Germany’s MPC Container Ships (MPCC) has explained why it is reluctant to sell any more ships in strong markets.
The Oslo-listed feeder vessel owner has offloaded 11 units since last August after deciding on their prospects when charters came up for renewal.
Chief executive Constantin Baack told analysts on a conference call: “So when charters are up for renewal and you can get an attractive price in the S&P [sale-and-purchase] market, we would also consider selling ships for the time being.”
But he said the charter market has been extremely strong, especially in the first quarter.
“It’s not just that we were able to fix charters at attractive periods and rates, but also way forward,” he added.
This has generated significant added value.
“So it depends on the charter market environment, whether to consider a sale or a charter,” Baack said.
“I think the first quarter has shown that, at least in our view, we have taken the right decision to also forward charter out a significant number of vessels strategically with good counterparties.”
This strategy will be reassessed as the year progresses.
Baack said sales are currently “not the right thing to do” because MPCC can continue to pay out significant dividends without them, as well as retain a sizeable fleet with more upside further down the road.
Slower speeds changing trade patterns
New efficiency regulations will in particular lead to slower speeds on smaller vessels because of the way the formula works, he argues.
“Therefore we believe trading patterns will be adjusted going forward. And that is actually an upside,” he said.
“So I would not necessarily say that we need to sell the vessels now — to the contrary. I think at the moment it’s a very attractive chartering pitch.”
Clarksons Platou Securities said freight and charter rates for container ships remain near all-time highs.
“While macroeconomic headwinds are growing, the outlook remains optimistic for the time being due to sustained demand and severe logistical disruptions,” analysts Frode Morkedal and Even Kolsgaard said.
But they added: “As the inefficiencies fade and fleet growth increases (over 8% in 2023), container shipping market conditions are likely to ease.
“Slow steaming to meet emission targets would be one saving grace, however. For now, tonnage providers such as MPCC can enjoy their substantial charter backlog, which we believe offers significant upside potential to the share price.”
