Sea freight monthly review: February 2019

Encouragingly for reefer operators, the redelivery of eight large units from Chiquita’s Great White Fleet into the pool of vessels used primarily for spot voyages at the start of the year, coupled with the depressed price for scrap, did not prevent the market from strengthening towards the end of the month. The increase in capacity was offset by a hitherto healthy, albeit belated, Chilean season, more vessels fixed earlier into New Zealand and the introduction of Seatrade’s 5-vessel Zodiac service for bananas, pineapples and melons.

Although there still was some tension or pressure in the supply/demand equation as March began, the week-on-week increase in the TCE average throughout February can hardly be considered spectacular. While the TC figures on vessels fixed into Chile and New Zealand may have been in the 50-60c/cbft range, the yield to owners will be a significant tick less, given the expense vessels incurred to meet their laycans.

Market conditions in the small segment improved throughout the month. The combination of a limited number of operators and a similarly limited number of charterers, the realization that both need each other to survive and indeed thrive in the face of the threat posed by the carriers, means that the bandwidth of the TCE average is likely to stay fairly narrow. Only in exceptional circumstances, such as a spike in demand from the South Atlantic, incursion from the large segment or a significant rise in bunker costs, are rates likely to deviate above or below the US$160-$180 per MT range.

February was a case in point: although chartering activity was weak for the first half of the month, there was little-to-no change in the rate structure for the benchmark Mauretania to West Africa voyage. Similarly, as more vessels fixed into the Faroe Islands, Walvis Bay and Mauretania towards the end of the month, rates remained stable.

sea freight - monthly spot average

sea freight - large reefers

sea freight - small reefers