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MSC is Bleeding the Charter Market Dry

The Loadstar
Total Views: 8074
June 19, 2023

By Mike Wackett (The Loadstar) –

The containership charter market shows no sign of softening as it goes into the usually slack summer season, despite sea freight rates coming under pressure on several tradelanes.

This disconnect is likely to put carriers with expensive long-term charters under financial stress.

Moreover, the driver, the shortage of open tonnage on the market, is being exacerbated by MSC’s insatiable appetite for buying second-hand ships. Its fleet capacity is almost a million teu clear of rival carrier Maersk, approaching 5.1m teu, with a 1.5m teu orderbook still to be delivered.

Consequently MSC, with more than 300 second-hand containerships bought since August 2020, is able to react to demand peaks and new service opportunities across its network while liner rivals struggle to find open tonnage at affordable daily hire rates and shorter periods.

And, by growing its owned fleet, MSC is less dependent on the traditional non-operating owners (NOOs) for tonnage.

One of the Geneva-headquartered carrier’s latest acquisitions is the 2010-built 4,256 teu As Emma, purchased from NOO MPC Container Ships for $22m for delivery in November.

S&P brokers report MSC remains by far the most active line in the second-hand market, and is connected to numerous ongoing transactions for smaller vessels.

The carrier is turning the heads of NOOs with its massive buying power and willingness to accept forward delivery, or vessels with unexpired charters attached.

NOO MPCC is refocusing its circa-70-ship portfolio on younger, smaller sizes with the acquisition of four 1,750 teu ships and a 2,200 teu vessel from Lomar Shipping, for a total of $136.4m.

The vessels have charters attached: with Maersk in the case of the 1,750 teu ships; while the 2,200 teu Queen Esther, to be renamed AS Anne, has an unexpired three-year charter with the American Jones Act carrier Pasha Hawaii, at a highly elevated $42,000 a day, some $15m a year.

“The inclusion of five young, eco-design vessels enhances the overall composition of our fleet and will increase our earnings and distribution capacity,” said CEO Constantin Baack.

Meanwhile, today, London-based shipbroker Braemar reported that the market was “robust”, both the panamax and post-panamax sectors had enjoyed another “relatively busy week”. However, tonnage availability in the panamax segment of 4,000-5,000 teu vessels “remains extremely scarce”, it added.

And Alphaliner also reported a continued positive outlook for the containership charter market, noting there had been “a lot happening behind closed doors, with multiple deals concluded in the larger sizes ,including for newbuilding”.

“This high activity is obviously supporting charter rates, which remain very healthy for big ships, particularly for long periods,” it said.

(c) Copyright Thomson Reuters 2023.

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