Expect more rate increases as ship charter index climbs new heights

The ship charter market is hitting new highs of hefty premiums and that doesn’t bode well for a slowdown in recent steamship rate increases, according to the Canadian International Freight Forwarders Association (CIFFA).

"Daily hire rates for a 3,500-TEU gearless vessel are fetching some US$33,500. And some owners are holding out for even higher rates with reports that some are asking as much as $23,000 a day for 12-month charters of 1,700-TEU ships. Carriers are balking at these demands but brokers expect resistance will crumble as they face the prospect of turning away premium-paying cargo for lack of capacity," CIFFA’s newletter report today.

The charter market received a further boost over the weekend after China said it expects its economy, the mainstay of the container shipping boom, will grow by more than nine percent in the first half of the year. The total value of foreign trade likely will grow 17 percent to $1 trillion in 2004, the Commerce Ministry said, casting doubt on the impact of Beijing’s efforts to prevent the economy from overheating.

"This development does not bode well for a steading rate market and further rate increases and other premiums (i.e. bunker surcharges) will inevitably follow in due course," CIFFA warns.