News / Containership charter market 'not playing ball', but NOOs are happy

Photo: VesselFinder

Greek non-operating containership owner (NOO) Danaos and compatriot container and bulk shipowner Costamare have both reported another set of strong first-quarter results.

Moreover, unlike their ocean carrier customers, the future return from the container sector is considerably more assured for NOOs, given the current bullish charter market and increased fixture durations.

Indeed, while ocean freight revenues continue to fall, carriers have locked themselves into long-term charters with shipowners that may restrict their ability to reduce costs matching the lower average rates they will receive per container this year.

And that disconnect will continue as shipbrokers report strong demand for tonnage and a shortage of supply across all vessel sizes.

“Overall market activity remains healthy despite reported weaker Q1 financials,” said London-based shipbroker Braemar.

And Maersk Broker said the charter market “was not playing ball” against the background of negative headlines, and that the market was “more or less cleaned-out of large tonnage”.

Although time charter rates have corrected from their highly elevated levels of last year, they remain above historical averages and the dearth of open tonnage has seen an increase in daily hire rates.

Commenting on Costamare’s Q1 performance of net income of $142m and liquidity above $1bn, CFO Gregory Zikos said the NOO had nearly 100%-covered the open days of its 64 containerships this year, as well as having fixed long-term employment for charters that expire between 2023 and 2025, giving a contracted revenue of $3.1bn.

And Danaos CEO Dr John Coustas reported “yet another solid quarter”, “despite the continuing geopolitical uncertainty and turmoil in the financial markets”.

He said: “The charter market improved due to the very limited supply of charter-free vessels, as well as the impact of speed reduction as charterers seek to comply with CII regulation.

“In the first quarter, we successfully secured more than $380m of contracted revenue through multi-year charters, including $262m for all six new buildings that will be delivered in 2024,” he added.

Danaos has a revenue backlog of $2.3bn through to 2028, underpinned by charter party agreements with most of the major container carriers averaging 3.2 years. In terms of capacity, CMA CGM is its largest charterer, with 21% attributed to the French carrier, followed by MSC at 18% and HMM with a 14% share.

During the three months ending 31 March, Danaos operated an average of 68 container vessels, ranging in size from 2,100 teu to 13,100 teu, with a very healthy fleet utilisation level of 97%. Adjusted net income was $145m, compared with $235m in Q1 22, however last year the NOO’s profit was inflated by a non-recurring $110m dividend from its shares in Zim, which it has since sold.