In response to the shortage of ships resulting from Red Sea diversions, tonnage providers have jacked up charter rates, particularly for larger vessels that are the workhorses of long-haul routes.

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

Clarksons remarked: “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 compelled many ship operators to make detours round the Cape of Good Hope.

Linerlytica observed that mainline operators’ tonnage demand has picked up again after freight rates surged 40% in the past week, and several units that were previously open for sublet were withdrawn. Charter rates have picked up across the board, with the larger sizes enjoying the largest gains. The bullish conditions are expected to last as long as vessel diversions to the Cape remain in place.

Linerlytica estimates that rates for an 8,000 TEU ship are now around US$35,800/day, 45% higher than in 2019, while a 6,500 TEU ship is going for US$25,500/day, 29% more than in 2019. Compared with 2019, daily hire rates for 5,600 TEU and 4,200 TEU ships are higher by 38% and 53%, respectively, at US$22,500 and US$16,900.

Recent fixtures show that OOCL chartered Global Ship Lease’s 2002-built 6,840 TEU GSL Christen for US$20,500/day for seven to 10 months. Ocean Network Express (ONE) and CMA CGM have also taken Panamax vessels, chartering Oman Container Line’s 2008-built 4,250 TEU Wadi Bani Khalid and Global Feeder Shipping’s 2004-built 4,239 TEU Varada, respectively. Wadi Bani Khalid was fixed for two to five months at US$16,500/day, while Varada was chartered for one to three months at US$17,000/day.