Global upswing pulls caribbean charter market along

CONTAINER CHARTER MARKET REPORT FOR THE AMERICAS / CARIBBEAN REGION, JANUARY TO MARCH 2018

During the first three months of the year, a very dynamic market with strong demand for smaller container tonnage, especially in Asia, caused charter rates to increase substantially. The Caribbean market presented itself relatively balanced and actually registered a small decline of three fewer vessels employed on Latin America related services (up to 3,000 TEU) at the end of March compared with the end of 2017. In intra-Europe and intra-Asia services, however, 22 more ships are trading now than at the end of last year. As a consequence, ships that left the Caribbean trading area due to upcoming special surveys did not all return after leaving the dry dock, as the Caribbean ‘premium’ had pretty much disappeared by the end of March.

Throughout the first quarter of the year, barely any ship, regardless of size, had run into a spot position. This good utilization, in addition to higher rates, also led to periods with reduced flexibility.

At the beginning of the year, ships of 2,500 TEU employed in high reefer trades were still able to command a bonus of around US$ 2,000. With the general market increase, however, standard tonnage had caught up by March and also managed to achieve earnings in the US$ 11,000 levels. A very interesting development in the high reefer segment has been that one of the fruit majors for the first time utilized two gearless 2,700 TEU high reefer ships to run a service between the US East Coast and Central America.

The 1,700 TEU segment also continued the positive development from the end of last year and moved from high US$ 8,000 levels to over US$ 10,000 by March.

Outperformed

Once again, the 1,300 TEU high reefer category outperformed the slightly larger ships and moved from mid US$ 8,000 to mid US$ 10,000 levels. Charter rates had even reached levels where some charterers were reluctant to fix periods longer than around six months as the rates were deemed to be high. Some pressure on this segment could result from the upcoming closure of one reefer-focused transatlantic service which had been run mainly with such vessels.

The market for 1,100 TEU vessels was most active during January, when several ships were extended at high US$ 7,000 to low US$ 8,000 levels. Modern, more fuel-efficient ships remained popular and were able to fix for about US$ 2,000 more than a standard 1,100 TEU design. In February and March the market was quieter, though the few remaining ships were even fixed for higher rates reaching close to US$ 9,000. The trend towards more gearless ships trading in the Americas almost continued as well in the 1,000 TEU size segment, but two ‘European design’ ships with ice class and good 45 ft container intake, intended to run a Caribbean string, failed on subs.

Again, a 700 TEU gearless ship positioned from Europe for a new US-Mexico service. Otherwise, little activity showed in the category below 1,000 TEU. In particular, the very small ships of under 800 TEU continued their decline in numbers as good employment opportunities could also be found in the Mediterranean. As of the end of March, fewer than 10 charter ships in this size range remain. Charter rates stayed relatively strong, with levels between mid US$ 6,000 and mid US$ 8,000 depending on exact size and specifications.

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