It is just a question of time before falling container ship markets lead to a revision of charters concluded during the coronavirus bonanza, a senior shipping banker said on Thursday.
“I think renegotiations with charterers are inevitable,” said Christos Tsakonas, head of global shipping at DNB, during a Capital Link forum in Athens.
Major listed container ship owners that released financial results recently, such as Costamare and Capital Product Partners, reported record profits, underpinned by the lucrative long-term charters they are sitting on — several of which were concluded in previous years, when their market was booming.
When asked by analysts earlier this month about how they see their charter income moving forward, executives of both companies said they felt comfortable, given the strong financial position and credibility of their charterparties, which are flush with cash as well.
Such cash buffers have led some observers, including Jefferies’ lead shipping analyst, Omar Nokta, to say the chance of major renegotiation remains slim.
“Material renegotiation of high-priced vessel charter agreements is unlikely in the near term, as these typically occur when liners are facing difficult financial conditions, and most shipowners are protected by firm contract terms,” Nokta wrote last month.
Speaking at the Capital Link panel, Tsakonas acknowledged that “companies have very high buffers of cash and are being supportive”.
Charter renegotiations, however, will come, he insisted: “We will see them sooner rather than later.”
Tsakonas said fundamentals for the rest of shipping, with the exception of container ships, are good and urged owners not to ruin these by newbuildings.
“Please don’t order,” he said.
