The Grimaldi Group is renegotiating charter rates and redelivering ships to mitigate the impact of the pandemic on its car carrier and ropax fleets.

Emanuele Grimaldi, managing director of Italy's largest shipping group, said talks have focused on around 10 chartered-in vessels in its fleet of around 120 ro-ro, ropax, and pure car/truck carriers (PCTCs).

Some shipowners "have been sympathetic" and reduced charter rates in order to keep the vessel employed, he said.

Other vessels will be redelivered after paying a penalty, including a recent deal that cost the Neapolitan owner around $1.5m to cancel the charter.

One-third idled

The measures are designed to enable Grimaldi to weather the pandemic, which is estimated to have left around one-third of the global car carrier fleet laid-up.

Demand for vehicle carriers globally is down 18% year on year so far, according to VesselsValue.

April and May and were especially tough as car production lines ground to a halt.

At its height, around 20 vessels in the Grimaldi fleet were idled, but the shipowner said the "worst is over".

His company is among a number of car carrier operators that have unveiled plans to scrap vessels.

The ro-ro vessel Eurocargo Trieste. Photo: Tony Capa/MarineTraffic

Grimaldi has started a process to send three vessels for recycling. One of its ro-ro vessels, the 26,500-gt Eurocargo Trieste (built 1997), was last month sold for demolition in Aliaga, Turkey.

Grimaldi said there are plans to scrap two more car carriers.

The vessels will be sent to a Turkish yard that is compliant with European recycling laws.

He expects that means receiving around $1m less for the vessels than at other shipbreaking facilities.

Other car carrier operators taking mitigating measures include Wallenius Wilhelmsen, which is completing the lay-up of 10 PCTCs.

Last week, South Korean operator Hyundai Glovis sold two midsize car carriers, the Glovis Phoenix and Glovis Prime (both built 1995), to Bangladesh for $314 per ldt "as is" in Singapore.

Lay-up

Grimaldi has also laid up a number of vessels, which has resulted in significant savings on charter rates of up to $5,000 per day.

The shipowner does not expect demand for car carriers to return to pre-Covid-19 levels later this year.

The slump in demand will hit the company's turnover this year.

But the shipowner is confident Grimaldi will turn in a profit.

Its financial position will be helped by "immense" savings of around one-third on fuel costs.

The company made savings of around $100m on fuel in the second quarter.

Its bunker bill came to $17m to $18m per month in April and May, compared with $51m in January.

That points to fuel costs of between $300m and $400m this year, down from $700m last year, said Grimaldi.

These savings will benefit the group's operating subsidiaries Grimaldi Euromed, Atlantic Container Line, Minoan Lines and Finnlines.

Orderbook

Grimaldi said there are no plans to cut back on the shipowner's substantial orderbook.

The group has 18 vessels on order comprising four PCTCs under construction at Yangfan Group and 12 ro-ro vessels being built at CSC Jinling Shipyard for delivery later this year and 2021.

It has a further two ropax ships of 5,800 lane metres and 1,000 passengers under construction at China Merchants Jinling Shipyard (Weihei), previously known as AVIC Weihei, for delivery in 2023.

Grimaldi's company had no liquidity issues and could make payments for the ships.

But the pandemic may result in delivery being postponed by a couple of months.

None of the ships were ordered for speculative measures.

"Every ship was intended for employment and would have substituted another ship," Grimaldi said.

On delivery of the newbuildings, some of Grimaldi's chartered vessels will be redelivered and other ships will be recycled.

Government aid

Grimaldi remains supportive of governments that provide financial assistance to shipping companies during the pandemic. But state-aid should be distributed to all companies to generate a level playing field, he said.

He questioned whether weaker operators, including some carrying passengers in Italy or Finland, should benefit from state-aid. That would distorts the market to the detriment of prudent owners, he added.