Shipowners Expect Better Charter Market in 2016

The gap between supply and demand for containerships is expected to widen next year

Shipowners are hopeful that 2016 will bring increased demand and higher charter rates for containerships, Joc reports. 

Speaking on Monday at the 9th Annual Capital Link International Shipping & Offshore Forum in New York, a panel of independent shipowners forecast that as deliveries of new tonnage slows and the global economy continues to grow, vessel supply and demand should start to come into balance form next year.

Charles Lupinski, senior analyst at Global Hunter Securities, says it would then be likely that liner shipping companies will turn to the charter market to find newer, more fuel-efficient ships and keep their capital for other projects including terminals.

"We are going to see a re-acceleration of trade over the next two years and given the fact that the orderbook now is at 18 percent of the global fleet compared to 50 percent in 2009, we believe that demand is going to outstrip growth and that we are going to have opportunities going forward to have pricing increases and a tighter overall market," he said. 

Meanwhile, prices for containership newbuilds have been low with shipyards hungry for business, especially as many offshore projects are on hold, said Herman Klein, president of the German Society for Maritime Technology. 

Seaspan Chief Financial Officer Sai Chu also added that ship orders are at 10-year lows, which bodes well for the market in 2016. 

"The liners have been working together to rationalize supply, and there is an interest in large ships, so broadly we see a well-balanced orderbook with industry fundamentals improving, which we expect to continue going forward" he said.

"So our forecast is for an improving environment for the industry and ultimately it's a good place for container ship owners to be."

Last summer, it was reported that the addition of ultra-large container vessels, along with more orders for boxships in general, had been depressing freight rates.