29 May 2024 (Lloyd's List) - CARRIER demand for additional tonnage to make up for diversions, delays and demand has reduced the pool of idle vessels to “almost zero” and pushed up charter rates for available vessels.
“The number of commercially inactive ships, which had already been low in recent months, has fallen even further in the second half of May, with idle capacity now at only 0.4% of the total fleet,” said analysts at Alphaliner.
“The market has last seen such a low level of vessel idling in February 2022, when carriers deployed each and every available ship to capitalise on the sky-high post-pandemic container freight rates.”
Higher-than-expected cargo demand and the reappearance of vessel congestion in some key ports were putting additional strain on the maritime supply chain, it added.
“Combined with the fallout from the Israel-Gaza war, subsequent threats in the Red Sea, and the ensuing service diversions via the Cape of Good Hope, supply of container tonnage remains tight on a global level,” Alphaliner said.
An early peak season, driven by shippers wary of supply chain delays, meant demand for tonnage was expected to remain high in the months ahead.
That is providing a bonanza for tonnage providers, who are seeing increasingly strong rates, particularly for short-period charters.
Alphaliner’s charter index is at its highest point since October 2022 and has risen 60% since the end of last year.
Analysts at Linerlytica said that carriers had been forced to secure vessel charters beyond September after their initial hesitation to commit too far ahead in the event that demand would falter after the summer peak season.
“The charter market remains extremely buoyant with rates and periods rising at a rapid pace. Demand remains high across all size segments, including the smaller sizes below 1,800 teu that had been dormant until now,” Linerlytica said.
Oslo-based MPC Container Ships yesterday said that charter lengths were being extended and that forward bookings remained strong.
“NOOs are obtaining longer charter contracts for their vessels, with most sizes above 2,000 teu qualifying for 24 months and even 36-month employments,” Alphaliner said.
Supply remained tight despite the unremitting flow of new tonnage into the market, it added.
“The freight rate bonanza, triggered by the high cargo demand, limited supply, and the Cape of Good Hope diversions could potentially extend until the end of the peak cargo season in October, benefiting the charter market by extension,” it said.
“However, its sustainability remains threatened by the uninterrupted deliveries of newbuilding capacities, with nearly twice as much new tonnage due to hit the water by the end of 2024 than what was delivered so far this year.”
