ECONOMY

Container ships on course

The container shipping business seems to have entered a positive period of intense activity, after seeing freight rates drop over the last couple of years. In the second half of last year, time-chartering of ships carrying containers dropped by about a third, while in the first quarter of 2006 most routes showed consolidation trends. But in the last few months, some of the losses have been recovered: It is estimated that shipowners recovered about $150 out of the $500 of losses per container. Most shipowners expect further recovery in the summer months, so analysts do not see this year as particularly negative, as they initially had, though it will not be better than 2005. The lack of tonnage supply, at least until this fall, and the maintenance of steady demand have improved the picture for time-chartering, while shipowners have been able to make even long-term contracts of three or four years. Some companies actually expected to see the return of the five-year chartering contracts which have not been seen since early last year. What may justify this improvement is the rise in the consumer index in the USA. In the first quarter of the year, there was an increase in consumption on the other side of the Atlantic, coming close to the peak of the last two years. Nevertheless, it looks as though the next couple of years will be decisive, since in 2007 and 2008 new ships are due for delivery with a combined capacity of 1.3 to 1.4 million containers per year. Consequently, the market will require annual growth in demand (for the shipping of goods by container) of about 15 percent so as to avoid oversupply and a decline in freight rates. On the other hand, new orders for container ships in Asia’s major shipyards have been exceptionally low in the last few months. High prices was one of the reasons, but that situation is now being reversed, as the multitude of new orders has reduced the launching cradles available for delivery in 2009. Analysts note that by early May container ship orders with a combined capacity of only 430,000 containers were in place for delivery in 2009. With the global market growing by 9 percent annually, it means that ships carrying 1.1 million containers per year will be required to cover demand, while capacity will grow by 1.4 million containers by 2008. Danaos Shipping Greek companies in the sector have been particularly active recently, including Danaos Shipping of Dimitris and Ioannis Coustas. Reports in the international shipping press suggest that the company is on the doorstep of the New York Stock Exchange, although no public-listing application has been submitted yet. Danaos is developing a program of constructing six new container ships, with a capacity of 1,700 to 8,500 containers, while its existing fleet includes 26 container ships. During the last month, there have been some attempts to charter the new ships, four of which will be delivered in 2008; the other two are expected from Samsung shipyards in 2009.