P3 flop good for lessors

China’s refusal to back huge alliance is positive for listed boxship companies, Stifel says.

China’s decision to kill off the proposed P3 network is good news for listed containership lessors, a leading analyst says.

Ben Nolan of Stifel explains Beijing’s rejection of the Maersk Line, CMA CGM and MSC alliance means the tide may begin to turn in favour of the containership leasing companies.

“We believe the stoppage of the P3 alliance removes a major potential headwind for containership lessors, particularly those with older capacity between 1,500 and 5,500 teu,” Nolan wrote in a report today. 

The analyst, whose coverage includes Seaspan and Costamare, added: “We believe that lessor companies with handymax and panamax fleets will be the largest benefactors of this recent announcement.”

As TradeWinds reported yesterday, Beijing denied permission to the P3 network in a move that sent Maersk’s shares spinning downwards.

Based on the total operating capacity of 2.6 million teu, Nolan says the network would have replaced around 289 boxships that would have been displaced largely from ship lessors.

“Specifically, the older less fuel efficient vessels would have been particularly impacted by the increased efficiency of the fleet,” he said.

“While many new fuel efficient vessels have been ordered to service the alliance and are likely still going to be delivered, we believe the fleet will simply be less operationally efficient.

“Thus there is still likely to be a heavy discount for smaller less efficient vessels, and longer-term the trend is still toward more efficient larger vessels, but we believe should demand for container shipping remain strong, the older vessels may still have some earnings potential.”