MPC Container Ships expects second-half scrubber boost to charter rates after posting interim loss

An IMO 2020-driven recovery in time charter rates for container tonnage has only recently filtered through to the smallest sized segment according to feeder ship owner MPC Container Ships.

This Oslo-listed shipowner posted second-quarter results revealing a net loss of $4.4m for a total loss of $9.6m in the first six months of the year.

The negative result came from a total revenue of $58m in the first half, earned from MPC’s fleet of 39 owned vessels ranging in size from 966 teu to 2,846 teu.

Charter rates for larger tonnage have soared in recent months as ocean carriers have chased and secured ships as cover for vessels taken out of service for scrubber retrofitting in readiness for IMO 2020.

MPC said that by the end of June the demand had filtered down to the panamax sizes with analysts then expecting that the market upswing was pointing towards a “top-down” support that would influence the feeder ship market.

“This occurred only recently,” said MPC, “when the market successfully averted a traditional summer downturn with solid activity and improving rates for the smaller segments as well.”

Daily hire rates for a 1,000 teu feeder on a 6-12 month charter were down 3% as at the end of June at around $6,150 a day the shipowner reported.

In a recent analysis of the containership charter market Alphaliner said that in contrast to larger ships, which it said “could expect healthy charter rates” the “smaller sizes could see their hires stagnate at the current relatively depressed levels”.

Nevertheless, MPC painted a rosier outlook for the sector in the second half of the year given that the supply side of the equation has been totally dominated by the delivery of ships larger than 12,000 teu in the first half.

It added that feeder ship newbuild orders were mainly replacement tonnage “or tailored for the fast-growing intra-Asia market”, concluding that “a demand-supply rebalancing appears to hold up as a realistic scenario”.

A current concern for MPC’s shareholders is the asset values of its fleet which are falling due to negative market sentiment.

For example, it said that the second-hand price of a 10-year-old 1,700 teu ship was down 24% year-to-date at the end of June.

The company noted that notwithstanding the improvement in charter rates for larger tonnage this had yet to have a significant impact on asset values.

Indeed, The Loadstar reported last week on Maersk’s 12-month charter of the 6,882 teu Cape Pioneer, which it had fixed to cover a position on its transpacific tradelane due to a scrubber retrofit on the incumbent ship.

This was 40% higher than the vessel’s previous charter to NYK.

However, according to vesselvalue.com data the massive jump in the time charter rate for the ship has so far failed to significantly lift the valuation of the two-year-old vessel, which is still at around $58m.

MPC said: “Once again, factors outside the second-hand containership market have adversely affected market sentiment, dampened demand and led to prices dipping below the conventional correlation with earnings for most ship sizes.”