Container Charter Market Faces Tightening Supply, Potential Rate Rebound

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The container charter market is experiencing heightened activity, particularly in the larger vessel sizes, amid a slowing rate erosion trend. The tightening supply, especially for modern energy-efficient tonnage, may signal an end to rate erosion and even a potential rebound in the new year, according to Alphaliner.

In the 1,000 to 3,000 TEU range, a reduced number of vessels available for employment in the coming weeks suggests a possible bottoming out of charter rates. Larger sizes (5,500 TEU and above) maintain healthy rates despite a slight softening trend.

Interest in large container vessels remains strong, driven by dynamic North-South and regional trades. Alphaliner highlights the growing importance of markets in Africa, South America, India-related, and Intra Asia trades in addressing overcapacity.

Recent attacks on Israeli-controlled tonnage in the Red Sea may impact container vessel demand, potentially leading to a shift in routes, such as circumventing the Cape of Good Hope.

In the Very Large Container Ship (VLCS) category (7,500-13,000 TEU), carriers secure vessels for deliveries in 2024, indicating continued strong rates. The Large Container Ship (LCS) segment (5,300-7,499 TEU) experiences muted activity due to low supply.

Demand for ‘classic panamax’ vessels (4,000-5,299 TEU) stabilizes rates, while the 3,000-3,800 TEU segment sees relatively firm charter rates with limited tonnage available by year-end.

In the 2,700-2,900 TEU segment, a reduction in supply results in busy activity, with rates stabilizing. Falling supply in the 2,000-2,699 TEU sizes is expected to end rate erosion.

Supply in the 1,500-1,900 TEU segment stabilizes, with charter rates around USD 10,000 per day. The 1,250-1,499 TEU and 1,000-1,249 TEU segments experience increased activity, influencing rates.

The sub-1,000 TEU segment faces a persistently high supply, but charter rates remain generally firm, particularly for specific niche routes.

Overall, the container charter market sees varied dynamics across different size categories, with the potential for rate stabilization and even rebound in certain segments.

Source: Alphaliner

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