Container Ship Charter Rates Edge Higher

Container ship charter rates are edging higher despite slowing cargo volume and softening liner freight rates as some leading ocean carriers continue to add capacity in a bid to boost market share.

Charter rates are, however, rising at a much slower rate than in the first half of the year, suggesting the market will soon reach a plateau and possibly weaken through the traditionally slack fourth quarter.

Medium-sized vessels are posting the biggest gains but rates for smaller ships could also pick up amid a growing shortage of tonnage in Europe and Asia.

By The Numbers: Container Rate Benchmark.

A gearless Panamax ship of 3,500 20-foot equivalent units capacity is earning $18,250 a day compared with $17,500 in July, $16,500 in June and $14,000 in May, according to London shipbroker Clarkson.

This is almost three times the average $6,575 earned through 2009 but still well adrift of the $ 26,125 these ships were commanding in 2008.

Rates for even larger ships are still climbing too, albeit modestly, as carriers consolidate capacity amid a slowing cargo market as the peak shipping season tapers off.

A 4,250 TEU ship is currently fetching $24,217 a day compared with $24,044 a month ago, according to the Hamburg Shipbrokers Association.

The Association's Contex time charter index for ships between 1,100 TEUs and 4,250 TEUs has reached 599, double its level at the beginning of April.

From the Experts: Trans-Pacific Trades and Pricing

Rates for smaller vessels could start rising more sharply driven by strong demand on intra-Asian and north European routes. A 725 TEU geared feeder ship is earning $5,000 a day compared with $4,000 in June and a 2009 average of $3,558, according to Clarkson.

Unifeeder, the largest north European feeder shipping line, introduced a $32 per TEU "cost recovery surcharge" on Sept. 1 in response to a 50 percent rise in charter rates in recent months coupled with "serious operational problems and delays" at three terminals in Rotterdam.

The shortage of vessels with a capacity of 800 TEUs or more "has made it progressively more challenging to engage in short term charter agreements," the Aarhus, Denmark-based carrier said.

-- Contact Bruce Barnard at brucebarnard47@hotmail.com.