Danaos enjoys strong Q3, but sees uncertainty as liners look to cut charter costs
Greece-based non-operating containership owner (NOO) Danaos recorded another strong result in the third quarter, posting ...
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By Mike Wackett
Despite a record number of Panamax ships making their final voyages to the beaches of Asian shipbreakers last year, rampant containership cascading has forced the vessel sector into the wilderness of short period charters of three months or less at sub-economic daily hire rates – often made worse by the requirement to reposition the vessel prior to the charter commencing.
Indeed, more than 50 ships of 3,000-5,000 teu – equating to over 200,000 teu of capacity and representing half of all slots scrapped – were deleted in 2014 as employment options were extinguished by the influx of almost 1.5m teu of new and mostly larger tonnage.
Moreover, an estimated 1.75m teu of newbuilds, heavily weighted with ultra-large container vessels (ULCVs), will hit the seas this year, resulting in further cascading and causing brokers of Panamax vessels to have to work even harder for fixtures.
Further evidence of the parlous position for the Panamax sector came from Alphaliner this week, which reported that Maersk Line redelivered 13 unwanted long-term chartered ships of 3,600-4,200 teu back to German owner MPC, some two years ahead of the expiry of the charter thereby incurring a termination penalty of $39m.
According to Alphaliner, the Hamburg-based managers of the KG company subsequently scrapped the ships, underwritten by a scrappage guarantee from the Danish carrier of around $126m as part of the charter party termination negotiations.
Maersk Line no longer had use for the Panamax vessels, underlining its strategy of deploying the biggest ship possible on each trade, and MPC saw no prospects for other employment – scrapping was viewed as the only viable option.
Consigning the redundant ships to lay-up was no doubt also considered, but this option is only viable if there is some light at the end of the tunnel in terms of improving employment prospects, and the gloomy long-term prospects for the Panamax sector also explains the artificially low level of laid-up tonnage – at 230,000 teu it is around 70% lower that of a year ago, and includes just 11 Panamax units compared with 75 vessels mothballed at the beginning 0f 2014.
This situation suggests that owners are no longer prepared to sweat-out slack demand for their ships, while still paying mortgages and incurring lay-up costs, in the hope of better times ahead.
Give or take the occasional spike, daily hire rates for Panamax containerships at less than $10,000 per day are, on average, just 30% of what their owners enjoyed four years ago – although if a broker can secure any fixture this represents a contribution to overheads, and being ready to operate at least means they are available for ad hoc fixtures carriers might throw them.
Nevertheless, the “new normal” of short hires and charter party positioning terms mean that the Panamax boxship managers are facing further challenges in 2015.
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