Containership charterer Seaspan eager to grow its fleet

Chen said the company has recently signed nine charter extensions with COSCO, its largest customer, and agreed to acquire a 9,600-TEU ship built in 2010 to be put on a three-year charter with ONE when the ship is delivered in April 2020. It is also going to flag a panamax containership as a U.S.-flag ship for one of its customers, which Chen said may lead to other opportunities.

Seaspan said net earnings in its third quarter ending Sept. 30, 2019, amounted to $43 million, compared to $80 million in the same period a year earlier. Revenue was also down slightly to $282.7 million, compared to $295 million in the same period a year earlier. Operating earnings in the third quarter of this year were $116.1 million, compared to $133.4 million in the same 2018 period.

The company said utilization of its 112 containerships was 99.6%, compared to 98.4% in the same period last year, reaching the highest level since the third quarter of 2011.

Peter Curtis, executive vice president at Seaspan, said containership charter rates continued to move higher, even though freight rates have softened on main line trades.

He said charter rates are being buoyed by the low number of new ships being built and solid demand for ships to move cargo on intraregional trade routes.

He also explained that IMO 2020, the requirement that ships use low-sulfur fuel or equip their ships with exhaust scrubbers by the beginning of next year, is helping support freight rates. As ships are removed from service to have scrubbers installed at shipyards or have their fuel tanks cleaned in preparation for the switch to low-sulfur fuel, overall capacity is falling by about 1%.

At the same time, asset values for containerships have dropped, creating opportunities for sale and purchase transactions.

Citing figures from Alphaliner, Curtis said the amount of new containership capacity on order is currently about 10.3% of the global fleet, far below the 60% orderbook-to-fleet ratio about a decade ago.

Asked during an analyst call if that low level of ordering would continue, Curtis noted, “There has been a maturation in the container market. We’ve come from over 150 participants to a situation where the top 10 carry 90% of global container trade.”

Carriers are more disciplined in their ordering of new ships, and they work together in vessel space-sharing agreements such as the 2M, Ocean and THE alliances, which form the backdrop to their forecasting and ship order decisions.

“The world of speculative construction and ordering is one that has gone by,” he said.