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SMM Digital

Strongest containership charter market in 12 years yet to reach peak

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The container charter ship market is at its highest levels since 2008 and there is confidence that it will continue this year, with more to support rates than just the impact of the Covid-19 pandemic on boxshipping.

Soaring container freight rates and a shortage of boxes have been well documented, containership charter rates have also been enjoying their day in the sun, if not quite at the record levels seen for freight rates.

A surge in charter rates has been witnessed across all sizes of containerships has led the Howe Robinson Containership Charter Index to stand at 1,293 points last week, its highest level in over 12 years since 2008.

John D’Ancona, head of containership research for Howe Robinson Partners, told the Tradewinds Shipowners Forum at SMM Digital, “Certainly these 12 years have been incredibly important, not only the difficulties but also creating the solution to where we are at the moment.

He said that some people would prescribe positive growth in rates in 2019 to scrubber retrofits taking tonnage out of the market, and 2020 to Covid, however, D’Ancona believes that a steady improvement in the fundamentals meant that the market was already on this path.

While the spot market hit a low point in May 2020 with 200 spot ships sitting idle it bounced back quickly as activity picked up and lines tried to deal the dislocation that had taken place in the global supply chain. “Very quickly we saw the spot count go down to barely anything and suddently we’ve got a much stronger market situation,” he said.

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This has prompted what D’Ancona sees as another pillar of support for the charter market that could help higher rates last a lot longer – container lines buying up tonnage secondhand. “They have really pounced on the market and have been buying up these ships,” he said.

Looking ahead D’Ancona remains optimistic on charter rates for shipowners. “Charter rates may moderate across the board, but I don’t believe they will crash, and potentially the lower point could be by Q3, but by Q4 then starts to move back.”

D’Ancona was not alone in his view among speakers in the panel session that followed his presentation.

Simon Aust, managing director of Blue Chartering said, “I think we haven’t reached the peak. If you look at the availability of ships in the second quarter there’s still room for improvement. There is further upward potential.”

There was a similar view from John Freydag, cco of MPC Capital, who said, “We haven’t seen the peak yet.” He said rates might not go as straight up as had been seen recently, but the market would remain firm in sizes of vessels. “The overall trend is continuing unabated,” Freydag said.

Hapag-Lloyd cfo Mark Frese saw a positive outlook for both container freight rates and ship charter rates. “Overall it will be strong demand for boxes, slots and ships,” he said.

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