Update on Increasing Vessel Charter Rates
The shipping industry is currently experiencing significant increases in container time charter rates for certain classes of tonnage worldwide. The impact for time charter renewals in the Caribbean in particular, with tighter supply/demand ratios based on the availability of ships in this region, is generating substantial increases to daily operating costs. These vessel time charter rates had remained fairly consistent for the last three to four years. There is now a clear upward trend in vessel time charter rates. As shown in the chart below, worldwide fixtures in the common vessel classes deployed in the Caribbean have increased from 20% to more than 50% in just the first quarter of 2015. We are doing everything we can to minimize the impact of these increased vessel costs to our customers. However, vessels in the below segments are in short supply. As an example, recent fixtures in the 1700 TEU range are now exceeding $11,600 per day, an increase of $4,000 per day from a year ago. As time charter hires have traditionally had terms of at least six months, this kind of increase represents millions of dollars of annual increased costs for shipping lines.