TThe yearlong slide in container Evergreen Line pulled out of a long-term
ship charter rates is accelerating as charter for eight 12,400-TEU ships from
slower cargo growth on key trade Greek owner Niki Shipping.
routes and weakening liner freight With a flood of large ships of up to
rates dampen ocean carriers’ demand for 12,000 TEUs to be delivered from Asian
capacity. shipyards over the next three years as
Hire rates for all ship sizes are retreat- growth slows on the Asia-Europe trade,
ing with carriers able to negotiate siz- charter owners are bracing for rates to
able discounts as owners opt for lower sink even lower. But brokers rule out
rates rather than risk having their vessels a repeat of the 2001 bear market when
unemployed. charter owners considered a coordinat-
Carriers also are deferring charters ed lay-up of idled ships, largely because
until the last possible moment because cargo demand and ship supply now are
they expect rates to fall even further dur- much more closely matched.
ing the current seasonal slack ahead of the Clarkson forecasts world container
pre-Christmas peak shipping season. trade will grow 8. 7 percent this year,
The average daily charter rate for a down from an earlier estimate of 9. 7
3,500-TEU gearless Panamax ship has percent, while ship capacity will grow fallen to $27,000 from $31,000 in May 13. 2 percent. That gap will be narrowed and $33,000 in March, according to substantially by several factors, includ-Clarkson, the London ship broker. A ing port congestion and slow steaming. 2,750-TEU vessel is earning $22,000 a Clarkson expects trade will grow 9. 6 per-day, down $8,000 since March, and the cent in 2009, while the world fleet will benchmark 1,700-TEU geared ship is expand 12. 9 percent. pocketing $16,000 a day, compared with BY BRUCE BARNARD $18,500 six months ago. Current rates have retreated to their 2006 average and are below earlier years — a 3,500-TEU vessel, for example, earned an average of nearly $38,500 in 2005.
Carriers also are taking vessels on much shorter charters, typically one year for 2,000- to 2,750-TEU ships instead of the two- to three-year deals common just six to nine months ago, because they don’t want to be locked into rates that could look expensive in a few months.
Reports of canceled charters and shipyard orders also have depressed market sentiment in recent weeks. Germany’s NSB, the world’s largest container ship charter owner with a fleet of 87 ships totaling 360,000 TEUs, this month canceled a $620 million contract for eight 4,250-TEU vessels, reportedly because it could not persuade banks to finance ships that didn’t have charter contracts. Earlier,
German legislation aimed at blocking foreign takeover of domestic businesses could undo a multi-billion dollar bid for Hapag-Lloyd by Neptune Orient Lines of Singapore.
A draft law approved by the cabinet of Chancellor Angela Merkel last week would set limits on foreign investment. Germany said last year that it will follow the United States and France in derailing investments that pose a threat to national security.
The draft law gives a commission, headed by the Economy Ministry, power to block bids for 25 percent or more of a target company by funds or companies whose majority owners are not nationals of the 27-nation European Union. German Economy Minister Michael Glos said that “public order and security” will be the main criteria considered in the approval process, Reuters reported.
Employees of Hapag-Lloyd, owned by travel operator TUI, called on Berlin to block a potential sale to NOL, which is majority-owned by Temasek Holdings, the investment arm of the Singapore government. In a bid to quell German opposition, Ron Widdows, chief executive of NOL, told The Financial Times that his company might retain the Hapag-Lloyd name if it takes over the carrier, as it did after acquiring U.S. carrier APL in 1987.
Germany has stepped up measures to block foreign investment after a state-owned Russian bank in 2006 bought a stake in the parent of Airbus, raising concerns that the lender would gain access to European military technology.
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