Mediterranean Shipping Co (MSC) is spending $170m on a pair of 16-year-old post-panamax boxships in a benchmark deal that shows the liner giant's optimistic view of the market.
The Swiss operator has snapped up the 8,814-teu sisterships Northern Jade and Northern Julie (both built 2005) — that it is currently chartering — for about $85m each, according to UK brokers.
MSC is digging deep into its pockets in a market where neo-panamax boxships are in short supply.
It is believed to be paying more than what the vessels cost when they were ordered 18 years ago.
Number one predator
The deal means MSC remains the market's number one predator of secondhand containerships.
The liner company is estimated to have picked up more than 70 such vessels in the past 10 months.
It already operates the Northern Jade and Northern Julie in its transpacific trades at an extremely low rate of $13,000 per day through a charter that lasts into next year.
However, the company locked in those rates in June last year, and since then the cost of fixing a containership has risen exponentially.
Today, MSC and other liner operators are faced with having to pay several times as much for charter hire.
This is a result of lengthening charter periods where rates have risen by tens of thousands of dollars.
In March, MSC secured the 8,814-teu sistership Northern Javelin (built 2009) for $44,800 per day in a four-year fixture.
That was surpassed last month when AP Moller-Maersk chartered the 8,814-teu Northern Jaguar (built 2009) in a five-year deal at $53,500 per day.
These escalating rates are seen as justification for MSC paying the exorbitant fee for containerships with older designs.
The price for the Northern Jade and Northern Julie exceeds expectations of the charter-free value of the ships, which is estimated to be between $60m and $70m.
In comparison, MSC paid less than $30m each for the 8,533-teu ER Texas (built 2006) and three sisterships late last year.
The higher prices reflect a dearth of charter-free tonnage in the large boxship sizes.
This is forcing liner operators to spend ever greater sums to secure vessels on charter or as outright purchases.
The neo-panamax vessels were owned by Hamburg-based Northern Shipping Holding after an October 2018 deal that saw Norddeutsche Reederei H Schuldt taken over by Advent, the private equity-backers of ship manager V.Group.
Since then, the ships have been technically managed from Hamburg by V.Ships and commercially managed by Blue Net Chartering.
The Northern Jade and Northern Julie were ordered by German KG (limited partnership) interests in 2003 from Daewoo Shipbuilding & Marine Engineering for about $83m each.
They were the first in a series of 10 Northern J-type ships, the last eight of which were delivered in 2009 and 2010.
