Gloomy outlook for MPCC as feeder market collapses and charter rates plunge
Oslo-listed feedership owner MPC Container Ships (MPCC) has posted a net loss of $10.7m for the ...
Norwegian container feeder vessel owner MPC Container Ships said charter rates and second-hand vessel values rose “significantly” in the first six months of this year.
The booming market for smaller containerships enabled MPC to post a net profit of $2.3m in the six months to 30 June.
Established in April 2017 to focus on feeder ships of 1,000-3,000 teu, the Oslo stock exchange-listed company rapidly built up a portfolio of more than 60 vessels in little over a year.
MPC acquired four small containerships in the second quarter of this year and another more recently, post balance sheet, to take the fleet to 69 ships.
It claimed to be the largest feeder containership owner globally, by capacity – of vessels up to 3,000 teu – and charters its ships to many of the biggest ocean carriers.
By far the largest carrier counterparty customer is Maersk Line which leases around half of MPC’s vessels.
In terms of capacity, the next ranked feeder shipowners are MSC, Maersk, Wan Hai and PIL, with long-established German shipowner Peter Dohle only ranking sixth.
According to MPC, time charter rates for 6-12 month June fixtures for vessels of between 1,000 teu and 2,750 teu increased by around 30% compared with the year before.
As a consequence the asset values of these smaller containerships also recovered – for example, a typical 10-year-old 2,750 teu feeder vessel now changes hands for around 30% more than a year ago.
The improvement in the market for the sector has been driven by strong demand and a shortage of smaller tonnage.
Indeed, although global container capacity supply growth is predicted to be just ahead of demand at around 5.6% this year, MPC said that in the smaller segments it expected “very moderate fleet growth of less than 1%”.
In its first-half earnings presentation, MPC claimed the feeder market still had the “best fundamentals in the container industry, due to higher demand growth and lower supply growth” and that it also benefited from “limited cascading”.
Looking ahead to the IMO’s 0.5% sulphur cap coming into force from 1 January 2020, MPC said it expected “the majority of its fleet will burn LSFO [low-sulphur fuel oil]”, although it added that “for selected vessels” it was in “discussions with its liner customers about strategic employment options which involve scrubber retrofits to capture the savings benefits”.
It said in terms of the benefit of installing the exhaust gas cleaning systems, that “on a selective basis, feeder ships equipped with scrubbers should be able to earn a significant extra premium in 2020 and for a few years onwards”. Charterers of feeder ships fitted with scrubbers would, if the current cost differential between LSFO and heavy fuel oil (HFO) continued, be able to save significantly on their fuel costs.
MPC’s second-quarter turnover from chartering was $46.9m, compared with $28.3m revenue in the first three months, reflecting additional vessels in the fleet, as well as improved daily hire rates.
The company has also appointed ex-PriceWaterhouseCoopers corporate finance consultant Harald Wilke as chief financial officer.