MPCC Co-CEO On Container Feeder Market Trade Disruptions And Growth Opportunities

In this Capital Link Deep Dive Podcast episode, Mr. August Klemp, Equity Analyst at Pareto Securities SA, welcomes Mr. Moritz Fuhrmann, Co-CEO & CFO of MPC Container Ships ASA MPZZF for a conversation focusing on the company’s future vision, including plans for fleet expansion, investment strategy, and the goal of maintaining a leading position in the feeder segment while fostering strategic partnerships and ensuring long-term shareholder value.

Τo watch the full conversation, please visit the following link:

https://www.youtube.com/watch?v=tODafZu27gE

Tariffs and Rerouting Not Threatening Long-term Growth

The recent U.S. tariffs, some of which are suspended for 90 days, have led to short-term volatility in freight rates. However, MPCC views these developments as a rerouting opportunity rather than a threat. Historical trends suggest that trade flows adapt rather than collapse. During 2018-19 when similar tariffs were put into effect, cargo was rerouted through Southeast Asia, Mexico and Europe, and a similar pattern is emerging now. The 90-day suspension has triggered a surge in front-loaded shipments, boosting demand, while manufacturing shifts (e.g., from China to Vietnam, India) are expected to continue.

Mr. Fuhrmann argues that the proposed U.S. fees on Chinese-built vessels could further disrupt liner networks, particularly for big operators like COSCO who now rely on using their partners' non-Chinese-built ships. Estimates suggest a 13,000 TEU ship could face approximately $9 million in additional costs per round voyage. While substantial, these costs can be absorbed across high-volume goods, though they are ultimately passed on to consumers. However, MPCC's fleet is exempt, as the company only possesses two vessels above 4,000 TEU and both were built in South Korea.

When it comes to the Red Sea crisis, there has been a 10-12% increase to container demand due to the now well-known Cape of Good Hope extended journey. While a ceasefire between the U.S. and Yemen is a step, the underlying attack in Gaza remains unresolved according to Mr. Fuhrmann.

Supply-Side Trends: Feeder Ships vs. Megaships

The container order book reveals a divide at the moment, as megaships (>10,000 TEU) account for 40% of it, while feeders (<5,000 TEU) represent just 4-6%. This imbalance reflects liner companies' focus on prioritizing economies of scale and investments based on new regulations in methanol/LNG vessels.

Nevertheless, feeder demand remains resilient yet underinvested. 97% of intra-regional trade relies on ships with less than 5,000 TEU, and this segment has historically outperformed major trade lanes. The existing feeder fleet is aging, as 25% of vessels are over 20 years old, and limited shipyard capacity means new orders won't quickly fill the gap. Unlike past cycles, where overordering affected all sectors, the current surge is concentrated in megaships, reducing spillover risks for feeders.

Conservative Chartering

Following recent divestments, MPCC's fleet will stand at 55 vessels by mid-year, with ambitions to grow in the long run. Expansion will be driven by continuous market screening and the ability to act on attractive opportunities as they arise.

Mr. Fuhrmann noted the company's conservative chartering strategy, with 96% coverage for 2025, 77% for 2026, and 28% for 2027. MPCC favors 2-to-3-year contracts over short-term spikes, providing earnings visibility. Their recent dividend policy adjustment includes reducing payouts from 75% to 30-50% of net profit and reflects a shift toward retaining capital for fleet growth and maintaining flexibility for distributions based on how things evolve. Since 2021, MPCC has returned over $1 billion to shareholders while actively renewing its fleet, acquiring nearly 30 vessels and selling close to 40, including less efficient tonnage. Overall, MPCC aims to solidify its role as a key tonnage provider for intra-regional trade.

Disclosure: Capital Link is the investor relations advisor to MPC Container Ships. This content is for informational purposes only and not intended to be investing advice. We would like to highlight that this is not a Capital Link article with our own editorial on the company. It is a CEO interview. Thus, all comments in the article are the CEO's.