Danaos' Coustas finds bulk carrier prices attractive, explains fresh container vessel order

During the Q4 earnings investor call, Danaos chief executive John Coustas was asked about the weakness in the dry bulk market and whether declining asset values present investment opportunities. He noted vessel prices are attractive and added Danaos plans to expand its presence in the sector. Dr Coustas said the company is focusing exclusively on Capesize vessels, with no interest in other segments.

Danaos, traditionally a container vessel specialist, made a surprising re-entry into the dry bulk market in 2023 and has since built a fleet of 10 Capesize ships. Dr Coustas highlighted while the market faces challenges due to China’s economic slowdown and pressure on mid-sized and smaller segments from a new tonnage influx, the Capesize segment benefits from an orderbook at historically low levels.

No risk in newbuildings

Despite announcing a temporary pause on newbuildings last summer, Danaos has confirmed an additional order for two 9,200-TEU container vessels, scheduled for delivery in 2027.

Dr Coustas emphasised the need for modern and efficient ships, particularly in this size bracket. The company has already secured multi-year charter agreements for 13 of its 15 newbuild vessels and announced an US$850M syndicated loan to fully cover the financing of all vessels on order, including the latest two.

With these agreements in place, Dr Coustas told analysts Danaos’ newbuilding investments carry minimal risk.

Danaos currently operates a container vessel fleet of 74 ships with a total capacity of 471,477 TEU, alongside 15 newbuilds totalling 128,220 TEU.

US$3.4 Bn backlog 

The strong container vessel charter market has significantly bolstered Danaos’ financial performance. In the last quarter of 2024, the company added US$336M to its contracted revenue backlog through a mix of new charters and charter extensions.

As a result, Danaos’ total contracted cash operating revenues now stand at US$3.4Bn, including newbuildings. The company’s average contracted charter duration for its container ship fleet is 3.7 years, weighted by aggregate contracted charter hire.

“Danaos is highly insulated from near-term market uncertainty, with 97% coverage for 2025 and 79% for 2026 at healthy rates, shielding us from market volatility,” Dr Coustas stated.

Danaos reported operating revenues exceeding US$1.0Bn in 2024, up from US$974M in 2023, while net income reached US$505M, compared with US$576M the previous year.