Summer Slowdown

Container market

From late spring to early summer the global container charter market continued on a positive trend. Since then, owners’ fortunes have stalled or reversed, the extent depending on the specific ship size and type. The Caribbean followed this general trend, although the downward correction in July and August has not been as significant as in European or the Asian markets.

In sync with the slightly declining rates, the number of vessels employed in Latin America trades under 3,000 teu has shrunk by 16 ships over the last five months. The supply-demand balance is still relatively intact, however, as only a handful of vessels were readily available at the end of August. Most of the surplus tonnage left for other trading areas, as many of them had to dock for class renewal anyway.

In May and June 2,500 teu ships enjoyed further rate increases up to almost US$ 13,000. With those improved earnings, the bonus for high reefer tonnage disappeared. Modern, more fuel-economic ships, however, were able to command rate premiums of around US$ 3,000. Despite the rate decrease of between 10 and 20 per cent for such tonnage in Asia during July and August, the earning levels in the Caribbean trading area remained stable on a more balanced Atlantic market. Compared with the smaller vessels in the area, the 2,500 teu ships also suffered the least rate decline. One charterer wanting to upsize his service even had to stick with a 1,700 teu as no larger tonnage was available without a ballast leg from the Mediterranean.

The 1,700 teu segment followed a similar path as the larger vessels, with rates going up to over US$ 11,000. By the end of August, though, earnings had fallen back to US$ 10,000 levels as more ships were readily available. This size category also experienced the largest reduction in numbers employed as service rationalizations in the Maersk/Hamburg Süd network set free some 1,800 teu ships. As earnings in other parts of the world had reached similar levels to the Caribbean market, most ships having to drydock quickly left the area for cheaper yard options in Asia or the Mediterranean.

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