Currently, the container ship short-term charter rate is still very strong, but it is already well below the level at the highest state.
Alphaliner said that a striking phenomenon in the container ship rental market is that small and medium-sized ships have previously conducted short-term rentals at incredibly high prices, and rents have begun to "diving".
It is reported that there is a link between the decline in rents and the extreme congestion in the ports of Los Angeles and Long Beach. There are a large number of ships in Southern California, and the charterer pays six-figure fees staying in anchorage or waiting mode for a month or more, causing some charterers to reconsider what they are willing to pay.
Short-term charter market was “severely hit”
short-term charter market highs came in September when Synergy Oakland, a 4,253 TEU container ship owned by Euroseas, rented for about $200,000 a day for 60-85 days. Alphaliner reported two other charter contracts close to that price in October, including the 4,339-TEU X-Press Kilimanjaro to China’s BAL Container Lines, with a lease of $190,000 per day for 40-50 days.
Alphaliner said on November 2 that "the number of short-term charter contracts completed by freight forwarders and new liner shipping entrants at sky-high prices has gradually decreased, and the charter rates for these temporary operations have been severely hit."
It is reported that BAL Container Lines extended the 4,892-TEU "Zhonggu Jiangsu" ship charter contract for three to four months, "only $125,000 a day, which is quite bad compared to the high water level of $200,000." Alphaliner said that the "Zhonggu Jiangsu" round had been rented to BAL for $185,000 a day; the extension rate was reduced by 32%.
Alphaliner charter index fell for the first time since June 2020 due to several lower-priced charter transactions. However, Alphaliner confirmed that “these sharp declines in the short-term charter market do not indicate any basic market improvement, but highlight a sign of correction in the ‘overheated’ market”.
Congested by chartered ships
Los Angeles Port Executive Director Gene Seroka emphasized the situation of chartering on November 2.
Seroka said that of the 73 container ships trapped at sea that day, only 23 were conventional service ships using 10,000-TEU or higher capacity ships, while the other 50 were mainly ships from new services and retailers tonnage.
According to Seroka, “many of these people did not book at the ports of Los Angeles and Long Beach even after loading the cargo and starting the voyage. In many cases, when our private sector maritime terminal operators cross the Pacific, they would call to try to book with them.”
Lessor’s cost increase
“Central Valley Jiangsu” ship set sail from Qingdao, China on August 30, and arrived at the anchorage outside of Southern California on September 13. As of November 3, it is still waiting at sea-51 days.
Even if the goods are unloaded immediately, the voyage back to Qingdao will not be completed until the third week of November. This makes its best-case round trip time of 80 days or more. Assuming the lessee is still paying the original rate, this equals the rental cost of $14.8 million or more during the voyage, excluding fuel. "If the 'Zhonggu Jiangsu' ship has 2,200 FEU spot cargo, her eastbound voyage revenue should be $33 million. But it is obvious that congestion is taking up a large portion of the huge revenue. I believe this is the main reason why small companies no longer pay astronomical figures to increase tonnage." The situation of the
"Zhonggu Jiangsu" ship is by no means an isolated case, with the other six container ships - A Kinka, BAL Peace, Hyundai Prestige, Wan Hai 508, Wan Hai 625 and AS Constantina - have been waiting for a month or more.
Before this, the rent for the S Santiago number was $135,000 per day, waiting 28 days before berthing (which means "waiting for rent" is $3.8 million).
Based on fuel consumption estimates provided by Standard and Poor's Global Pres Energy Information , the round trip from Los Angeles to China may consume another $2 million in lessee profit , which does not include the fuel consumed when waiting for the anchorage near Catalina Island.
But even with the fuel costs and serious delays in Los Angeles/Long Beach, if the ship carries high-priced cargo, the charterer's profit per voyage can still reach eight figures, which explains why there are so many smaller charter ships floating in San Pedro Bay now.
