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Surge in charter rates is driving SnP market

Hardening charter rates are pushing second-hand asset values upwards as carriers look to acquire suitable tonnage before the prices peak.

Some liner companies may consider second-hand vessels ahead of another price surge, though on the flip side, as asset prices are increasing, ship owners may take the opportunity to wait for prices to peak before considering selling tonnage, said shipbroker Braemar ACM.

Additionally, some carriers are looking to the second-hand market to make sure they have the necessary tonnage and to reduce their reliance on charter tonnage as the situation remains tight, particularly for feeder sizes, and with the possibility of a volatile market seeing more demand surges.

Source: Braemar ACM.

“With a lack of spot ships during this cargo surge, and increasing length of charter periods, buying second-hand tonnage does seem to be a viable option for liner companies to reduce their exposure to the charter market and could mitigate the risk of chasing tonnage during busier cargo periods in the future,” Braemar ACM researcher Jonathan Roach told Container News.

One company that has taken the used vessel route is MSC which was active in the second-hand market again this week with the acquisition of the 2007-built Castor N, a 3,091TEU delivered from Szczechin, for a little over US$9 million.

Given the tight feeder market, the broker said that values are also appreciating on second-hand vessels below 2,000TEU.

Samudera has sold two Wenchong 1,740TEU sisterships, the Sinar Sumba and Sinar Sabang. Both are geared vessels which have been built in 2008 at Guangzhou Wenchong. The boxships were sold to European buyers –“we understand at a price of high US$6 million. Leaving Sellers of similar ships already asking for considerably more,” said Roach.

For larger vessels, from Panamax to 11,500TEU, there is only one ship in order. There is very little spot tonnage for charter during this extended-peak season and the supply situation is likely to be repeated for the next peak season in 2021.

Additionally, ship owners may opt to fix for 24 months at stronger rates as this option is also available at the moment.

“We do expect the current surge in cargo volume to calm down as we exit 2020, but cargo surges will happen again, suggesting liner companies are bolstering their owned fleet to compensate for future cargo surges and charter ship shortages,” explained Roach.

Roach added that recent fixture periods of 18-24 months for Panamax or larger vessels are becoming achievable for ship owners as the charter market eases according to the London-based broker.

Braemar reports no demolition during this past week and only one delivery, a 1,952TEU ship to CNC Line.

Nick Savvides
Managing Editor

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