A positive market on average but mixed developments throughout the various sizes

Container Market

The major topic for the global container charter market during the last couple of months has been the upcoming IMO 2020 fuel oil sulfur limit, which already showed its first real effects. The installation of exhaust gas scrubbers, which for most vessels takes at least 40 days, caused large tonnage to become in short supply, especially in the Asian trading area.

By early September all ships above 2,000 TEU had found employment as the liner operators had increasingly been forced to charter in smaller and smaller tonnage as dry-dock replacements. From the beginning of July to the beginning of September charter rates for 2,500 TEU geared, 2,700 TEU gearless, 3,500 TEU gearless and 4,250 TEU gearless ships increased by 7%, 13%, 23% and 53% respectively. In the Americas the scrubber effect has not been as significant yet but did help to balance other adverse developments to some degree as described in the comments below.

Contrary to the generally improving market, the 2,500 TEU segment did experience a small decline throughout the summer. As two major liner operators upsized from 2,500 TEU ships to 7,000 TEU and 4,500 TEU wide-beam tonnage respectively, more than ten-high reefer 2,500 TEU vessels became surplus or had to shift to other services where capacity is not fully utilized. Despite those service restructurings barely any ships remained idle in the Caribbean during the last months, but the surplus tonnage availability in Europe put pressure on the rates which declined to about USD 10,000 levels. In addition to the overall pressure on earnings the premium for high reefer ships all but disappeared.

Read more...