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No. of Recommendations: 5
Yes, all that is possible and I certainly hope so.

But there are two downsides to keep an eye on beyond just charter rate reduction to match prevailing rates

1. That ships are unable to find charterers and so are laid up and unemployed generating zero revenue whilst the owner must still cover crewing, maintenance, lay up costs and all the rest. With the continuing downturn in shipping market, layups (ie unused ships) of the entire global container shipping fleet are forecast as below to reach 5%. Yes, it's just a forecast. Normally, the figure is less than 1%. But historically, in the last liner shipping market crisis in 2009, nearly one in nine vessels was laid up. With layups increasing already due to less trade and oversupply of vessels, owners are naturally cutting charter rates to avoid this scenario and at least keep vessel in employment and so it becomes a vicious circle.

How bad can it get ? Well there were some containers shipping lines that started up during the crisis, because owners were prepared to charter their vessels to them for next to nothing, giving them a huge cost advantage in some cases . Why ? Because the owner is spared the costs of layup (not just a case like parking a car in the garage), running maintenance and the like that are part and parcel of charters.

Which leads onto second point

2. That charter rates can very well go way below what they are at the moment.

QUOTE

Layups after peak season to reach 5%

Tuesday 20 September 2011, 10:24
Containers Back to Lloyd's List Asia .UNDER the best case scenario in the current economic climate, 5% of the global container fleet will be in lay-up by winter, says a new report.Macquarie Bank Hong Kong shipping analyst Janet Lewis predicts that the layups will start in the slack season that usually begins in November after

UNQUOTE

The market has yet to hit bottom so it's anyone's guess at the moment. One thing that heartened me was that Paragon do seem to report any changes to charters, so it would be appear Boxships would do the same. Hence, no news may very well be good news at the moment !
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