The demand remained strong during the first half of
the year while the availability of ships was limited. This high demand
came at a time when several 'Gdynia 2000' ships were immobilised for
several months in order to change a major default on their main engine.
The market entered a bearish phase in the latter part
of the year after the bull run of the previous months, with a relatively
high level of availability and a slack demand. Rates remained flat
despite this trend but were no longer rising.
Rates remained sustained for a 12-month period, while
charterers covered long-term positions at lower levels with tonnage
chartered for 36 or 48 months.
From $ 12,000 in the winter 1999-2000, rates for 'Gdynia
2000' ships (2,078 teu / 21 kts on 72 tons / 1995-97) went up to $
17,000 in March. A ship of this design was fixed early November by
Hamburg-S'd for 12 months at $ 17,750, with an option attached for a
further 12 months at $ 18,750. Two 'Gdynia 2000' newbuildings were
also fixed for 12 months by Lykes at a reported $ 18,000.
In December, modern 2,500 teu tonnage could be
obtained for a 12-month period at around $ 17,000 / 18,000 instead of $
22,000 in September.
A number of 2,500 teu newbuildings coming on stream
in 2001 / 2002 were also chartered by batches. There was a consistent
influx of orders in the 2,400 / 2,750 teu range, which was dominated by
German owners. 74 ships were ordered in the course of the year in this
narrow band. However, this sudden and massive ordering of 2,500 teu
tonnage can be seen as a correction as there were so few orders in the
2,000 / 3,000 teu range in 1998-99. And it is market driven and not tax
driven as it was in the mid-1990s.
||CMA CGM MATISSE
2,205 teu, blt 1999 by China SB - Operated by CMA-CGM Group.
The 1,500 / 2,000 teu size range market was very
contrasted. During the first half of the year, a sustained demand
combined with an unusual low number of newbuilding deliveries led to a
severe shortage. The demand was not only fuelled by operators for their
usual North-South routes, but also to plug gaps in East-West sailings,
or even to make extra sailings (mainly ex China). Humble 1,600 teu ships
were thus diverted from their usual work to go along with much larger
With a lack of cellular tonnage in this category,
conbulkers made a comeback. Some of them were equipped (or re-equipped)
with the needed lashing gear to take advantage of the rates increase.
Szczecin-built 'B-170's rates passed the $ 15,000
mark during the summer, against $ 13,000 in May. CC1600s and Thyssen
1500s were also negotiated at rates circa the $ 15,000 mark during the
Uniglory took advantage of these strong rates through
the chartering out of three of their 'P' class ships (1,618 teu /
18.5 kts on 41.5 tons / 1999-2000) to GWSL for a 24 month-period at a
healthy $ 15,500, agreed upon in May for a July laycan.
After a sparkling first half, the market for 1,500 to
2,000 teu ships entered a period of hesitation at the end of the summer.
The number of ships available remained low but the demand was itself
lower. Some of the few ships open for charter were fixed at the very
last minute. The rationalisation of the Europe-ECSA trade by
Maersk-Sealand and Hamburg-S'd may have played a role at this time.
In November / December, the 1,500 / 2,000 teu range
suffered a lot from an unexpected high number of prompt ships and few
charterers. The cascading effect took its toll while rationalisations on
some lines using 1,300 / 2,000 teu tonnage have driven ships out. Some
ships had to wait several days or weeks before finding employment.
The glut of open ships for prompt delivery is partly
explained by the relet of ships that were initially expected to be open
for charter in the first half of 2001. The FESCO / GWSL agreement leads
to replacing of two services using a total of nine or ten 1,300 / 1,700
teu ships by a single loop using five 1,600 / 1,700 teu ones.
Not only ships of 1,500 / 2,000 teu are squeezed out
of the East-West liner trades through such rationalisations, but they
also suffer from the introduction of 2,000 / 3,500 teu tonnage on key
North-South trades (especially for South America). In a perfect world,
they should shift to feeder trades or to intra-Asia trades, from where
they would kick-out the 1,000 / 1,500 teu ships, and so on.
The reality is different. Ships of 1,500 / 2,000 teu
are still too big for most of the feeder trades and many intra Asia long
haul operators (East of Singapore) stick to their 1,000 / 1,500 teu
Given this, it is not surprising that rates fell.
Very few charters were concluded in the last weeks of the year. As more
ships were building up, owners had to accept much lower rates. In
December, B-170s were traded at around $ 12,500. Confirming the downward
trend, two 1,740 teu newbuildings with a good speed (20.5 kts on 58 tons
/ 2001), were fixed by ANZDL for 12-14 months at $ 13,550 / 13,800. A
low was reached by a 'BV 1700' (1,684 teu / 19 kts on 48 tons /
1995) which went to Heung-A in December for 12 months at only $ 10,500.
The demand for ships in this size range remained
consistent while the supply remained limited, at least until October.
Furthermore, very few newbuildings were delivered (as well as in the
1,000 / 1,250 teu range). This is reflected in rates obtained by 'CS1400'
vessels (1,388 teu / 18.5 kts on 46 tons / 1992-1995), which reached the
$ 13,500 mark during the summer.
After these exceptional months, ships of 1,250 /
1,500 teu started to suffer for the same reasons as their 1,500 / 2,000
teu counterparts. Owners had then to accept lower rates than those
enjoyed early September.
In May, a B-186 (1,354 teu / 19.5 kts on 48 tons /
1994) was negotiated at $ 13,200 with a July delivery for a 24-month
period. In June, a sister ship was fixed by CMA-CGM at $ 13,875. In
December, a sister vessel accepted $ 9,600 for 12 months with Kien Hung.
Illustrating the ups and downs throughout the year, a
'Merkur II' class ship (1,438 teu / 19 kts on 63 tons / 1982 - ice
class), was extended in May for six months by Maersk-SeaLand at $
11,250, a strong rise against the $ 6,500 it made in November 1999 for a
similar extension. The same ship went in December to Senator Linie for a
period of about four months at $ 8,200. In June, a trio of 18 years old
'Merkur II' ships went to APL for $ 10,800.
Despite a rise and fall in rates over the year, the
1,000 / 1,250 teu ships were less affected than the 1,250 / 2,000 teu
ones. The rate increase observed since the 1999 lows were also less
spectacular. However, a few ships became prompt as the year 2000 came to
its end and this put the rates under pressure. But the demand matched
the offer and charter rates remained strong until collapsing at the turn
of the year.
Rates peaked during the summer. In July, CMA-CGM
extended a 'VW 1100' ship (based on 'BV1000' - 1,122 teu / 19.5
kts on 44 tons / 1996) for 12 months at $ 11,200 while a sister ship was
fixed to DAL for $ 11,125. In September, a sister ship got $ 11,050 for
a six month charter with Costa for its Transatlantic triangular service
while two 'Sietas Type 146' (1,048 teu / 18.5 kts on 40 tons / 1994)
were extended for 12 months by P&ON at $ 11,450.
'B-183' / 'RW49' type (1,012 teu / 17.5 kts
on 29 tons / 1992-97) got $ 6,500 in January. Rates went up to $ 8,000 /
8,500 in May. In September, they were negotiated at their highest, circa
$ 9,000 / 9,200 for a 3 or 6-month period. In November and early
December, such ships obtained $ 8,000 / 8,300 for commitments of six to
The enhanced version (1,162 teu) got around $ 8,000 /
8,500 in March and peaked at $ 10,000 / 10,500 in September / October
for a three to twelve month period. It went back to circa $ 9,500 in
November for a 12-month period.
Nevertheless, rates went down abruptly at the turn of
the year as shown by the $ 7,500 obtained in late December by a 'Gdynia
8125 - Planet' (1,128 teu / 18.5 kts on 37.5 tons / 1995) for a three
month-period with Hanjin. A low rate which also reflects the fact that
this ship had been relet by its previous charterer and was opened
prompt. In October, a sister ship obtained $ 11,000 for a six-month
'Stadt 1100' ships (1,102 teu / 20 kts on 42 tons
/ 1998-99) got $ 10,000 in May, reflecting a slight premium for speed.
This premium was also reflected with a series of 1,216 teu fast
newbuildings (1,216 teu / 22 kts on 63.5 tons / 2000), which obtained $
10,000 / 10,500 in May and $ 11,000 in December. They are deployed, or
will be deployed, on intra Asia services. This is an interesting
development as it shows a need for speed, which may cause a rise in
demand for such ships by other intra Asia operators. However, at 22
knots, these 1,200 teu ships are quite unique.
Rates for 800 / 1,000 teu ships climbed progressively
during the year. There is a strong demand coming from regional feeder
Illustrating the trend, a Turkey-built 'Box'
class ship (812 teu / 18.5 kts on 33 tons / 2000) went to Shandong
Marine at mid year for $ 6,700 while her sister obtained $ 6,100 in
April. In August, a sister ship went to CMA-CGM for six months at $
In September, ships of 800 to 1,000 teu enjoyed a
mini-boom. Fast, modern tonnage in this category passed the $ 10,000
mark, a level unseen since the peak period of 1995-96.
However, rates did not explode as they did for the
large vessels but neither had they plunged as deep. Another factor may
prevent any exaggerated rise: there are plenty of compact multipurpose
tonnage around plying tramp trades that can easily be transferred to the
feeder ship market.
A 'Szczecinska B-188' newbuilding (907 teu / 18.5
kts on 34 tons / ex-yard September) was reported fixed by Costa
Container Lines in August at $ 8,750 for 12 months. Existing 'B-188'
ships, which are slower (907 teu / 17.5 kts on 31 tons / 1995-1999)
obtained about $ 8,100 / 8,600, against $ 7,500 four months earlier.
There is also a premium for speed in this category,
as shown by the 12 months extensions by DAL of two 'Sietas Type 155'
(910 teu e 19 kts on 37 tons / 1996) at $ 10,900.
By comparison, two older and slower 'Nordsino'-type
ships (844 teu / 15 kts on 22 tons / 1983) were extended in September
for 12 months by Hub Line at $ 5,500 for local intra Asia trading.
Ships of 600 / 700 teu are not performing as well as
their 800 / 1,000 teu counterparts. In October / November, modern 650 /
700 teu cellular ships got $ 6,200 / 7,300, according to their speed.
Two 'Sietas Typ 156' (646 teu / 17.5 kts on 32 tons / 1995) were
extended for 12 months by OOCL at $ 7,225 / 7,325. Two 'Hakata 600 L'
sisters (653 teu / 15.5 kts on 21 tons / 1997) were extended in October
by APL and PIL for six and twelve months at $ 6,200/6,350 while a sister
got $ 6,600 from P&ON one month earlier.
Signs of a slight improvement were also observed for
the 500 / 600 teu range. Modern ships of 500 / 520 teu got $ 4,700 at
mid year, against $ 4,300 / 4,400 two months earlier.
Rates for 'RW 39' ships (582 teu / 15.5 kts on 19
tons / 1980-1986) took off from the $ 4,000 / 4,200 in January to reach
$ 5,000 in March, $ 6,000 in July. Rates remained strong, at around $
6,000, for the latter part of the year.
However, in July, two 'Marcon 400' ships (408 teu
/ 16 kts on 17 tons / 1997) were fixed respectively to Associated
Transport Lines (extension) and CMA-CGM at a reported $ 4,350. This
shows a rate slide as both were fixed at a stagnant $ 4,700 during the
past 12 months.
|The containership second-hand market
The chronic shortage of large ships (above 2,500 teu)
and the impossibility to obtain newbuildings with a short notice may
have triggered-off a decision, not seen in the recent years from a large
operator to consider second-hand ships as a way to boost its fleet (with
the notable exception of MSC). CP Ships has bought seven ships of around
3,000 teu to continue to develop the activities of its subsidiaries.
This decision provides also an indication that the charter market for
such ships is expected to remain bullish and on the owners side for some
Besides CP Ships, Norwegian and Israel buyers have
dominated the second-hand market, confirming the trend observed in 1999.
Sellers have been mostly East Asian operators needing cash in order to
keep afloat their operation or to improve their end year results. It can
be said that without these sellers, the volume of second-hand deals for
ships above 2,500 teu would have been reduced.
The market for these large ships was shared equally
between sales/charter-back deals and straight sales. Cash-strapped
Korean owners continued to sell ships with t/c back. Norwegian owners
continued to show an interest into buying such ships. This move can be
interpreted as a wish to diversify their assets in order not to rely
only on the bulker or tanker sectors.
In 2000, Korean owners Hyundai and Choyang have sold
10 ships of 2,700 to 4,400 teu, all with charters back to the sellers.
The number of large Korean ships sold since the beginning of the Asian
financial crisis in 1997 amounts to 26 sales. In addition to this, an
order for five 6,400 teu ships, reported as contracted by Hyundai in
late 1999, was taken over in the spring 2000 by the Ofer-controlled
company Zodiac Shipping, with a ten year charter to Hyundai.
The activity has been very reduced in the 1,500 /
2,000 teu range. Strong charter rates, at least until the end of the
year, may have played a role in dissuading owners to sell. Only four
ships were reported sold in this category, including two resales of
A dozen of cellular-ships were reported changing
hands in the 1,000 / 1,500 teu range, most deals were straight sales. In
addition, four multipurpose ships of 23,500 dwt / 1,200 teu were sold.
Generally speaking whilst the market substantially
progressed all over the year 2000, the market reached a plateau in the
summer, followed by a price softening for the medium/low size range.
Nevertheless, it remained very difficult after the summer to trace
charter-free quality ships in the large sizes (above 2,500 teu).
It looks like most of the owners decided to keep
their vessels, enjoying lower but still comfortable market rates. After
the summer, unless the lines required immediate tonnage, the buyers
became more selective or even preferred not to move, awaiting to see
where the market was going.
At the end of 2000 the market dropped, but we remain
fully confident that the prices should pick up again as from summer or
Shipping and Shipbuilding Markets in 2000
I N D E X