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New York Stock Exchange-listed containership owner Global Ship Lease (GSL), whose fleet of 17 boxships are all on charter to CMA CGM, may soon be seeking new employment for two of its panamax vessels or may be forced to sell or put them into lay-up.

The time-charters for the vessels with the French carrier expire at the end of March and the carrier has indicated that it will not seek to extend the charters.

The Marshall Islands-incorporated GSL, in which CMA CGM has a “significant equity stake”, might have expected to agree extended charters on the ships, given that the daily hire rate had already been reduced to $7,000 as part of the terms of a prior extension – around 30% of the hire rate of similar-sized ships on long-term charter with the carrier.

The unwelcome news, received on 31 January from CMA CGM for the 1997-built Ville d’Orion and the 1996-built Ville d’Aquarius, both 4,113teu, was revealed in GSL’s 2013 accounts, which were released yesterday. They reported a net profit of $32.5m for the year on revenue of $143.2m.

If a last-minute extension is not negotiated and GSL cannot find another charterer for a ship size which is near-unemployable, it said it may lay them up “or evaluate alternates” – which presumably includes selling the ships for scrap.

According to, the ships have a demolition value of around $8m each, having fallen from a market-high valuation of $71.7m in February 2008.

The remaining terms for the time-charters of GSL’s other 15 ships with CMA CGM range from three years to 12, and the carrier would not default on the agreements, however expensive the daily hire rate currently appears, as charter documents are regarded as sacrosanct in shipping – regardless of CMA CGM’s shareholding in GSL.

This is the reason why the long-term charter fixed-rate business models of GSL and other containership owners, such as Seaspan and Danaos, are generally seen as watertight and unaffected by plunging spot charter hire rates caused by excess cellular capacity.

However, Danaos, as reported by The Loadstar, has been caught in the restructuring of Israeli carrier Zim and having already conceded deferred charter hire payments, it was this week obliged to report a $19m hit in its accounts.

Elsewhere, a deal has been reached between Maersk Line and a KG fund owner named as MPC Flottenfonds 111  to return 14 panamax vessels two years ahead of the expiry of their charters. The charters, on ships that range from 3,604- 4,224teu, were inherited by the Danish carrier when it acquired P&O Nedlloyd in 2005, and are likely to have commanded a daily hire rate significantly higher than today’s level.

The agreement to terminate the charters would have involved a substantial payment from Maersk, and was made possible because the MPC-managed fund identified an opportunity to sell the ships for scrap, a transaction that MPC said “would bring solid returns for the private KG investors in the fund”.

Meanwhile, Maersk Line has more than 300 other ships on charter, extension options on many of which are due to be negotiated in the near future. Like its prospective alliance partners MSC and CMA CGM, Maersk plans to return several of these ships to owners if the P3 network gets the goahead from regulators.

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  • Nelson Carlini

    February 14, 2014 at 12:30 pm

    The brazilian domestic shipping companies would have a good employment for these 4800 teu vessels at such low rate.