Charter rates for container ships soar due to Red Sea route diversions

A  container ship (Source: Maritimegateway)

Due to the shortage of ships caused by route diversions in the Red Sea and detours around the Cape of Good Hope, tonnage providers have significantly increased charter rates, particularly for large vessels optimized for long-distance routes.

As of December 21, 2023, Clarksons’ Containership Timecharter Rate Index reached 67 points, down 32% from the beginning of the year but up 18% from 2019, the year before the Covid-19 pandemic.

Clarksons commented: "In the charter market, the situation in the Red Sea led to operational discussions between owners and operators, while potential sublet vessels were recalled so that operators had sufficient tonnage to manage rerouting requirements."

Threats of missile and drone attacks from Houthi rebels have forced many ship operators to reroute around the Cape of Good Hope.

Linerlytica noted that tonnage demand from mainline operators has rebounded after freight rates surged 40% over the past week, and several units previously available for sublet were withdrawn. Charter rates have risen across all categories, with larger vessels benefiting the most. This favorable condition is expected to continue as long as diversions around the Cape of Good Hope persist.

Linerlytica estimates that the rate for an 8,000 TEU vessel is now around $35,800 per day, 45% higher than in 2019, while a 6,500 TEU vessel costs $25,500 per day, 29% more than in 2019. Compared to 2019, daily hire rates for 5,600 TEU and 4,200 TEU vessels are 38% and 53% higher, respectively, at $22,500 and $16,900.

Recent contracts show that OOCL chartered the 2002-built, 6,840 TEU GSL Christen from Global Ship Lease for $20,500 per day for seven to ten months. Ocean Network Express (ONE) and CMA CGM also chartered Panamax vessels, with ONE chartering the 2008-built, 4,250 TEU Wadi Bani Khalid from Oman Container Line, and CMA CGM chartering the 2004-built, 4,239 TEU Varada from Global Feeder Shipping. Wadi Bani Khalid was chartered for $16,500 per day for two to five months, while Varada was chartered for $17,000 per day for one to three months.

Read more:

• SCFI index soared 40% as ships diverted around Cape of Good Hope
• International shipping and logistics market update - Week 52/2023
• MSC Statement on MSC UNITED VIII Incident in Red Sea
• Shipping lines changed routes due to escalating security concerns at Bab-al-Mandeb

Source: Phaata.com (According to ContainerNews) 

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