The next industry casualty of the Hanjin collapse may not be a carrier, but a major non-operating containership owner.
In his industry predictions for 2017, Lars Jensen, chief executive and partner at SeaIntelligence, said today, “Non-operating vessel owners holding unwanted container tonnage will be hit particularly hard, and it is likely that we might see bankruptcies in this sector.”
Indeed, the new vulnerability of containership lessors was the subject of an analysis by The Loadstar’s financial guru, Alessandro Pasetti, on 28 November.
Among the major shipowners, Danaos had long-term charters with Hanjin on eight of its 55 containerships, but the biggest risk for the Greek company may come from expiring charters on its remaining fleet. No fewer than 24 Danaos ships have charters expiring next year, and three more expire in 2018.
There is little to suggest that charter rates will pick up any time soon, given the current parlous state of the market, and the consensus of opinion is that supply will outweigh demand for some time to come. As a result, Danaos will either have to scrap redundant tonnage or, if possible, fix the off-hired ships but accept a much reduced ‘market’ daily hire rate with shorter periods and flexible options.
Danaos and its peers have long boasted about their lack of exposure to the volatility of spot markets, by having long-term fixed-rate charter parties signed with ‘blue chip’ liner shipping companies, but the default of Hanjin was a game-changer for the sector.
Now banks and other lending institutions will be warier than before about the insurance policy value of a charter party. And as for current mortgages on ships, Danaos has admitted it is in breach of its financial covenants and has only been able to obtain waivers from its lenders until April.
Some claim it has been a disastrous year for Danaos: in July it was obliged to reduce its charter hire by 20% on 13 vessels on long-term charter to South Korean carrier Hyundai Merchant Marine (HMM), against the threat of the carrier’s collapse. And its third-quarter results revealed that loss of revenue on charters for the eight Hanjin-operated ships amounted to $560m out of a total contracted revenue of $2.8bn.
It has submitted a claim to the Seoul bankruptcy court for $598m for unpaid charter hire, charges, expenses and loss of profit.
By Mike Wackett, The Load Star (22/12/16)