Asset values in container shipping are firmly on the way up, with portfolio clear-outs and selling pressure by shipping[ds_preview] banks now a thing of the past. Multipurpose ships could be next in line, says Christiane Witting, chief analyst at consultant and ship valuer Ingenieurbüro Weselmann.
This must be a year-end rallye also for you as ship valuers amid today’s busy S&P market?
Christiane Wittig: We are reasonably busy, but not really more so than in other years. But the excitement we are seeing in the container market, that is something truly extraordinary, something we haven’t seen for many years. I don’t think anybody has seen it coming. Will it last? For now at least, the rally shows no signs of losing steam. And the supply side fundamentals are encouraging, especially for the mid-sized vessels. Between 3,000 and 10,000 TEU, nothing at all has been built for years. And very little is being ordered aside from very large ships. Demand is much harder to predict. The pandemic is far from over and even when it is, the economic aftereffects will be felt for some time. On the other hand, it is interesting to see how active liner companies are in the S&P markets. MSC basically appears to be buying anything that floats. They wouldn’t do so unless they expect they will need the tonnage in the years to come.
How fast are market values for ships increasing? How much more room is there for improvement?
Wittig: In the container sector every sale we hear of seems to be well above last done. And asset prices certainly seem to have some way to go, the numbers we are seeing are still not that high by historical standards or in relation to newbuilding prices. Buying interest is coming from many different sides, not just the liner companies. Access to capital remains an issue for many non-operating owners though. Other sectors are less exciting just now, bulkers are largely flat and tankers under pressure. What we are watching very closely is MPP. With container freight rates exploding and severely limited space availability, break bulk becomes an increasingly attractive option for shippers. We expect to see some serious improvement in the short term, in the charter market and then also for asset values.
Are run-off strategies by shipping banks and distressed loan investors still a major influence on the market?
Wittig: This process has by now largely come to an end. Not completely, but it is no longer a major influence in our view. It is possible that the improved values in the container sector will lead to some more disposals, but probably not in a major way. And that’s good news, of course. The ‘Everything Must Go’ strategy really had a very negative impact on the market for a long time and destroyed a lot of value. It distorted the market to some extent, and that is never a good thing. Shipping is facing so many challenges, environmental, technological and regulatory, it’s time for our industry to put the mistakes of the past behind and concentrate on facing the future.
