Global overcapacity weighs on Caribbean charter market

Container market

The global – and the Caribbean – container charter market did not recover during the fall this year. Instead, earnings declined throughout all size segments, but to a lesser degree than in Europe or Asia.

Ships of 2,500 teu were in relatively short supply throughout the last couple of months. Despite the balanced Caribbean market, charter rates trended downwards about US$ 1,000 for standard ships as cheaper candidates were available in the Mediterranean or from Asia. An exception to the overall negative development provided modern economic vessels and high reefer ships with 600 or more reefer plugs. Eco vessels could achieve high US$ 14,000s levels on the back of continuously high bunker prices. Strong demand for high reefer ships, both from specialized fruit traders and from the main liners, kept charter rates for such ships between US$ 12,000 and US$ 13,000. One traditional reefer operator recently decided to change to containerships again after a transatlantic service run with 1,300 teu ships had been switched over to reefer ships at the beginning of the year. This time, the new service will be run with 2,500 teu ships and in cooperation with a main line operator.

Ships of 1,700 teu experienced a similar fate as the standard 2,500 teu ships with slowly declining rates during the fall. Again, supply in the Caribbean was limited, but at times up to 10 ships were looking for employment in the Mediterranean. Although the oversupply situation has improved on the European side of the Atlantic, charter rates are expected to further correct downwards as the current rate difference of US$ 1,500 to US$ 2,000 is rather large. Low rates in Asia also induced one 1,700 teu ship to ballast across the Pacific for a WCSA employment.

High reefer ships of 1,300 teu were once again fixing higher rates than 1,700 teu ships by the end of the year. The general pressure on earnings was, however, also felt by those specialist ships as rates declined from US$ 10,000 to US$ 9,000 towards the end of the year. The very large rate difference of sometimes over US$ 2,000 between the various trading areas even tempted one ship from Asia to position by taking new empty reefers without having a subsequent charter.

The 1,100 teu segment proved relatively stable. From mid US$ 7,000 levels, charter rates did only decrease to low US$ 7,000 levels by the end of the year. More than a year after the originally scheduled delivery date, the first of three 1,100 teu newbuildings contracted by a Caribbean specialist operator had been delivered and will arrive in the Caribbean in early January. As this operator has four 1,000/1,100 teu ships on charter, those newbuildings might release some extra charter ships in the near future.

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