greenjacket

Rising Oil and the Future of Globalization: Implications for Transport Stocks

rds1955 - thanks

Rising Oil and the Future of Globalization: Implications for Transport Stocks

I own both Seaspan & Eagle and have a profit on both. They both charter out the ships they own.
Seaspan charters long term (at least 8 years) to major shipping lines sch as Maersk, Cosco, etc. If part of the lease they will aso operate the ships for the line. They have contracts for new buildings and lease outs for the next two plus years. I have two concerns.
First is there an opt out for existing leases, and opt outs and provisions for cost escalations on new buildings. It is assumed that the shipping line wll pay for any escalation in operating costs (fuel, wages, port charges, etc.)
In the case of EGLE they have a new buildings program to increase their current fleet by about doube. The new buildings program goes out about 3-1/2 years. Their charters as far as I can tell are bare-boat charters, typically 1 to 2 years.
For the present I plan to hold SSW to the end of this year and see if they can raise their dividend again. However, also monitor their forward looking statements when they report 2nd Q resuts.
I agree with 163888 & beezebufo that bulk carriers are going to have a long play. EGLE is my preferred play not only because of the current yield, but as old charters on the current fleet expire they will be able to get higher day rates on new charters. Further their dividend policy is based on free cash flow so that one can expect significant dividend increase.