OOCL Qingdao
OOCL Qingdao - one of GSL's fleet

Owners of mid- to small-sized container vessels remain optimistic, despite the impact of trade wars and forecasts of a global deceleration in box volumes,

With an almost empty orderbook in the smaller containership sectors, owners are confident they can continue to achieve daily hire rate increases for extensions or new charters.

Speaking to Bloomberg radio today, Global Ship Lease (GSL) chief executive Ian Webber said that although trade wars and tariffs were “never good for business”, they could create opportunities for smaller liner services.

“The very big ships, the ones deployed on trades between China and North America and China and Europe, are the ones that are going to be most affected directly by tariffs and trade wars, at least until something is resolved,” said Mr Webber.

“The mid-sized and smaller fleet is outside of that – that’s 70% of global container trade – and that is where my company is focused. There will be an indirect effect of course, but we expect the direct result to be negligible,” he said.

NYSE-listed GSL, which merged withPoseidon Containers last year, owns 45 containerships ranging in size from 2,207 teu to 11,040 teu, which it charters out to the major shipping lines on a fixed-rate period lease. It has around $750m of contracted revenue.

Mr Webber sees a demand growth in the secondary trades of 3-4% this year, driven by local economies and the shipment of goods that emerging nations, in particular, will continue to need, but conceded that not every trade was “going gangbusters at the same time”.

“For our ships that are becoming open in the market later this year, we are hoping to renew at higher rates, driven by these economic fundamentals,” he said. “There is inevitably a bit of a tussle between owner and charterer, but you end up with something that you agree on rate and duration.”

He added that there were still opportunities to increase the fleet selectively with second-hand vessels of between five and 10 years old, preferably with a charter attached.

Moreover, he said, with asset values still at the bottom of the cycle there were investment opportunities “for those that have the appetite and capital, which we do”.

Supporting Mr Webber’s outlook for the sector, Alphaliner’s recent charter review concluded that the market remained “bullish in the face of a continued tight supply and a resilient underlying demand”.

It said: “Although some charterers have recently focused on fixing scrubber-fitted vessels, non scrubber-fitted ships are also expected to remain in good demand in the medium term.”

It continued: “This should prompt a further hike in charter rates once demand picks up after the Chinese new year holiday, although the market will very much remain two-tier, with a continued substantial rate differential setting scrubber-fitted vessels apart.”

Indeed, one Hamburg-based broker told The Loadstar this week he could “almost double” the daily hire rate for a scrubber-fitted open ship.

“The owners that took the gamble of investing in scrubbers are really getting a good return now,” he said.

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