Containerships – Earnings, Values & Demand

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(Vessels Value) So far, 2020 has been a particularly challenging year for the Containership sector, which has been rattled by lengthy port delays and record numbers of idle vessels since January.

Alongside many other sectors, Containerships have felt the brunt of COVID-19, with operational limitations and reduced demand for goods from China, but things are beginning to look up. Below we will be exploring reductions seen in rates and values, in relation to demand changes and recent increases across key shipping routes.

Containership Earnings

The chart below shows earnings for the main types of Containerships from the start of 2015.

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This chart clearly shows that Containership earnings have fallen significantly since the multi year highs seen at the end of 2019 and early January 2020. The most volatile type has unsurprisingly been the larger Post Panamax Containerships, who’s earnings have fallen circa 60% from $30,000 per day in early January 2020 to $12,000 in June 2020.

The smaller types have also all fallen to near Operating Cost (OPEX) levels. Currently there are no signs of reversal of this trend. However, if the western economies successfully come out, and remain out of lockdown, then the rise in related consumer spending and demand for imported goods could cause these rates to recover.

Containership Values

Changes in vessel values typically reflect longer term expectation for the market than earnings. The matrix below shows changes in values for the main Containership types of different ages from the 8th of May 2020 to the 8th June 2020.

container shipping

As shown, values for Containerships have fallen across all types and ages. These falls have been quite significant and fast. Part of this is due to Container values rising through 2019 as the market improved, meaning values had further to fall. However, structurally we are seeing favour move against Containerships as market participants readjust their forecasts for international and Container trade over the next years to take into account expected possible recessions in some major importing countries.

These falls in value of over 12% for the larger more modern size vessels over a 1 month period are quite significant. This is obviously an issue for owners looking to sell or refinance, but also present opportunities for buyers to lock in low prices and benefit from potential upside as the market improves due to the easing of lockdown.

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