The Red Sea crisis has provided non-operating containership owners (NOOs) with a significant boost to their earnings.
Re-routing liner services around the Cape of Good Hope has increased demand for chartered tonnage, and reversed the declining trend in time-charter rates and periods.
“These recent developments are mitigating the effects of oversupply in the containership market,” said Costamare CFO Gregory Zikos.
“We have proactively secured employment for 95% and 78% of our open days for 2024 and 2025 respectively, putting our contracted revenues for container vessels at $2.5bn, with a remaining time-charter duration of 3.6 years,” reported Mr Zikos during the NOO’s recent Q4 earnings call.
And it was the same story from Greek compatriot Danaos’s CEO, Dr John Coustas, who told investors and analysts it had “secured additional charters for our vessels at very healthy levels”.
Meanwhile at Euroseas, its oldest and smallest vessel, the 1997-built 1,439 teu Aegean Express (pictured above), has earned a stay of execution from the scrapyard, thanks to the renewed demand.
CEO Aristides Pittas said it made sense not to sell, given that the vessel could, in the current market, earn in excess of its operating costs.
“Last year we were assuming we would be scrapping the Aegean Express on the completion of its charter, because we thought the market would be soft,” explained Mr Pittas. “But we want to have the option of earning significantly more than what we could get by selling the vessel today at scrap value.”
And it follows that the Red Sea disruption, and the resulting need for more capacity to plug holes in carrier networks, has also temporarily stymied a containership demolition market expected to spike this year in response to the delivery of a huge number of newbuild vessels.
Indeed, Alphaliner reported this week that there was “no weakness in sight” for the charter market.
“As the supply of prompt tonnage continues to be tight, especially for larger vessels of 4,000 teu and above, charter rates are rising sharply, with any new fixture typically concluded at much higher levels than last-done deals,” said the consultant.
Examples are to be found in the resurgent interest in ‘classic’ panamax sizes, of 4,000 to 5,300 teu ships, which are reported by brokers to be “in strong demand”.
“As supply dries up, rates continue to rapidly increase,” said Alphaliner, noting that the ‘benchmark’ daily hire rate for a 4,250 teu ship had risen from $22,500 to $25,000 in the past two weeks.
Moreover, in the unlikely event that the Red Sea crisis ends soon, the view from the sector is that the charter market will take some time to return to normal.
“Even if things were to end tomorrow, it will take at least six months before we got back to normality,” said Mr Pittas.
