Coming Back to Earth: The Containership Charter Market
September 17, 2022
Many theories have been put out regarding the timing and rate of the containership market's return to pre-pandemic levels. More concrete evidence exists today that the pandemic-fueled bull has peaked.
The HARPEX index uses actual weekly fixtures to track pricing in the container ship charter industry. It is released every week by the German shipbroker HARPER PETERSEN and offers rate assessments in USD for nine ship classes depending on vessel sizes (again, based on actual weekly fixture reports), as well as Harper Petersen's own market assessment, or the HARPEX (HARPER PETERSEN Charter Rates Index).
The most recent HARPEX rating of 3,095 is significantly lower than the previous week's value by 17%, with decreases seen across all nine ship classes. When you zoom out on the chart, you can see that charter rates have now decreased by nearly 33% from the HARPEX's all-time high reading of 4,586.25, which was just last April.
Charter rates are still somewhat higher than the 24-month average, as shown in the chart above, where the average reading over the past 24 months is 2,941.81. The HARPEX achieved a pandemic low of 412 points in June 2020, a few months before the chart's lowest reading of 678.40 in September 2020. Therefore, when comparing those low readings to the most recent reading, the market is still significantly higher than it was at the start of the pandemic.
Without a doubt, the decrease in containership charter market rates came after the decline in container spot pricing. Spot costs have now decreased for 29 weeks in a row, with the most recent reading of $4,942 per 40-foot container being 52% below the peak of $10,377 recorded in September 2021, according to Drewry's weekly aggregate World Container Index. Given that the HARPEX continued to show improvements throughout the spring and the general deterioration in market mood, it appears that the container ship charter market is finally beginning to catch up to falling spot rates.
It appears that the pandemic-fueled bull run in container shipping has indeed peaked, with all indications pointing to a market that will begin to decline in the months to come. The market is currently falling, but how much further will it go before hitting a new post-pandemic bottom is the question.