It took a little while longer for charter rates to drop in 2022 than was the case for freight rates. Both rates will continue downward trajectory in 2023, Alphaliner predicts.
Rates on container freight and charter rates for container vessels have both ”collapsed” during 2022. Charter rates have plunged somewhat after freight rates – but with similar dramatic drops, reveals Alphaliner’s latest newsletter where the analyst delves into price development in container markets.
While rates on the Shanghai Containerized Freight Index peaked on Jan. 7, it took a few months before Alphaliner’s own charter rate index for container vessels (ACI) reached historical peak levels of 563 points.
Since then, the SCFI – with a few minor exceptions — have been on a crashing trajectory coming in 80 percent lower than in January. The latest tally showed 1107 points compared to 5109 points not more than a year ago.
ACI didn’t drop for several months with the downturn first starting in September, but have since built up speed, however. In December, the charter rates – at 144 points – has dropped nearly 75 percent compared to March.
Still, the rates are almost twice as high than when Covid-19 broke out in the start of 2020. According to Alphaliner, the rates have stabilized somewhat and are looking ”decent” for a string of vessel types, but further drops is to be expected throughout 2023.
The analyst predicts the second half of the year to be ”be particularly challenging, as the domino effect of the massive newbuild deliveries, especially (but not only) in the larger sizes, will start being felt more acutely in the rest of the market.”
Even though spot rates too are higher than three years ago, they are only up by 20 percent. Their drop has diminished lately, but are expected to plunge further on account of the holiday season and the Chinese New Year kicking off at the end of January 2023.
Alphaliner concludes that attempts by carriers to stem the cargo rate declines – with service closures, slow steaming, Cape of Good Hope routing and blank sailing – continues to have a ”limited effect”.
