Freight fall corners operators with costly charters

Monday, 26 September 2022

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Crumbling container freight rates have taken their toll on the newer and smaller players in the liner shipping industry, as their current earnings are insufficient to cover their vessel charter commitments.

In August, UK freight forwarder Allseas Shipping had committed to chartering the 2005-built 1,740 TEU Green Ace from SFL Corp., at just under US$50,000/day for two years. However, this month, Allseas reportedly walked away from the agreement, resulting in SFL fixing the ship to another operator at a rate of US$23,000/day, less than half of what Allseas originally agreed.

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Reportedly, as cargo volumes fell, Asia-Europe rates lost 25% from May, averaging only around US$7,700/teu, and Allseas decided to cut back on its capacity.

According to Alphaliner, the situation reflects how charter rates for 1,500-1,900 TEU ships have taken a serious hit recently, with the latest fixtures concluded at levels 35% lower than last comparable deals.

Illustrating this, Turkish liner operator Akkon Lines recently chartered the 1,732 TEU A Daisen for US$35,000/day for six months. The charter rate represents a near 50% drop from the US$60,000/day that Alibaba’s shipping affiliate, Transfar shipping , paid to hire the vessel from February to August this year.

In March, midway through Transfar’s charter, the company decided to buy the ship for US$33 million to control its chartering costs. For Transfar to fix out the vessel to Akkon Lines, instead of operating the ship itself, was yet another sign that liner operators’ party was over.

MORE NEWS : Global Cargo Market Softening Points to Gloomy Christmas

At 2,312 points on 16 September, the Shanghai Container Freight Index was down 33% from mid-August and 55% below its peak of January.

Alphaliner said, “This trend is especially impacting those carriers with a high exposure to spot cargoes. Some of them are already struggling to honour expensive charter commitments and more could find themselves in trouble going forward.”

Source : https://container-news.com

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