Global Ship Lease (GSL) has fixed a post-panamax container ship on a long-term charter that will be much more lucrative than its current fixture.
The Ian Webber-led owner of 65 boxships has chartered the 8,600-teu GSL Ningbo (built 2004) for at least four years starting in July 2023.
New York-listed GSL said that the vessel has been hired at a rate that will make $16.6m in annualized Ebitda, which is three times the Ebitda of its present charter signed in late 2020.
The UK-based owner would not disclose the rate for the future charter, which can be extended to 52 months.
The GSL Ningbo is currently on a 28-month charter with Mediterranean Shipping Co (MSC) at $22,500 per day, according to the company’s website.
MSC has the option to prolong the current fixture for another four months.
“We are proud to announce this forward charter for the GSL Ningbo, at an attractive rate and multi-year duration that demonstrate the continued strength of the charter market,” executive chairman George Youroukos said in a statement.
“We believe that this long-term forward charter on a vessel that will be approaching 20 years old is illustrative of not just an expectation by our liner customers that containerized freight demand will remain robust, but also a recognition that a highly specified and well-maintained older vessel can remain a key contributor well into its third decade of operation.”
BF Riley Securities noted on Tuesday that GSL’s fleet had $1.7bn in contracted revenue with an average coverage of 2.4 years before this latest fixture was announced.
“Although spot rates have backed off from 3Q21 highs, the rate environment remains very healthy for all classes of vessels with liner companies willing to take longer fixtures at higher rates,” analyst Liam Burke wrote in a note.
“Despite continued market strength, management is taking a very conservative view by securing medium- and long-term charters at attractive rates at the expense of higher spot rates but reducing its market risk.”
BF Riley is maintaining our price target of $38 and a buy rating on GSL shares.
“Additional ships coming off of charter in 2023 are at below-market rates, and we would expect, like the Ningbo, higher re-charters,” Burke wrote.
He also said that the market should benefit from regulatory guidelines to lower carbon emissions by 2023 through slow steaming, which will tighten global fleet capacity.