Constantin Baack

Boxship availability thins further

Constantin Baack, chief executive officer of German feeder boxship specialist MPC Container Ships (MPCC) expects a tighter charter market next year

MPC Container Ships (MPCC) supremo, Constantin Baack, reckons the market will see even fewer vessels open for charter next year.

The boss of the German feeder boxship specialist believes that despite the significant increase in macroeconomic uncertainties over the past couple of weeks, such as the Russia-Ukraine conflict, the zero covid policy in China, inflation and reduced growth outlook, the container vessel market has remained fairly tight.

For Baack, these uncertainties have basically caused a bit of a wait and see position when it comes to the charter market. Time charter rates have softened a bit over the last few weeks, but Baack argues they are still at historically elevated levels.

He observes a structural shift in the charter market within the past year towards more of a forward fixing, which for him takes a lot of capacity out of the market and basically translates into a very low level of muscle availability going forward.

“Usually in the last three years we had around 1,500 vessels being available to the charter market and we entered this year with only 400 to 450 vessels being available and most of them are now charted out on longterm charters. So for the remainder of the year, we only see 200 to 250 vessels available to the charter market, which is unique and which, in my view, will be a very decisive factor when looking at the market going forward,” Baack said on the latest Capital Link podcast.

The Oslo-listed MPCC has had the most Lazarus-like reincarnation in the busy boxship market, swinging back to the black in 2021 with a net profit of around $190m against a net loss of $64.5m a year earlier. It anticipates revenues in the range of $550m to $575m for 2022. The company reported another strong quarter recently, booking a profit of nearly $120m, and on the back of that, was able to increase its dividends to roughly $70m.

Baack joined the MPC Group in Hamburg in 2008, where he has since held various senior positions, including managing director of Ahrenkiel Steamship, head of shipping of the MPC Group, and CFO of Frankfurtlisted investment and asset manager MPC Capital. He has served as CEO of MPC Container Ships since its establishment in 2017.

He thinks that due to the fact that there are fewer charter vessels on an annual basis available, that will lead to a more sustainable charter market in terms of rates and periods. “I’m sure we will see a bit of a softening down the road, but we are at historical highs. We have a situation where you can lock in three-year charters at $40,000 or $50,000 for vessels of our size, which is very sizable and secures very strong revenue, Baack told the podcast.

He went on to note that all the market parameters suggest that the sector not go down to the very short charters anytime soon, in particular because the disruption is not over yet. “China is in lockdown as we speak and the port of Shanghai has handled 25% fewer containers in April, so there’s a lot of backlog and once this backlog is resolved, there will be more congestion and more disrupted supply chains, which will also fuel more demand for vessels,” Baack predicts. ●

Spot on MPC Container Ships

Founded in April 2017 and listed in Oslo, MPC Container Ships has 65 ships, most of which are fully owned.