Danaos’ CEO John Coustas says the profitability of liner companies has dramatically decreased, and the major operators have announced sweeping cost cutting measures.
The chartering market continued to remain under pressure, particularly in the market for vessels smaller than 3,000 teu, where charter rates returned to pre-pandemic levels.
Despite the significant fall in the charter market and the overall weak market environment, the shipowner of large-size containerships delivered solid financial results for the third quarter of 2023, as the company has not been impacted by higher interest rates.
The New York-listed owner of 68 container ships and four capesize bulkers recorded $133,156 in net income for the three-month period, almost double the $66,800 for the same period last year.
However, the adjusted net income was $143.0m for the three months ended September 30, 2023 compared to $176.9m for the same period last year, a decrease of $33.9m.
Furthermore, Danaos Corp. claims that its charter backlog of $2.5 billion in contracted revenue also provides a significant cash flow visibility and allows the shipowner to maintain flexibility in the company´s capital allocation policy.
In larger vessel segments, the charter rates have remained relatively stable given the scarcity of open tonnage for next year, a factor that has enabled Danaos to fix all vessels above 10,000 teu on three year charters at profitable levels, as the owner says, that will commence after expiry of existing charter contracts in 2024. As a result, the company´s charter cover for 2024 has increased to 90%.
Meanwhile, the company has 10 container vessels under construction with an aggregate capacity of 74,914 teu, with expected deliveries of seven vessels in 2024, one vessel in 2025 and two vessels in 2026.
The newbuild vessels will come with methanol fuel, and will be fitted with alternative maritime power units to meet the requirements of the International Maritime Organization in relation to Tier III emission standards and Energy Efficiency Design Index (EEDI) Phase III.
Earlier this year, the owner sealed a deal to acquire another two capesize bulk carriers built in 2009 that aggregate 351,765 dwt for a total of $36.6 million. These vessels are expected to be delivered between November and December 2023.
The expectation is to have a total number of capesize bulk carriers to seven with an aggregate capacity of 1,231,071 dwt, after the delivery of the bulkers purchased.
This year, the owner also completed the sale of the vessel Amalia C for net proceeds of $4.9 million resulting in a gain of $1.6 million.
Looking ahead, Danaos is monitoring the dry bulk market and “opportunistically pursue opportunities to expand its presence in this market.”
