Shipowners that charter out container ships to liner operators are optimistic that the container shipping market is turning around and that charter rates for their vessels will increase as shipping lines turn to them to fill a gap between supply and demand that will start to open up in 2016 and after.
A panel of independent shipowners forecast that the combination of continuing global economic growth and declining delivery of new ships next year means that vessel supply and demand will come into balance and create more demand and thus higher charter rates for their assets.
“We are going to see a re-acceleration of trade over the next two years and given the fact that the orderbook now is at 18 percent of the global fleet compared to 50 percent in 2009, we believe that demand is going to outstrip growth and that we are going to have opportunities going forward to have pricing increases and a tighter overall market,” Charles Lupinski, senior analyst at Global Hunter Securities, said at the 9th Annual Capital Link International Shipping & Offshore Forum in New York on Monday.
He said liner shipping companies are turning to the charter markets to fulfill their needs for new, more fuel-efficient and cost-effective container ships. “The liner companies want to preserve their capital for things like terminals” he said.
More than half of the fleets operated by the top 20 container lines is chartered, according to Alphaliner, he said.
A panel of four independent shipowners told the forum that demand for newer charter vessels is picking up while ship operators are managing to control capacity through slow-steaming and alliances.
The outlook for better returns on capital invested in new container ships is being enhanced by low oil prices, said Dr. Herman Klein, president of the German Society for Maritime Technology, who next month will become chief operating officer of Offen Ship, a German charterer with a fleet of 100 container ships, bulkers and product tankers.
“Lots of offshore projects are on hold, so the major shipyards of the world are hungry for new orders and this might lead to lower prices for new container vessels,” he said.
Sai Chu, chief financial officer of SeaSpan, the largest independent charter container ship owner, said new ship orders are currently at the lowest levels they have been in 10 years. “The liners have been working together to rationalize supply, and there is an interest in large ships, so broadly we see a well-balanced orderbook with industry fundamentals improving, which we expect to continue going forward” he said. “So our forecast is for an improving environment for the industry and ultimately it’s a good place for container ship owners to be.”
The container ship market this year is expected to progress much as it last year, but will show marked improvement next year, as new ship deliveries slow. “We see an improving market, not so much within this year, but more within next year,” said Aristides Pittas, chairman and chief executive of Euroseas, which owns a fleet of dry bulk and container ships.
“Overall in 2016, when new ship deliveries will only be a bit more than half of what they will be this year, we think there will be a very good market. And demand is sure to be good enough, so our best case calls for a not too surprisingly good market in 2015. And 2016 should be great, but this is shipping and anything can happen,” Pittas said.
Evangelos Chatzis, CFO of Danaos Corp., a Greek company that owns 56 container ships, said 2015 will be stable, but that next year, “on the back of the slow year in ordering in 2014, we will not have as many ships in the water so demand will outpace supply in 2016.”
Chatzis said Danaos is buying new ships with capacities of ships of 18,000-20,000 20-foot container units, but only with contracts sfor long-term charters in place. “You cannot go wrong acquiring ships at historically low prices.” He said it was ordering medium-sized ships in the 16,0000-TEU range with shorter-term charters in place.
Global demand is likely to grow faster on the north-south trade lanes than on the east-west trades, Klein said. The growth is trade will not necessarily lean that we will see more vessels on these trades, but that we will see a higher utilization and this will come from well-organized alliances,” he said.
Source: Peter Leach at pleach@joc.com
