Danaos returns to Yangzijiang for two more methanol-ready containerships

Home Methanol Danaos returns to Yangzijiang for two more methanol-ready containerships

February 14, 2024,
by

Jasmina Ovcina Mandra

Greek shipowner Danaos Corporation has placed a $188.4 million order for the construction of two methanol-ready 8,258 TEU containerships at Yangzijiang shipyard in China.

Danaos-owned CMA CGM Nerval/Illustration. Image by Kees Torn on Flickr under CC BY-SA 2.0 license

The latest fleet renewal move brings the company’s orderbook to twelve ECO methanol-ready containership newbuilds with an aggregate capacity of 91,430 TEU.

The deliveries are spread across 2024 and 2027, with the latest two additions scheduled for the fourth quarter of 2026 and first quarter of 2027, respectively.

“Danaos has also recently ordered two more 8,258 TEU vessels at Yangzijiang shipyard and we now have a total of four vessels under construction at that shipyard with deliveries scheduled for the second half of 2026 and the first quarter of 2027. All twelve vessels in our newbuilding program are methanol ready and are designed with the latest eco characteristics. Demand for shipyard delivery slots is very high as the industry is quickly moving to reduce carbon emissions by operating green vessels,” Danaos’ CEO Dr. John Coustas, said.

Danaos said that all of its ships under construction will be fitted with alternative maritime power units and built under the latest requirements of the International Maritime Organization. This means that they will meet Tier III emission standards and Energy Efficiency Design Index (EEDI) Phase III.

In February 2024, Danaos bought two Capesize bulk carriers built in 2010 and 2011 for $52.8 million. These vessels are expected to be delivered in April and July 2024, respectively, pushing the company’s Capsize capacity to 354,579 dwt.

“The market for Capesize vessels is showing unusual seasonal strength as Brazilian iron ore exports increase, the coal trade remains elevated, and demand for minor bulks like bauxite and agricultural commodities is following a global recovery. Recent stimulus measures in China aimed at supporting construction, infrastructure projects, and consumer demand is expected to keep demand steady as fleet growth begins to slow over the next two years. We continue to explore interesting opportunities in the dry bulk sector,” Coustas said.

Over the past three months, Danaos has bolstered its contracted revenue backlog by approximately $43 million, securing new charters for five container vessels within its fleet. This brings the total contracted cash operating revenues to $2.3 billion. The average remaining contracted charter duration stands at 3.0 years, weighted by aggregate contracted charter hire.

The company reported an adjusted net income for the last quarter of 2023 worth $136 million compared to $141.7 million a year earlier.

“Most recently, the conflict in the Middle East expanded to the seas with attacks on vessels in the Red Sea area. This dramatically altered trade routes and the performance of liner companies as most major companies decided to reroute their vessels away from the Suez Canal, sailing longer distances around the Cape of Good Hope to reach Europe. This in turn increased ton mile demand, leading to a capacity shortage that drove box rates significantly higher by up to 300%, while it is expected that box rates will remain elevated as long as the disruption continues. Against this backdrop, we have some secured additional charters for our vessels at very healthy levels,” Coustas added.

“Danaos is well positioned with a very strong balance sheet and significant revenue visibility into 2025. This provides us with the flexibility to return value to our shareholders through dividends and share repurchases and also pursue opportunities to ensure the long-term resilience of the company.”