(www.MaritimeCyprus.com) Container vessel time charter rates have risen to 10-year highs amid an ongoing bull run in container freight markets, according to an index published by German ship broker Harper Petersen & Co. Time charter rates for a ship with a capacity of 8,500 twenty-foot equivalent units (TEU) registered at $54,000/d on April 23, the highest assessment in more than 10 years.
This represents a 151% increase over the year-ago assessment, when the chartering cost for an 8,500 TEU ship was $21,500/d.Charter rates hit multi-year lows in 2020 as bleak carrier outlook brought on by the coronavirus pandemic began to be felt. At that time, many carriers opted to return chartered vessels early in the hopes of recouping some of the leasing costs, ballooning the global idle fleet At the same time, consumer uncertainty and faltering demand put pressure on global freight rates.
The Platts Global Container Index, a weighted average of all Platts’ assessed routes, was assessed on April 23 2020 at $1,008/FEU, but has since grown by 337% to $4,412/FEU on April 23 2021. But as a second-half 2020 surge in lockdown-induced consumer demand for containerized products began to support freight rates, ocean liners quickly turned to tonnage providers for additional capacity. Similar patterns in the two indexes reflect operational issues that have plagued the market since demand began to surge in the second half of 2020.
Since then, carriers have scrambled to secure additional charters as demand for containerized goods has outstripped available supply.
“A vessel usually chartered at two to three months is now chartered for two years, at a much higher cost,” a shipowner source said. “Our fleet . . . would have been chartered at $6,500/d in May last year, with only a few months’ term,” adding that negotiation power has shifted firmly in favour of shipowners.
Short-term orderbook slim Sources say that relatively few vessel deliveries in 2021-22 indicate short to medium-term strength on the side of carriers and tonnage providers. “[Demand growth] will shape charter market for long period because availability is limited, and orderbook for 2021 delivery is very slim,” said the same shipowner source, adding that vessel fundamentals and demand indications favour the supply side for at least the next 24 months.