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Danaos rides out box rate storm with steady first half

Danaos rides out box rate storm with steady first half
Profits for New York-listed containership owner Danaos Corporation fell to $11.8m in the second quarter, down from $16.2m in 2012. Net income for the first half 2013 was also down, $25.7m compare to $33.1m in 2012.

Operating revenues at Danaos held steady at $146.6m for the quarter, contributing to a 4.2% increase for the half at $292.7m, up from $280.9m in 2012.

The cause of the profit drop is a softening of the charter market, but the company is well positioned for a revival, explained ceo John Coustas. "The vessels that have been re-chartered at the current low rates deployed under short-term charters are currently running at operating break-even levels, an improvement in the charter market is a one-way option to the improvement of our results."

Although any revival in rates may be a way off. "On the market front the situation is stagnant while the liner companies are struggling to absorb the influx of the mega containerships amidst a weak demand environment in the main-lane trades, particularly in the Europe - Far East trade with GDP in the Eurozone expected to marginally contract in 2013 and the growth figures in China not being as robust as initially anticipated," Coustas explained.

"The US economy seems to be rebounding but this is not in itself enough to drive a market improvement. The peripheral trades are doing much better and at the moment this is the only bright side of the market. The orderbook is currently at only 20% of the current fleet but it is clear that the surplus in shipyard capacity and the very low new building prices being offered pose a risk to the timing of the recovery of the market."

Danaos has contracts totalling $4.6bn stretching to 2028 and an average charter duration of 9.3 years for its current fleet of 61 vessels, totalling 325,065 teu.

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