Seaspan quarterly profit soars 321pc to US$285.3 million on bill payment

HONG KONG's non-operating containership owner Seaspan Corporation has declared a 321 per cent year-on-year first quarter net profit increase to US$285

08 May 2019 - 19:00
HONG KONG's non-operating containership owner Seaspan Corporation has declared a 321 per cent year-on-year first quarter net profit increase to US$285.3 million. No revenue figures were provided,

The most recent quarter included a $227 million payment from one of Seaspan's top-five charterers. It paid the fee to redeliver seven vessels ahead of schedule. Those vessels were then re-chartered to other Seaspan customers.

'In the first quarter, we saw stabilising rates in the smaller vessel segments and increasing rates in the post-Panamax size classes,' said Seaspan chief commercial officer Peter Curtis.

'We saw an increase in March in the 8,000-9,500 TEU segments, where liners have been fixing vessels for longer periods at increasing rates, and where segment capacity is almost fully occupied.' he said.

'Leasing by liners with very large scrubber programmes has also been very active,' said Mr Curtis, reported New York's FreightWaves.

Many vessel owners throughout the global shipping industry are opting to deal with the IMO 2020 regulation by installing scrubbers that will allow them to burn cheaper high-sulphur heavy fuel oil while still reducing emissions.

To take advantage of lower fuel bills with scrubbers, ships have to be taken out of the market for installations. However, liner companies must stick to set weekly schedules, meaning that retrofitted ships must be temporarily replaced.

'The liners have been active at securing larger tonnage for longer periods, securing coverage for a year or two, as larger vessels are taken out of service for scrubber installations,' said Mr Curtis.

'This is proving to be a positive factor for charter rates, and has significantly increased charter rates in the 8,500-10,000 TEU segments, where idle capacity is almost nil at this time.'

He also highlighted another positive development for charter markets stemming from port developments. 'Several regions, such as Africa, Southeast Asia, India and Oceania are enjoying improving port infrastructure, opening them up to vessel segments that are larger than the traditional feeder size allowing upsizing.

Upsizing has helped offset soft market conditions in the Asia-Europe container trade and 'normalised' conditions in the transpacific trade, he said, adding, 'Our view is that with no newbuildings being ordered in the 4,250-9,000 TEU segments, the upsizing in these trades bodes well for these vessel segments.'

Commenting on the overall vessel-supply picture, Mr Curtis said: 'The orderbook-to-existing fleet ratio remains near all-time lows at about 11.7 per cent, and orders continue to favour the larger vessels over 18,000 TEU.

'Given that the orderbook is baked in until 2021, and that fleet capacity has increased 0.5 per cent since the beginning of this year, we see continued improvement in the balance of supply and demand, and a more stable environment developing in the container industry,' he said.

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