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Cyprus shipowner earns record fee in single voyage

s santiago
S Santiago

A Cyprus-based shipowner has managed to regain almost a sixth of their ship’s value in a single voyage due to the frenetic global container market and the resulting soaring rates.

The shipowner, Cyprus Sea Lines, were able to lease container ship S Santiago to a forwarder for an eye-watering $135,000 per day.

Although the figure was not confirmed, with a ballpark figure of somewhere between $100,000 and $145,000 being provided, shipping industry sources put the exact fee at the aforementioned amount.

“An industry source speaking to American Shipper on condition of anonymity said the rate was $135,000 per day, the duration was 45-90 days (one round voyage with an option for a second) and the charterer was Chinese freight forwarder 3 Seas,” wrote FreightWaves, an analytics firm specialising in the global freight market.

This means that at the very least the owner of the S Santiago will stand to make more than $6 million for a single voyage from this one forwarder alone.

The South Korean-built S Santiago was constructed in 2006 and has a capacity of 5,060 20-foot equivalent units (TEUs).

What is staggering about the fee that Cyprus Sea Lines were able to charge is that the capacity of the ship is not particularly high, with more modern container ships being able to carry four times the amount of containers.

The global freight market has been in an unprecedented upswing since the midpoint of 2020 when the coronavirus pandemic disrupted supply chains and caused restocking demand to skyrocket both in the United States and Europe.

In turn, this caused a shortage of containers in global export centres such as China, India and South Korea.

The effect on container rates is particularly evident when we observe the Freightos Baltic Global Container Index (FBX), the leading international Freight Rate Index, which takes into account 12 major container routes from around the world.

In November of 2020, the FBX index was at $2,359 per FEU (forty-foot equivalent unit, double the size of the previously mentioned TEU for the S Santiago), which at the time was considered high.

“The spike is driven by very high demand for container freight since July, driven by post-lockdown restocking, limited air-freight capacity, incremental demand for stay-home goods and PPE (personal protective equipment), and a severe shortage of containers,” Liner Research Services market analyst Hua Joo Tan said at the time.

Fast forward to today and the FBX index has almost doubled, reaching $5,443 at the time of writing.

To further accentuate the dramatic rise in prices, the same index was hovering near the $1,340 mark in July of 2019 and not once did it break the $2,000 barrier between that time and August 28, 2020.

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