Unexpected Bonus For NOOs As Demand For Charters Increases

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The Red Sea crisis has provided non-operating container ship owners (NOOs) with a significant boost to their earnings.

Demand increased 

Re-routing liner services around the Cape of Good Hope has increased demand for chartered tonnage, and reversed the declining trend in time-charter rates and periods.

“We have proactively secured employment for 95% and 78% of our open days for 2024 and 2025 respectively, putting our contracted revenues for container vessels at $2.5bn, with a remaining time-charter duration of 3.6 years,” reported Mr Zikos during the NOO’s recent Q4 earnings call.”

Meanwhile at Euroseas, its oldest and smallest vessel, the 1997-built 1,439 teu Aegean Express (pictured above), has earned a stay of execution from the scrapyard, thanks to the renewed demand.

CEO Aristides Pittas said it made sense not to sell, given that the vessel could, in the current market, earn in excess of its operating costs.

“Last year we were assuming we would be scrapping the Aegean Express on the completion of its charter, because we thought the market would be soft,” explained Mr Pittas. “But we want to have the option of earning significantly more than what we could get by selling the vessel today at scrap value.”

No weakness

Indeed, Alphaliner reported this week that there was “no weakness in sight” for the charter market.

“As the supply of prompt tonnage continues to be tight, especially for larger vessels of 4,000 teu and above, charter rates are rising sharply, with any new fixture typically concluded at much higher levels than last-done deals,” said the consultant.

“As supply dries up, rates continue to rapidly increase,” said Alphaliner, noting that the ‘benchmark’ daily hire rate for a 4,250 teu ship had risen from $22,500 to $25,000 in the past two weeks.

Moreover, in the unlikely event that the Red Sea crisis ends soon, the view from the sector is that the charter market will take some time to return to normal.

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Source : Loadstar

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