MPC Container Ships (MPCC) is not expecting any renegotiation of vessel charters agreed upon during record boxship markets.
Following a weakening of freight and charter rates, chief executive Constantin Baack was asked on a conference call if the Oslo-listed company had been approached by operators seeking to redraw deal terms.
He said MPCC had changed one cargo-backed charter and was able to re-charter the ships, but could not give more details.
“So the vessels were continuously deployed in the market and we were able to bring forward some cash flows,” Baack said.
But he described that deal as a “unique” situation.
“Other than that we have not had any talks with anyone about adjusting any charters,” Baack told the call.
With counterparties still in the money, he sees no basis to change other contracts.
“While the market has come down for liner companies, we’ll probably still see the second-best year in history for liner shipping companies, at least for most of them,” Baack said.
“In addition, our charter backlog has on average 1.8 years in remaining duration left.”
MPCC’s net earnings in the second quarter were $101.5m, up from $90.1m in the same period last year.
“Looking ahead, obviously, is always a very challenging exercise,” Baack said.
Bottoming out?
“Some of the market research experts expect spot rates for the three mainline trades to bottom out over the next couple of quarters, reaching pre-Covid levels before starting to rise again towards the end of next year and early 2025.”
Baack shares the view that over the next couple of quarters, certainly on the freight side, “we will see a bit more choppy water”.
He said freight rates are down for the company’s charterers, but volumes seem to be increasing again globally, and operating margins — while down from the very high levels of last year — are still well above pre-pandemic levels.
As far as the secondhand arena goes, Baack said: “The market has shown continued strong interest.”
“We have seen almost 180 deals closed in 2023 so far versus around 280 in the full year of last year, so there is still quite some activity.”
Prices have stayed relatively stable at elevated levels over the last couple of months, but a decline in line with the volatility in the charter market can be expected, the boss believes.
“Looking at the idle fleet as a key indicator as well, it’s still at historically low levels,” Baack said.
“We are currently at an idle fleet of around 1% in terms of teu compared to the total fleet at the end of July, and that compares with 3.3% back in February 2023.
“So we are in an entirely good state when you look at the overall idle fleet.”
