Events in Feb 2022
- Beijing Winter Olympics 2022 ended
- Russia invaded Ukraine
#1 Resulted in a pause of some industrial activity in China
#2 Sanctions and the ramification of sanctions are seeing interesting developments
a. Spike in Black Sea & Mediterranean Sea related tanker rates
b. Dry bulk commodity maneuvering. Russia & Ukraine provide 30% of the world’s maize (corn to USAin & Canada folks) exports, significant barley exports
c. Russian oil and natural gas exports needing new homes
d. Subsequent easing in rates from a.
e. Expensive yachts being seized in West European ports.
#3. Then there’s them container vessels. Lots of chartering activity, especially on the smaller category vessels - About 20 charters/re-charters, 90% of them Sub Panamax or Feeder category at just crazy rates
One item in the broker’s report helped with a personal investment decision. Golden Ocean (GOGL) is my largest shipping stake. GOGL announced the sale of three older Panamax vessels. Shares took a bounce on 3/11/22, and I took that as a signal to sell some of my higher-cost shares (Shares in Roth ac, so no tax concerns). GOGL is still my largest shipping stake
Capital Product Partners (CPLP) is a badly named entity.
About 10-15 years ago, it started life as a shipping MLP/C-Corp focused on the tanker business, mostly tankers transporting refined products (thus the name). Then the company added a single dry bulk vessel, followed by a few container vessels. CPLP then sold its tankers to Diamond S Shipping, and kept the other vessels. Since then, they have added a few more container vessels, sold a pair of container vessels, and subsequently, jumped into LNG tankers.
CPLP owns 15 container vessels. All of the vessels are on legacy contracts. I thought I would contrast some of the legacy contracts with the contracts in the OP.
- 4 9288-9954 TEU vessels earning $26,950 - $35000 daily
- 3 5089-TEU vessels earning $13,200 daily
- 5 5023-TEU vessels earning $34,250 daily
vs typically smaller vessels (1032-TEU - 2556-TEU) vessels earning the same or higher rates for 1-year to 3-year contracts
=Padian 3= Feedermax 1032 Imabari 1998 – TS Lines – 1 yr USD 50100
=AS Palina= Sub P 2556 Hyundai HI 2004 – Maersk Line Ltd – 3 yrs USD 45750
During their most recent Earnings call, an analyst asked the status of one container vessel - Akadimos, with a charter due to expire in Sept 2022. CPLP management responded (paraphrasing here) - Yes, said vessel has a charterer option to extend another six months. Or, we could just the vessel after its contract expires.
Obviously, the charterer exercised their option. But, hypothetically, that vessel could have sold for $120M - $150M in the current market.