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 ...
Oslo-based containership owner MPC Container Ships has launched another raid on the former assets of German KG companies for three discounted 2,500 teu feeder vessels to boost its fleet to 68 ships.
In a combined cash and shares deal, it has an agreement with Triton Debt Opportunities to purchase the geared 2,500 teu 2005-built Victoria Schulte for a total consideration of $11.8m. And it is to purchase two 2,500 teu vessels, the Welle and the Woge, built in 2005 and 2006, for $11m each.
MPC has aggressively built a portfolio of predominately feeder ships on a blueprint strategy of acquiring the distressed assets at rock-bottom prices and capitalising on the rising charter market in this sector, thus improving vessel value.
Constantin Baack, chief executive, said: “We are very pleased with the development in the past year. Within only 12 months, MPC has become the largest owner globally of feeder containerships with a capacity of up to 3,000 teu. During the same time, charter rates in the segment have developed very positively.”
Noting that the supply of available ships was getting tighter with the idle fleet now having shrunk well below 100 ships, Mr Baack said “the market continues to provide attractive acquisition opportunities”, which they are constantly assessing.
According to vesselsvalue data, the market value of the 61 ships recorded for MPC is $618m, compared with a demolition value of $242m. Asset values were on a par with scrap values just a year ago, but the market has seen a dramatic turnaround since.
Indeed, boosted by an acute shortage of tonnage in the smaller sectors, daily high rates have soared in recent months, with hire rates for some feeder ships reported to have spiked by 50% since March.
Unsurprisingly, the demolition market was described to The Loadstar as “dead as a dodo” by one broker this week, with only 15 container vessels sold for scrap so far in 2018, compared with around 90 during the same period last year.
Container lines are scrambling to find tonnage and owners are now on the front foot in terms of negotiation, able to dictate the terms and conditions, including positioning costs and the options for the extension of the charter.
This inflationary pressure is adding more cost to the bottom lines of carriers also being hit by a big hike in fuel prices and freight rates that remain stubbornly low.
With several of the top 10 carriers chartering-in over 50% of their tonnage, the sharp rise in daily hire rates will begin to impact their costs as and when charters are extended or new ships are fixed.
Meanwhile, MPC is in the healthy position of having all of its ships employed at above-operating cost and able to hike the daily hire rates for each new fixture.