Seaspan: Second-hand containerships may be more attractive than newbuilds

The containership lessor also said there may be opportunities for consolidation in the fragmented containership chartering business.    Bing Chen, the new chief executive officer of the containership lessor Seaspan Corp., which in the past, has primarily invested in new ships that it charters to liner companies, says with demand for new ships reduced and many ships coming off long-term charters, there may be more opportunities for his company in the second-hand market.
  New containership prices have fallen sharply, but “the containership order book as a percentage of the global fleet has been on a decline for the last few years,” Chen noted. He said that may be ultimately a good thing for the industry because it will lead to a better balance between ship supply and demand.
   Seaspan expects to find new ship chartering opportunities over time. He said he believes “the current dynamics present more attractive growth in second-hand vessels.”
   As an example, he pointed to a deal announced Feb. 5 where it acquired two 2006-built 2,500-TEU geared feeder ships and chartered them to Maersk for four years, with an option for Maersk to extend the charter for two additional years at a higher rate.
   Speaking to investment analysts as the company released its 2017 financial results, Chen said there may also be opportunities for acquiring other companies or their assets, and even investing in other types of ships.
   “The liners have consolidated,” he said. “Our sector is still relatively fragmented.”
   He said Seaspan is in a good position to take advantage of opportunities as they arise because of the “integrated platform” and experience it has built up over the past 20 years, in addition to the company’s improved financial strength.       
   Seaspan is the largest containership lessor with a 112-ship fleet – 94 ships that it owns and 18 ships that it manages for other companies.
   Chen joined the company from the French bank BNB Paribas where he was CEO of its China subsidiary. He replaced Gerry Wang, who was one of the co-founders of Seaspan.
   Chen said a $250 investment by Fairfax Financial, a company led by Prem Watsa (who has sometimes been called the “Canadian Warren Buffett”), had strengthened Seaspan’s  balance sheet.
   Seaspan had a net profit in 2017 of $175.2 million compared with a net loss of $139 million in 2016. Revenues totaled $831 million in 2017 compared with $878 million in 2016, while adjusted earnings before interest, tax, depreciation and amortization stood at $525 million in 2017 compared with $621 million in 2016.