Russbroker Caribbean Market Review

Who thought it was possible? 

Container Market

The container charter market has in 2021 so far only known one direction and that was up. Regardless of the vessels’ size, owners have been able to command higher rates with every fixture and absolute levels are closing in on all-time high figures last seen in 2005. The Contex, inaugurated in late 2007, has already exceeded its previous high from February 2008 by over 25%.

The extremely strong market is driven by solid cargo volumes combined with very low general efficiency. The Covid-19 crisis is still responsible for the shoreside labor shortage in many parts of the world, which leads to longer ports stays, congestion and consequently shipping capacity being bound by waiting time. By the spring of 2021, container equipment still remained in short supply, which forced operators to look at creative solutions at how to reposition boxes the quickest way to the highest paying freight market. An ageing fleet with more technical off-hire times also contributed to the capacity shortage.

As there were no vessels available on a spot basis or for short periods, operators are also having trouble covering gaps arising from the regular dry dockings the vessels have to undergo. The usual practice of just chartering in a replacement ship no longer works, and either schedules have to be scrambled in order to use vessels from other services or in some cases the cargo is just not being transported. For the Caribbean trades this problem is even more pronounced as due to cost reasons the large majority of owners prefer to dock their ships either in Europe or Asia. Factoring in four weeks of positioning voyages, ships are “gone” for almost two months. In 2021 almost 500 ships or about 17% of the total fleet between 500 and 3,000 TEU, have to go to dry dock for class renewal. Additionally, with many ships now also installing ballast water treatment systems, yard stay times are likely to be above average.

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