Concordia Maritime announced that it has shelved an effort exploring the conversion of its P-MAX type product tankers into container vessels. Under financial pressure and with a sagging tanker market while demand remained higher for container capacity, the company at the beginning of the year announced a feasibility study for adapting its 62,5000 dwt P-MAX tankers for container transportation.
“We decided to put the container project on hold,” said Erik Lewenhaupt, Concordia CEO in the company’s half-year interim financial statement. “The study shows that it is technically feasible to convert P-MAX vessels into 2,100 TEU container vessels, but the increasing economic uncertainty has made it difficult to reach an agreement with an end customer.”
The company had said that initial assessments had shown that the P-MAX vessels’ two diesel engines, with full redundancy, and other dimensions, would make them possible to convert to container vessels. The vessels are 600 feet long with approximately a 131-foot beam.
They had said there were a number of technical and market challenges to converting and adapting P-MAX tankers to container ships that they would continue to explore. The study during the first half of this year was to include preparation for basic design class approval. They had said they would be talking with shipyards and possible charterers to explore potential interest. The actual conversion was expected to require approximately three to five months to convert one of the vessels if they decided to proceed with the project. The product tanker operator commissioned Stena Teknik and a German consulting company to carry out a technical design study.
Weighing on the company’s decision not to proceed may have also been a change in the financial performance of the operations during the most recent quarter as the oil markets rebounded. “As always, the tanker market reacts quickly to external events and volatility has been unusually high so far this year,” they said during the quarterly report to investors. “The product tanker market future looks brighter,” noted Lewenhaupt.
During the second quarter, the company returned to profitability after an extended period of losses. It however continues to have debt and liquidity challenges. Concordia sold its Suezmax tanker Stena Supreme during the second providing a positive effect on liquidity. They also signed an agreement for the sale of another of its P-MAX tanker, Stena Paris, a sale that will be used to accelerate loan repayments.
After delivery of the vessel to her new Greek owner, the company’s product tanker fleet will consist of seven 65,200 dwt P-MAX vessels. Six of the vessels are employed under a five-year time charter contract with Stena Bulk. The seventh vessel, Polaris, has been chartered to Crowley Government Services which has in turn chartered the vessel to U.S. Military Sealift Command.