MPC Container Ships is Capitalizing on the Feeder Shortage
In this episode of Capital Link’s Trending News Webinar Series, MPC Container Ships ASA's co-CEO and CFO Moritz Fuhrmann discussed the company's Q2 performance and strategic direction, including their $1.2 billion backlog and recent newbuild orders. The discussion covered current market conditions, chartering activity, and the impact of geopolitical events on the shipping industry, with Mr. Fuhrmann explaining how factors like the Red Sea closure and U.S. trade measures have influenced charter rates and ton-miles.
Highlights:
Q2 Results: $138M revenues, $81M EBITDA, and steady dividends marked the quarter.
Feeder Scarcity: Near-full charter coverage into 2027 provides strong visibility.
Strategic Fleet Renewal: $800M investment program including new dual-fuel vessels, secondhand eco-ships, and efficiency upgrades.
Capital Allocation: Over $1B returned to shareholders thus far while reducing leverage and strengthening liquidity.
To watch the full presentation, please visit the following link:
The Q2 quarterly results showed a company with operating revenues of $137.8 million and an Adjusted EBITDA of $80.7 million. The declared dividend of $0.05 per share, amounting to $22.2 million, is the 14th consecutive quarterly payout. Operationally, the fleet maintained a high utilization rate of 97.6% and achieved an Adjusted Average TCE rate of $26,247 per day.
Financially, they saw their total assets growing to $1.45 billion and cash and cash equivalents reaching $358.5 million. This robust liquidity is further complemented by a conservative leverage ratio of 33.6%.
A Market of Scarcity
During the summer months, there has been some slowing down in chartering activity. Mr. Fuhrmann was quick to clarify that this is not a sign of weakening demand but rather a result of extreme tonnage scarcity.
“There is a massive scarcity, especially in the feeder segment, for available tonnage in the short term," he said. "There's not much activity because there are no vessels to be fixed.”
We can notice this scarcity reflected in MPCC's near-full coverage, 100% for 2025, 89% for 2026, and 34% for 2027. This results in exceptional earnings visibility and shields the company from potential spot market volatility. Mr. Fuhrmann pointed to Maersk's recent fixation of 5,500 TEU vessels for delivery in 2026 at rates that exceed $30,000 per day, as a powerful positive signal for medium-term charter demand.
When asked about the temptation to keep vessels open for potential upside, his response was that MPCC will preserve its conservative philosophy. “We will continue to emphasize coverage, which I believe investors will appreciate. The most recent fixtures are between two and three years, at rates which are between north of $20,000 per day, even up to $30,000 per day, depending on the vessel size” he added.
The Dual-Edged Sword of Geopolitics
Mr. Fuhrmann noted that the three more pressing disruptions right now are the Red Sea crisis, the tariffs imposed by the Trump administration as well as the USTR, which is essentially a fee imposed by the US government on Chinese built and/or operated vessels that is expected to come into effect later in 2025.
The rerouting around the Cape of Good Hope continues to add roughly an estimated 11% to ton-mile demand, absorbing a significant portion of the orderbook and supporting rates.
Then again, the constant threat of tariffs led to an expected front-loading of cargo in Q2, creating an artificial peak season that buoyed freight and, of course, charter rates.
Finally, when it comes to potential fees on Chinese built ships, it is important to note that 95% of MPCC's fleet falls below the 4,000 TEU threshold mentioned in proposals, meaning that their vessels would be exempt. Furthermore, any disruption that forces liners to reshuffle networks, fleets or even consider hub ports in the Caribbean, could increase demand for feeder services.
Attempting Fleet Renewal
While the overall container ship orderbook sits at a historically high of 30%, Mr. Fuhrmann has spotted a critical disconnect within the segments. The orderbook is heavily tilted towards larger vessels (9,000+ TEU), while MPCC's main feeder and mid-size segments (1,000-8,000 TEU) tell a different story.
“The orderbook right now is between 8, 9, maybe 10% that is being delivered over the next years until 2028/29. I don't think we have any deliveries in the feeder space beyond 2029.” Mr. Fuhrmann explained. On the flip side, 20+% of the existing trading fleet is 20 years and older.
This creates a mismatch. A healthy market keeps older ships trading, but any normalization of rates combined with increasing environmental regulatory pressure could push this aged tonnage toward recycling. As the orderbook is insufficient to replace it, a supply-side crunch in the feeder segment is a plausible outcome. This possibility alone was enough of an indicator to drive MPCC to order four new 4,500 TEU vessels.
These four ships represent a $228 million investment. They will be among the most efficient in their class, with slot costs 50% lower than peers. Additionally, there is a clear path to retrofit in the future to either LNG, methanol or ammonia.
Additionally, over the last three years there have been certain newbuilding and secondhand investments, as the company has contracted five newbuildings against long-term charters in addition to the aforementioned 4,500 TEUs as well as acquired nine young, environmentally friendly ships. They have also invested in hydrodynamic and energy efficiency upgrades on more than 20 vessels, showing significant increases in trading efficiency.
In total, this represents an $800 million investment program that will help lower the fleet's average age.
Financial Fortitude and Capital Allocation Philosophy
The company ended Q2 with $359 million in liquidity and 27 vessels free of debt (approximately 50% of the fleet) with a combined fair market value of $650 million.
According to Mr. Fuhrmann. MPCC's leverage policy is not based on a rigid ratio but on specific cash flow visibility based on projects. “The longer the cash flow is on a certain vessel, the higher the leverage can be” he said. The large pool of unencumbered assets provides immense flexibility to act on opportunities or weather downturns, depending on the occasion.
On the matter of capital allocation, over the past three years, MPCC has returned over $1 billion to shareholders through dividends while executing their fleet renewal program and lowering its leverage ratio to 33.6%.
“Looking back, historically we have distributed out a billion dollars to investors. We have increased the amount of debt-free vessels from almost none, to 27. Leverage ratio used to be 40, maybe 45%, now we're at 30%. And we invested the $800 million,” Mr. Fuhrmann noted. “We're not saying it has to be split in three-thirds, we always have been opportunistic.”
Closing the Valuation Gap
Acknowledging that MPCC, like many shipping firms, trades at a discount to the NAV implied by its recent vessel sales, Mr. Fuhrmann still believes there is a path to closing this gap.
He argued that the consistent dividend policy provides tangible returns, while the strategic reinvestment into a younger fleet is a value creator that will last. “Buying your own stock, you buy into a fleet of 13, 14-year-old ships,” he said, whereas reinvesting now prepares the company to capitalize on the next inevitable industry upcycle.
“We believe there's much more value in balancing recurring dividends with investing now into the right asset that will benefit from the next upswing in the market. I think in the foreseeable future, there will be a supply-side crunch, and we all know what that means in shipping”.
About MPC Container Ships
MPC Container Ships ASA (ticker code "MPCC") is a leading container tonnage provider focusing on small to mid-size container ships. Its main activity is to own and operate a portfolio of container ships serving intra-regional trade lanes on fixed-rate charters. The Company is registered and has its business office in Oslo, Norway. For more information, please visit www.mpc-container.com.
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