HANSA 11-2019

MÄRKTE | MARKETS
Scrubber retrofits keep rates up
Tonnage availability in the boxship charter market has gone up but hire rates
remain firm so far. By Michael Hollmann
With the peak shipping season drawing
to a close in the fourth quarter
and liner operators adjusting their route
capacities, demand for charter tonnage
usually starts to wane. That is what you
would normally assume to happen. But
2019 is by no means a »normal« year. The
pattern of charter rates has been pretty
extraordinary, with the market posting
significant gains during the summer
holi days – usually a quiet period that
sees earlier gains eroded. The strength
has carried over into autumn, with
fixing levels roughly trending sideways
over the past four weeks. This is
despite an increase in blank sailings
(cancellations) by liner operators
around and after the Golden Week
national holiday in China when cargo
loading activity drops.
As a result, there has been some increase
in spot tonnage supply mainly in
the 5,500-7,500 TEU post-panamax, the
conventional panamax and some of the
feeder size classes. Yet, chartering activity
remains relatively brisk to date, according
to shipbrokers. There has only been
a slight weakening in rates in the 5,500-
6,000 TEU segment, as illustrated by the
fixture of a CSBC-II-type (6,000 TEU) at
low $ 20,000’s for a short period in Asia,
down from 21,000 $/day concluded on a
sister ship back in September.
Conventional panamaxes also faced
a bit of pressure in late September and
early October as more spot/prompt
ships emerged. Fixing levels deteoriorated
to low/mid 13,000’s $/day, but only
for a short while. Indeed the downward
correction triggered another surge in
demand, with around 16 units fixed or
extended within a span of two weeks.
As a result, rates pushed up again towards
14,000 $/day for 4,200-4,400 TEU
vessels.
Some brokers have warned that the rise
in spot tonnage is about to ebb away again
soon based on the amount of ships coming
off charter in the coming months. As
the research desk of Howe Robinson stated:
»From November onwards, near-term
availability would seasonally fall anyway,
but this year is proving exceptional, with
open ships in the next 3-4 months reaching
their lowest level since 2011.« Especially
those charterers in need of larger
ships might find themselves short of options,
it said.
Nearly 2 % of capacity under retrofit
Even if operators were just to keep their
fleet capacity unchanged and maintain
the status quo, they will need extra
charter tonnage to replace the growing
number of vessels heading to the shipyards
for installation of scrubbers. Idle
fleet figures compiled by Alphaliner see
the volume of tonnage undergoing retrofit
work going up week after week.
As per 14 October, vessels with an
aggregate capacity of 436,000 TEU
had been temporarily out of service
because of scrubber retrofits, it reported
– almost 2% of all worldwide
container ship capacity. »It is a true
game-changer,« as one Hamburg
broker observed.
This will not change anytime soon.
Retrofit activity is expected to remain
high well into 2020 and there may be
more negative effects on fleet productivity
as a result of the global sulphur cap
for marine fuels as from January. Given
that the new low-sulphur products
are expected to be priced around 200 $
higher per ton (or even 300-350 $, if operators
have to bunker marine gas oil…),
sailing speeds may have to be reduced to
save costs in certain trades, especially on
backhaul trips.
Moreover, there are likely to be disruptions
to vessel operations because of technical
issues during the changeover or inavailability
of compliant fuels in certain
locations, experts have warned. All this
may put a massive strain on active container
shipping capacity, ultimately benefiting
the charter market fleet. n
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8 HANSA International Maritime Journal 11 | 2019