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International Shipping News / Hellenic Shipping News Worldwide

CA - It just got cheaper to rent a container ship — now just $125,000/day

A high-profile corner of the container-ship charter market — small and medium-size vessels taken for short, multimonth rentals at mind-bogglingly high rates — has taken “a dive,” according to Alphaliner.

There is a connection between the rate drop and the extreme congestion at the ports of Los Angeles and Long Beach.

Short-term-chartered ships, largely operated by Chinese interests, have been inflating the California queue numbers by coming across the Pacific without terminal reservations. Ships costing charterers six figures per day are getting stuck at anchor or in holding patterns for a month or more, causing some charterers to reconsider how much they’re willing to pay.

Caught in the middle are U.S. importers who booked ocean transport through forwarders and were not aware that the ships their cargo was coming over on did not have pre-arranged windows at Los Angeles/Long Beach terminals.

Rates take ‘serious hit’
The high point in the short-term market came in September, when the Synergy Oakland — a ship owned by Euroseas (NASDAQ: ESEA) with a capacity of 4,253 twenty-foot equivalent units — was chartered at around $200,000 per day for 60-85 days. Alphaliner reported two other charters in October at near that rate, including the 4,339-TEU X-Press Kilimanjaro, chartered to China’s BAL Container Lines, at $190,000 per day for 40-50 days.

Alphaliner said on Tuesday that “the number of short-term charters concluded at sky-high levels by freight forwarders and new liner shipping entrants has gradually been receding, with charter rates for these ad-hoc employments taking a serious hit.”

It reported that the charter of the 4,892-TEU Zhong Gu Jiang Su has been extended by BAL Container Lines for three to four months at “only $125,000 per day, a level that compares poorly” to the $200,000 high-water mark. Alphaliner told American Shipper that the Zhong Gu Jiang Su had previously been on charter to BAL at $185,000 per day; the extension rate was 32% lower.

“The carriers behind these opportunistic employments are clearly becoming wary of growing uncertainties on the cargo front, with spot freight rates no longer rising and volumes expected to soften at the end of the current peak season,” said Alphaliner. It added, “Pricey bunkers [marine fuel] and crippling congestion issues … are also a mounting concern.”

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