Charter rates unfazed by continued bad news on freight side

by Editor

Reading Time: 2 mins read

The container charter market remains for now on a strong course, despite the multiple challenges and uncertainties it is facing. Carriers are again embarking on multi-year forward fixing in the larger sizes above 4,000 teu, which highlights confidence in future market developments.

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Charter rates remain stable at healthy levels for vessels of 3,000 teu and above, and have started rising again in the smaller sizes, after months of stability.

Periods are also getting longer for smaller ships, with a significant number of fixtures of 1,500-1,900 teu vessels now concluded for 24 months. The 1,000-1,249 teu segment is also seeing a growing number of two-year deals while the sub-1,000 teu sizes witness both rising rates and longer period employments.

Meantime, US Admin continues with its trade war and, in addition to tariffs, aims to introduce levies of up to $1.5m on Chinese-operated or Chinese-built vessels calling at US ports. Such a measure, if adopted, could have wide-ranging repercussions on the industry, with sizeable financial consequences impacting most container shipping lines serving the USA.

On the cargo side, spot freight rates continue to drop severely, with the SCFI having lost 40% of its value in only six weeks, with the Trans-Pacific in serious retreat.

March GRIs are expected to temporarily stop the rot, but only a bold management of supply going forward can reverse the trend. That might prove to be a challenge though, considering the continued delivery of new ships.

However, carriers have started taking action, as illustrated by MSC Mediterranean Shipping Company’s recent move to withdraw large tonnage of 24,000 teu from the Far East-Europe trade in favor of more lucrative North-South routes. The carrier has also given up plans to start a fifth service on the Pacific due to deteriorating freight rates.

Source: Alphaliner