Containership owners are snapping up secondhand vessels before asset prices rise.
Savvy owners believe now is the time to invest as strong charter rates present an opportunity to fix long term.
Trio of owners
Leading players, such as Costamare, Danaos Corp and Lomar Shipping, are among those making a play in the secondhand boxship market.
Costamare is reportedly looking at buying a number of vessels of between 5,600 teu and 8,800 teu.
These would add to the 4,250-teu Tanja Rickmers (built 2009), which the Greek owner is said to have recently bought for $10.5m from Zeaborn Ship Management.
However, the Greek owner plays down reports it has acquired the vessel.
Separately, Lomar has re-emerged as the buyer of the 3,500-teu Maria Schulte (built 2006) for $7.5m.
The company earlier paid about $8.6m to take the 4,253-teu Kota Laju (built 2007), to be renamed Zarnata Express. The vessel has been fixed to Israeli liner operator Zim for 10 to 12 months at an extremely strong rate of $17,500 per day.
Playing catch-up
Buyers of boxships believe that a dearth of newbuilding orders for midsize containerships could sustain the charter market for some time.
"Secondhand prices have not yet caught up to justify ordering in a newbuilding," Danaos chief financial officer Evangelos Chatzis told a Marine Money webinar.
"This a recipe for a very good container market in the medium term, that is to say for the next three years."
Shipowners believe that uncertainty over propulsion systems was likely to restrict potential newbuilding orders for smaller to medium-size containerships.
The stronger market looked sustainable through the first quarter of 2021, Songa Container chief executive James Buck told the webinar.
He said that sub-panamax ships that had previously fixed for three months to six months are today being taken on 12-month fixtures.
But a resumption of newbuilding orders was only likely to happen when lines were ready to do long-term fixtures with owners.
"What we need is more partnership between the charterer and the owners," Buck said.
"Then maybe we'll start to see few newbuildings going forward."
Good returns
Secondhand ships are likely to remain more attractive than newbuildings for some time, Chatzis said.
He estimated it would cost about $80m to build a 8,000-teu to 9,000-teu containership. This compares with about $30m to buy a 10-year-old ship.
However, the charter earnings of a newbuilding would not be significantly higher.
"There's no way the newbuild investment can make sense," Chatzis said.
"Secondhand values for good vessels are still very appealing when you relate to the earning capacity and the outlook.
"We have made acquisitions in the year and will continue to do a bit more."
Danaos had been able to acquire a 15-year-old post-panamax boxship for $26m and to charter it on a two-year contract that reaped $.6.6m per year in earnings. This would enable the shipowner to amortise the vessel down to its scrap value of about $20m.
"These are pretty good returns. I don’t think anyone would disagree," Chatzis said.
