News Content

Mega ship owners face 'tricky' charter market in the coming year

OWNERS of large vessels could be in for a "double whammy" due to the delivery of 100 containerships with a capacity of 14,000 TEU and above in 2018, doubling the number of vessels of this size currently in service.

One London broker told London's Loadstar that the flood of new capacity could also coincide with significant off-hiring due to liner consolidation.

However, non-operating owners in the smaller sectors are optimistic of higher returns.

Said the broker: "There is nervousness in larger sectors and owners are urging us to get extension options confirmed asap."

The arrival of new mega ships will result in shipping lines attempting to cascade vessels in operation into smaller trades, while the prospects are not good for vessels that are chartered-in and they are likely to be off-hired as soon as possible.

Furthermore, the acquisition of Hamburg Sud by Maersk Line and the upcoming merger of Japanese carriers: "K" Line, MOL and NYK into Ocean Network Express (ONE), will force vessel operation planners to reassess their fleet requirements.

The Japanese shipping lines currently have 154 ships on charter "54 each for MOL and NYK and 46 for "K" Line on a mixture of long and short-term charters, according to Alphaliner's database.

With ONE planning in its final stages, it is understood that provisional decisions have already been made on the fleet requirement for the merged carrier ahead of its official launch in April. However, the shipping market is being kept in the dark about the new arrangements.

"It is difficult to get any answers out of the operational guys at the Japanese lines," said the broker. "They are all waiting for instructions from the new ONE management and most of the guys we talk to there don't even know yet whether they will have a job in the new organisation."

On a brighter note, the charter market is "in a better shape overall than a year ago". Yet, overall charter rates remained "disappointing", according to Alphaliner and that is in spite of the increase in demand reducing idled capacity to 500,000 TEU from 1.6 million TEU a year ago.

The analyst said that looking ahead the charter market appeared "tricky" on account of the large number of big container vessels scheduled for delivery, but the outlook for smaller vessels under 3,000 TEU was "more promising".

Focusing on this smaller sector, which has seen very few newbuild orders in the past couple of years, is the business model of Oslo-listed MPC Container Ships.

MPC was formed in January as a non-operating owner (NOO) by German company MPC Capital and started trading in April. With the exception of one vessel of 5,040 TEU, MPC has built up a fleet of 39 sub-3,000-TEU ships, according to vesselsvalue.com data.

The NOO has just announced that it has agreed to acquire a further two towards its target of 100 ships, with the purchase of the 987-TEU Annika and the 1,041-TEU Antigoni, both of which were built in 2008.