According to Alphaliner, the container charter market is experiencing various challenges, with rates on a continued downward trend, particularly for sizes up to 5,500 TEU (twenty-foot equivalent units). Despite some recent activity, non-operating owners are finding the market less appealing, as charter rates have been on the decline.
However, the larger vessel segments, specifically those exceeding 10,000 TEU, have shown more resilience to the market downturn. For instance, 12,000 TEU tonnage has been witnessing strong fixtures, indicating a more stable market in this size category. Nevertheless, this positive trend might not last long, as the suspension of two major East-West loops by THE Alliance, involving 22 vessels of 13-14,000 TEU, due to poor freight rates, raises concerns about the fate of these vessels. Some may remain idle, while others might be redeployed within carrier networks or even offered in the charter market for short periods, which could impact charter rates in these usually sold-out sizes.
In the 4,000-5,299 TEU “classic panamax” segment, supply is on the rise, with some Pacific operators looking to relet tonnage. This development is expected to put additional pressure on an already weakening segment.
In the smaller sizes, those under 3,000 TEU, there is mixed news for owners. The 1,500-1,900 TEU segment, which previously faced a glut of tonnage, is now showing signs of improvement due to high demand for modern, energy-efficient “Bangkokmax” tonnage and postponed newbuilding deliveries in Asia. However, the 1,000-1,250 TEU and sub-1,000 TEU segments are still grappling with higher supply, which is exerting further pressure on charter rates.
The prospects for the charter market remain uncertain, with challenges on both the cargo and supply sides. Freight rates on critical routes remain low, and it is unlikely they will see a significant, lasting improvement in the near future due to continuous newbuilding capacities being added to routes. Only a substantial increase in cargo demand and significant scrapping of vessels could lead to a change in fortunes for both non-operating owners and carriers.
Large Container Vessels (VLCS) Segment Faces Uncertainty
In the large container vessel segment (7,500-13,000 TEU), tonnage has been tight for months. However, uncertainties loom as carriers relet vessels, and THE Alliance’s suspension of two East-West services may lead to redundancies in this size category. The benchmark rate for 12,000 TEU units has held at USD 57,000 for 12-month employments, but this figure may become less optimistic should the supply suddenly increase.
LCS Segment (5,300-7,499 TEU) Exhibits Resilience
Charter rates for LCS units (5,300-7,499 TEU) have remained relatively firm, although not as strong as in the summer. This includes older vessel designs. The supply in these sizes remains low, which is expected to support charter rates, particularly until the end of the year.
Classic Panamaxes (4,000-5,299 TEU) Experience Rate Decline
Charter rates for classic panamaxes (4,000-5,299 TEU) are gradually weakening. The rising supply of tonnage in Asia is expected to exert more significant downward pressure on these rates in the coming weeks.
Challenges Persist in the 3,000-3,800 TEU Segment
The 3,000-3,800 TEU segment faces liquidity issues, with very few ships available and limited interest from potential charterers. Supply remains limited, with only a couple of ships available for charter by the end of the year.
Rate Drop Continues in 2,700-2,900 TEU Sizes
The 2,700-2,900 TEU segment is witnessing a drop in charter rates. Recent fixtures have been agreed upon at lower levels, particularly in Asia, which is putting pressure on rates in this size category.
Weakening Rates in 2,000-2,699 TEU Sizes
Charter rates in the 2,000-2,699 TEU segment have been declining, despite a tightening supply. Modern, energy-efficient tonnage continues to secure better rates.
Improvement in 1,500-1,900 TEU Sizes
The 1,500-1,900 TEU segment in Asia has seen an improvement in its supply situation, resulting from the demand for modern, energy-efficient ‘Bangkokmax’ tonnage and postponed newbuilding deliveries. Charter rates globally have averaged around USD 10,000 per day.
Tonnage Build-Up in 1,250-1,499 TEU Segment
The 1,250-1,499 TEU segment in Asia is experiencing a tonnage build-up, which is expected to put pressure on charter rates in the short term. In contrast, the Atlantic region is expected to see stronger rates.
High Availability in 1,000-1,249 TEU Sizes
The 1,000-1,249 TEU segment has a significant list of available tonnage, which is equally split between the Atlantic and Asia. This oversupply is contributing to pressure on charter rates in these sizes.
Challenges in Sub-1,000 TEU Segment
The sub-1,000 TEU segment continues to face challenges, with an excess of tonnage available for charter. A boost in demand is needed to alleviate the pressure on weakening charter rates in this size category.