Boxship owners face massive impairments

10/28/2017

The dire conditions in the container shipping sector over the past few years have had a knock-on effect for non-operating owners, who have seen the value of their fleets massively reduced and their share prices dramatically impaired.

Research from Alphaliner shows that since 2010 over $2.7bn has been written off by seven publicly listed container shipowners: Seaspan, Danaos, Global Ship Lease, Costamare, Diana Containerships, Box Ships and Rickmers Maritime Trust.

Of those, only five remain in operation following the collapse of Box Ships and RMT. Moreover, despite improved charter market conditions and rising secondhand prices this year, the five remaining listed owners’ share prices are still down by over a third since the start of this year.

Diana Containerships’ share price has fallen by 100% in 2017, Alphaliner said, making it the worst performer of the surviving five, with its share price falling from a split-adjusted $2,540 per share at the end of 2016 to just $0.43 now.

“The total losses of $196m recorded by Diana Containerships from vessel impairments and ship sales between 2013 and 2016 have been insufficient to reflect the reduced value of its containership fleet,” Alphaliner said. “The company is expected to book a further loss of some $80m by the end of this year.”

Provisions for the reduction in fleet values by other owners are also inadequate, Alphaliner added.

Costamare warned that the total carrying value of its fleet as at December 31, 2016 exceeded the ships’ estimated market value by more than $572m.

GSL’s fleet has a carrying value that is $202m higher than the vessels’ current market value.

Even at Seaspan, the largest non-operating owner, the charter-free market value of its 79-strong fleet is estimated to be $2.5bn lower than its carrying value at the end of 2016, according to Alphaliner.

“Although the ships’ market values would be higher after taking into account the above-market charter rates for some of its ships, Seaspan would still need to take a substantial impairment hit,” Alphaliner said. “The adjustment will be much larger than the $285m impairment charge that the non-operating owner recognised in 2016 for 16 smaller vessels, including four 4,250 teu ships, two 3,500 teu ships and 10 2,500 teu units.”