Container ship charter rates are still rallying even as freight rates are falling as ocean carriers seek additional tonnage to defend market share amid strong cargo volume ahead of the summer peak shipping season.
A gearless Panamax vessel of 3,500 20-foor equivalent units capacity is earning $18,800 a day compared with $14,000 in December and a 2010 average of $13,250, according to London-based broker Clarkson.
The current rate for a 3,500-TEU ship is close to three times the average $6,575 earned in the container shipping slump of 2009 but well adrift of the $29,958 these vessels were commanding through the 2007 bull market.
The charter market rally coincides with retreating freight rates, especially on the barometer Asia-Europe trade where the cost of shipping a 20-foot box from Shanghai to the Le Havre-Hamburg port range in northern Europe last week sank below $1,000 for the first time in 18 months.
All sizes of container vessels are commanding higher rates though gains taper off for Handy 1,000-TEU ships and 725-TEU feeders.
A 4,250-TEU ship on a 24-month charter is fetching $28,625 a day compared with $22,555 at the beginning of the year, according to the Hamburg Shipbrokers Association. A 2,700-TEU vessel is pocketing $17,761 a day compared with $13,917 in early January.
The HSA's ConTex index of rates for six vessel sizes has soared to 712 from 547 in mid-December. A year ago, it stood at just 275.
With charter shipowners holding out for even higher rates and longer hire periods, some ocean carriers are staying out of the market in anticipation it will retreat as more tonnage becomes available.
Some lines plan to return vessels to their owners when fixtures expire even if this causes short term capacity shortages until the arrival of ships they have on order at Asian shipyards.
A few carriers are cashing in on the buoyant spot market by re-letting to rival lines ships they chartered at low rates during the 2009 slump that are now surplus to requirement following a restructuring of services.
So far sub-letting has not put downward pressure on the market and the gap between charter and freight rates seems set to widen in the coming weeks.
The surge in spot rates has come too late for owners that chartered out vessels during the 2009 bear market forcing several German KG investor funds who own the ships to provide additional funds to meet debt service payments.
-- Contact Bruce Barnard at firstname.lastname@example.org.