charter market rally has extended into the smaller sizes that hitherto lagged in terms of daily hire rate improvements.



One broker said carriers that would previously have regarded ships of 3,000 TEU and below as too small to be economically viable, had returned to the market, pushing rates higher.



'I've had several enquiries this week from carriers for sub-panamax ships, and owners are really seeing the dollar signs now,' the broker said.



However, Alphaliner added some words of caution about the sustainability of the containership charter market rally. It questioned how long the 'current bonanza' on the demand side could last, 'considering the depressed state of the world economy and the ever-threatening Covid-19.



'A greater availability of larger tonnage, quite likely during and after the forthcoming Chinese Golden Week holiday, could also take its toll.'


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