In International Shipping News 20/03/2018
The structure of ownership in the boxship sector has changed considerably over the past two decades, with the presence of a large charter owned fleet now a more prominent characteristic than had historically been the case. Meanwhile, dramatic changes have also taken place within the charter owned fleet in recent years, the extent of which warrants a closer look.
Exploring New Waters
In the early 1990s, little more than 25% of boxship capacity was held under the charter ownership model, with liner companies accounting for the lion’s share. The model rapidly gained popularity in the following years, supported in part by financial and economic incentives, until peaking at around 51% of containership fleet capacity in 2012. However, since then, the share of the fleet accounted for by charter owners has contracted, standing at 45% by the start of March 2018 (totalling 2,457 boxships of 9.6m TEU).
In the early 1990s, little more than 25% of boxship capacity was held under the charter ownership model, with liner companies accounting for the lion’s share. The model rapidly gained popularity in the following years, supported in part by financial and economic incentives, until peaking at around 51% of containership fleet capacity in 2012. However, since then, the share of the fleet accounted for by charter owners has contracted, standing at 45% by the start of March 2018 (totalling 2,457 boxships of 9.6m TEU).
Stormy Weather
Recent years have seen dramatic changes within the charter owned fleet, in particular with regard to owners’ nationality. The rise, and indeed fall, of the German ‘KG’ finance system was a key driver of these changes. The system was immensely popular during the 2000s, spurring significant investment in new boxship capacity. By start 2008 almost 70% of the charter owned fleet was accounted for by German owners, while the next largest owner, Greece, accounted for 12%. However, the post financial crisis collapse of the KG system saw the share of charter owned fleet capacity accounted for by German owners fall to 35% by start 2018. Meanwhile, Greek owners more than doubled their share, to nearly 25%, while Chinese interests are also playing a more prominent role in the sector.
Recent years have seen dramatic changes within the charter owned fleet, in particular with regard to owners’ nationality. The rise, and indeed fall, of the German ‘KG’ finance system was a key driver of these changes. The system was immensely popular during the 2000s, spurring significant investment in new boxship capacity. By start 2008 almost 70% of the charter owned fleet was accounted for by German owners, while the next largest owner, Greece, accounted for 12%. However, the post financial crisis collapse of the KG system saw the share of charter owned fleet capacity accounted for by German owners fall to 35% by start 2018. Meanwhile, Greek owners more than doubled their share, to nearly 25%, while Chinese interests are also playing a more prominent role in the sector.
These changes have been clearly reflected in the recycling and S&P markets, with German owners accounting for 30% of boxship capacity scrapped since 2008, and 52% of the secondhand sales (often in distressed circumstances). Nearly a third of the capacity sold secondhand went to Greek and Chinese buyers.
Banding Together
Meanwhile, there has also been a trend towards consolidation in the charter owner sector in recent years (although to a smaller extent than in the liner sector). Tracking this can be difficult, although according to published ownership statistics, the share of the charter owned fleet accounted for by the top 10 owners has increased from around 35% at the turn of the millennium to nearly 45% based on the current fleet and orderbook. In addition, a number of joint chartering arrangements have been agreed in recent years.
Meanwhile, there has also been a trend towards consolidation in the charter owner sector in recent years (although to a smaller extent than in the liner sector). Tracking this can be difficult, although according to published ownership statistics, the share of the charter owned fleet accounted for by the top 10 owners has increased from around 35% at the turn of the millennium to nearly 45% based on the current fleet and orderbook. In addition, a number of joint chartering arrangements have been agreed in recent years.
Sailing Onwards
So, the charter ownership model has risen to prominence over the last few decades, alongside an evolving financial landscape. Meanwhile, movements in the boxship market, as well as some dramatic changes to the world economy, have created both challenges and opportunities, and the shape of ownership is changing. As a key feature of the containership sector, the extent of change in the charter owned fleet is one for market watchers to keep a close eye on.
So, the charter ownership model has risen to prominence over the last few decades, alongside an evolving financial landscape. Meanwhile, movements in the boxship market, as well as some dramatic changes to the world economy, have created both challenges and opportunities, and the shape of ownership is changing. As a key feature of the containership sector, the extent of change in the charter owned fleet is one for market watchers to keep a close eye on.
Source: Clarksons
