MPC Containerships reports strong Q4 2020 performance on rising charter rates, high utilization

Houston — Oslo-based tonnage provider MPC Containerships benefited from strong fourth-quarter container market fundamentals, which boosted fleet utilization and average time charter equivalent (TCE) rates, the company said on a Feb. 25 earnings call.

"The year 2020 proved unexpectedly volatile, but the v-shaped recovery during the latter half boded very well for the container shipping industry in particular," said MPC Containerships CEO Constantin Baack. "Tonnage providers such as MPC Container Ships are greatly benefitting from the sharp upturn in charter rates."

Average TCE for the fourth quarter was $8,115/d, up just over 9% from the same period in 2019.

This comes after containership charter rates fell to multi-year lows in June 2020 as pandemic-induced uncertainty prompted carriers to redeliver chartered ships to reduce costs.

However, when global demand for container cargos rebounded in second-half 2020, so did demand for chartered vessels, putting significant upward pressure on TCE rates, which have climbed to 10-year highs.

Accordingly, the TCE for 6-12 month charters for the 4,400 twenty-foot equivalent unit (TEU) vessel class came in at $26,000/d on Jan. 22, an unprecedented increase of 282% since June 2020.

"With the recovery of traded TEU volumes, also the charter market improved to levels not seen in the last ten years," the company said Feb. 25.

Currently, only 1.1% of the global container fleet is idle. "Varying by vessel size segment, idle numbers decreased around 80% year on year," the company said.

MPC had a fleet utilization of 97% for Q4, up slightly from Q3 utilization of 94%.

The company reported a Q4 EBITDA of $4.5 million, a significant increase from the $2.7 million posted in Q4 2019.

STRONG OUTLOOK FOR TONNAGE PROVIDERS

"Given significant charters and rates we have locked in since Q4, and with what's ahead, we're excited about 2021," said Baack.

With few ship newbuildings scheduled to come online before 2022, and ongoing demand strength on the part of consumers and importers, MPC is optimistic that market fundamentals will continue to be favorable.

"The availability of tonnage will continue to be thin on the back on longer chartering periods," said Baack, which means carriers may have to vie with one another to secure any available ships.

The average charter period of vessels between 1-5,000 TEU increased from a low of 3.6 months in April 2020, to 11.9 months at present, the company said.

MPC Containerships has a fleet of 66 ships and is one of the largest global intra-regional tonnage providers.