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Russbroker Charter Market Commentary

Unspectacular end to 2014

As far as the chartering of container tonnage is concerned, an unspectacular year ends. Feeder tonnage of 900, 1,100 and 1,300 teu, within their respective clusters, kept rate levels stable until the end of the year, with minor corrections only either way.

Vessels of the 1,700 teu class, however, have been on a roller coaster for the last four to five months and are ending the year on the downhill section of the ride.

For the 2,500 teu class vessels, the market is divided. The layer of average specification vessels with low reefer intake is closing the year at levels well under US$ 8,000 while vessels of 550+ reefer plugs are fixing rates in levels of US$ 9,000 to 9,500 p/d for as long as the service is related to reefer cargoes.

The reason for higher specification 2,500s enjoying a firmer market was the opening of the joint service of GWF and MSC and a new reefer-heavy service by Hamburg Süd between Caribs and North Europe.

Early December 2014 the New ConTex is only 12 points above the level of January 2014 which, however, is a result of 3,500 teu and 4,250 teu vessels enjoying a significantly stronger market than at the beginning of the year.

Shortly before Christmas 2014 the USA announced the end of its over 50 years old policy towards Cuba. While elsewhere there is little incentive for positive outlooks, these positive political developments could actually stimulate new trades once the sanctions end.

Sale & purchase / newbuildings

Recent sales of container tonnage are mostly bank driven or fire sales, very often shortly before the vessels are to go to dry dock. Besides predominantly equity-fund backed buyers, a few Greek and Asian cash buyers picked up tonnage, mainly from the German market. Huge concerns to chartered containership owners are created by the newbuilding order book. Deliveries in 2015 and 2016 of tonnage of 10,000 teu and larger will add massive capacity to the already existing overcapacity in a very young segment of mega ships.

And yet some top carriers are seriously considering adding their tally to the rat race by ordering more mega ships, to be equally competitive on the slot cost. At the same time, the order book for feeder tonnage under or around 1,000 teu is negligible with 19 units, most of which are ordered by small Asian liner companies for local trades. A little more will be on offer up to 2,600 teu, partly with LNG propulsion. Some segments, especially the smaller end to 2,600 teu, has an average age of 10 to 11 years, so tonnage with modern features will divide the segment in two tiers and give advantage to vessels with an attractive miles-per-ton ratio.

Multipurpose

Tweendeckers in the Atlantic had a difficult summer, and these difficulties continued throughout the autumn. The market levels have been largely depending on vessels with the right features in the right spot at the right time, when rates have been attractive. Otherwise, vessels have faced some waiting time before picking up the next employment.

Reefer

After the summer doldrums on the larger units, the market finally started to become a bit active as of mid October with a surplus of bananas for shipment from ECCA. At the beginning of November operators began to arrange positioning of tonnage for Chile and, combined with the start of the potato season from the Continent as well as citrus from Spain and Morocco, the market tightened considerably over the space of four weeks. Considering supply and demand, the market will remain firm and tight until the week before Christmas. For the smaller segment of reeferships a very good year ends. Continuous requirements of frozen fish in West Africa create a tight supply and keep rates at strong levels.

Services

The US-FMC has approved 2M, the joint service network of MSC and Maersk Line.

Cagema has revamped its service to go weekly New York, Savannah, Miami, Kingston, Point Lisas, Port of Spain, Rio Haina and back to New York with 3 x CV1100.

MSC/GWF’s 5 x 2,500 teu/600 plugs reefer and feeder service to Florida is up and running since October. World Direct Shipping (WDS) started its new service Port Manatee/Coatzacoalcos and v.v. with the 862 teu ‘Falmouth’, also focusing on reefer cargoes.

Hamburg Süd has begun a feeder service from Mexico to Mariel with the 657 teu ‘Birk’. The carrier also took a number of high reefer 2,500 teu vessels for a Caribs/North Europe service backed by reefer volumes from the banana industry.

King Ocean takes slots on Crowley’s Florida-Cuba-Guatemala and Honduras service, going Port Everglades, Mariel, Santo Tomas de Castilla, Puerto Cortes and back to Port Everglades except for the calls at Mariel. Three units of 974 teu work on this service.

Horizon’s service to Puerto Rico will close after 56 years of operation following the sale of Horizon’s activities to Matson (for the USWC/Hawaii service) and Pasha (for the USWC/Alaska service).

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