A couple of days ago, I made comments on a ongoing development on Trans-Atlantic container shipping rates
Note my comments towards the end of the post.
Earlier today (11/2), Navios Maritime Partners (NMM) - a shipping entity with a mixed fleet - dry bulk, container and tanker vessels, reported their Q3 2023 results. NMM own a fleet of 47 container vessels (35 existing, 12 newbuilds) that have a decent amount of contract coverage (about $1.9B spread out over about 10 - 11 years). That’s what management want you to think about. But, there are new developments (Mentioned in Slide 6, but greater details in Slide 12)
What’s happening?
Existing charters on 4 vessels are being reworked. The slide lists it as two transactions. The logical expectation is that it is two different charterers. But, who knows? It could very well be two different transactions with a single charterer. NMM is what I consider a second tier container shipping entity. A second tier entity typically owns their vessels, but leases the vessels to tier 1 entity, or occasionally, trades a vessel in the spot market.
More tier 1 and tier 2 entities will be reporting their results over the next few weeks. Stay tuned
HohumYNWA
Has a NMM position, but with the announced developments, needs to rethink the position.
On the container shipping side, not my real strength. But, I will offer my two cents.
If I had to lean on one of the choices, I would lean towards the third. From my view, I think, take any major route there is some combination of “regulars” and “freelancers”. I think, the “freelancers” follow the better returns, while the “regulars” stay with their route and adapt with internal adjustments. So when Pacific was more profitable, many “freelancers” moved over there. When Pacific got less appealing, back to Trans-Atlantic. With Trans-Atlantic now being less appealing again, the free-lancer will likely look for something better again.
“Our industry is facing a new normal with subdued demand, prices back in line with historical levels and inflationary pressure on our cost base,” CEO Vincent Clerc said in a statement, adding that overcapacity in most regions had driven down prices.
Maersk maintained full-year EDITDA (earnings before interest, taxes, depreciation and amortization) guidance of $9.5 billion to $11 billion, but said it expected it to come in at the lower end of this range.
@DrBob2 - From the NMM slide-deck, Slide 13 shows icons of the various NMM customers. One can identify several container shipping entities, including Maersk. I do know that one of NMM’s existing customers is ZIM Integrated (ZIM). There are probably 5 or 6 NMM vessels on charter to ZIM currently. There are an additional 10 container newbuilds scheduled to service ZIM charters. But, those contracts were signed in different market conditions.