Performance Shipping Inc (PSHG) 2014 Q3 法說會逐字稿

Greetings, and welcome to the Diana Containerships 2014 third-quarter earnings conference call. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ed Nebb, Investor Relations advisor for Diana Containerships. Thank you, sir. You may begin.

Thank you, Christine, and thanks to all of you for joining us today on the Diana Containerships Inc. 2014 third-quarter conference call. The members of the management team who are with us today are Mr. Symeon Palios, Chairman and Chief Executive Officer; Mr. Anastasios Margaronis, President; Mr. Andreas Michalopoulos, Chief Financial Officer; Mr. Ioannis Zafirakis, Chief Operating Officer and Secretary; and Miss Eleni Leontari, Chief Accounting Officer.

Before management begins their remarks, let me briefly summarize the Safe Harbor notice. Certain statements made during this conference call which are not statements of historical fact are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act. Such forward-looking statements are based on assumptions, expectations, projections, intentions, and beliefs as to future events that may not prove to be accurate.

The risks, uncertainties, and other factors that may cause future results to differ materially from the forward-looking statements are contained in the Company's filings with the Securities and Exchange Commission.

And now, with that, let me turn the call over to Mr. Symeon Palios, Chairman and Chief Executive Officer of Diana Containerships Inc.

Thank you, Ed. Good morning, and thank you for joining us to discuss the results of Diana Containerships Inc. for the 2014 third quarter. I am pleased to report that Diana Containerships delivered net income of $1.4 million for the 2014 third quarter. This represents a [soft] turnaround compared with the net loss of $0.7 million for the same period a year ago. Our performance for the 2014 third quarter has continued the trend of steadily rising earnings that we have seen throughout the year. Earnings have trended upward from $0.3 million for the first quarter of 2014 to $0.6 million in the second quarter of 2014, to the $1.4 million we have reported today.

Time charter revenues, net of prepaid charter revenue amortization for the 2014 third quarter, were $13 million compared to $11.1 million in the same quarter of 2013. Our fleet is time chartered to some of the industry's leading container lines. And excluding the possible charter of Santa Pamina if the vessel is delivered to us by the end of this month, the fleet is time chartered for more than 98% of the days in 2014, and approximately 27% of the days in 2015, providing a stable revenue stream. Accordingly, we [contracted] gross revenue of the fleet, including the first nine months of 2014, is approximately $88.2 million.

I also wish to note that our balance sheet remains solid, with $110 million of available cash; [$10 million more] of restricted cash; and nearly $256 million in stockholders' equity. The Company's balance sheet strength partly reflects the private placement of $92 million which closed in July. As a result, we continue to be well positioned to take advantage of opportunities to expand our fleet service in the current marketplace.

The Board of Directors today declared a cash dividend on the Company's common stock of $0.0025 per share with respect to the third quarter of 2014. The cash dividend will be payable on or about or around December 18, 2014, to all shareholders of record as at December 4, 2014.

In addition to our financial progress, I would like to point out that we have continued our strategic initiative to transform our fleet during the 2014 third quarter and in the months that follow.

Specifically, we have taken delivery of, or have agreed to purchase, several container vessels. This, therefore, will position Diana Containerships very well for future improvements in the industry cycle by providing us with an attractive, modern, and efficient fleet to meet the needs of quality charterers.

To summarize our fleet expansion initiatives during and after the third quarter, in mid-September we took delivery of the motor vessel YM March, a 2004-built Post-Panamax container vessel of 5,575 TEU capacity, which is chartered to Yang Ming UK Ltd. at a net charter rate of $12,000 per day. Then, in October, we took delivery of the motor vessel YM Great, another 2004-built Post-Panamax container vessel of 5,576 TEU capacity, that is also charted to Yang Ming UK Ltd. at a net charter rate of $12,000 per day.

Just two weeks ago, we announced a Memorandum of Agreement to purchase a 2005-built Panamax container vessel of approximately 5,000 TEU capacity, the motor vessel Santa Pamina, for a price of $15.95 million. The vessel is expected to be delivered to the Company by the end of this month. It is chartered to the Shipping Corporation of India Ltd. at a gross rate of $9,500 per day. Including the Santa Pamina to be delivered later this month, the Diana Containerships fleet will consist of 11 container vessels, four Post-Panamax, and seven Panamax.

We believe that the solid financial position I have outlined today, along with our sharply focused fleet expansion strategy, will position the Company well for the next phase of the industry cycle. But we remain dedicated to prudently pursue opportunities for profitable growth and to enhancing long-term shareholders' value.

Now, I will turn the call the call over to our President, Stasi Margaronis, for a perspective on industry conditions. He will then be followed by our Chief Financial Officer, Andreas Michalopoulos, who will provide a more detailed financial overview. Thank you.

Thank you, Symeon. Good morning, and thanks to all for participating in this quarterly conference call of Diana Containerships Inc. Possibly the most significant development of the third quarter was -- according to Howe Robinson, at least -- the shift in fortunes for the Panamax sector, with charter rates for small Panamax ships going from $6,500 to over $10,000 in October; and larger Panamaxes commanding nearly $12,000 today. During the last few months, [around 35] Panamaxes have been scrapped, and new trading opportunities have opened up.

By the end of the third quarter, the Panamax fleet was essentially fully utilized. This is in sharp contrast to the early part of the year, when between 25 and 35 ships could have been waiting for charters.

As regards container volume shipped, the first eight months of 2014, total volumes on the Asia-Europe group reached to 10.4 million TEU, 8.2% higher than during the same period last year. During the same period, on the transpacific [BTX] trade, an increase compared to last year was 4.9%, at just under 9 million TEU. These are among the first encouraging signs on trade volumes on the main lane routes we have seen for a while.

Let's turn to macroeconomic considerations. According to the IMS, global economic growth is estimated to be 3.3% this year, which, if it materializes, will be identical to the growth rate witnessed in 2013. For 2015 the rate growth is estimated to be 3.8%. This is a slight downwards revision of the forecast given in July, which was 4%.

According to Maersk Broker, US consumer confidence rose in October to 94.5 from 89 in September, the highest level since October 2007. While in the European Union, economic sentiment unexpectedly rose in October, indicating that the [block's rapid] economy may be slowly improving at the end of the year. A year ago, we saw a [margin of last] earning in the growth of business activity in October, with October's PMI rising to 52.2 from 52 in September.

The International Monetary Fund's forecast for growth in the Eurozone as a whole is 0.8% this year and 1.3% next year. They also warned, however, of downsized risk to growth projections if prices are allowed by the European Central Banks to drift any lower. According to the IMF, the US economy should grow by 2.2% this year. As for the global economic growth, the IMF has downgraded its forecast to 3.3% this year and to 3.8% for 2015, as mentioned above. This was primarily caused by downgrades in their outlook for the Eurozone, Russia, the Middle East, and Japan.

However, Japanese manufacturing activity expanded in October, as domestic and overseas orders increased. This, according to Maersk, projects that growth in Japan is picking up pace again after disappointing performances in the second quarter and the third quarter, caused by a consumption tax hike. According to the World Bank, growth in China will fall to 7.4% in 2014, and to 7.2% in 2015. A further drop to 7.1% is envisaged for 2016.

Let's turn to demand. The OECD is forecasting that world trade growth will be around 4% in 2014, and between 5.3% and 5.8% in 2015 and 2016, respectively. If these predictions are correct, Howe Robinson argues that there should be a corresponding increase in headline demand for container ships. Based on their assessment of the relationship between OECD world trade growth figures and container ship demand, they foresee demand increasing by 5.8% in 2014, and by around 8% in 2015 and 2016. These are certainly very encouraging demand figures if they come to pass.

Clarksons are more conservative in their forecast, and foresee that global container freight will grow at a rate of 6.7% in 2015, when main lane trade volumes are expected to expand by 5.8%. Strong increases are anticipated in the North-South trade and the intra-regional trade. During the same year, container ship supply is expected to grow by 6.3%. According to Maersk, Chinese foreign trade data surprised positively in October, with exports growing 15.3% from year ago, the fastest rate of increase in 19 months.

A brief look at new ordering. According to Braemar ACM, during the first nine months of 2014, an estimated 114 container vessels were ordered with a total carrying capacity of 890,000 TEU. This represents a year-over-year decline of 44% compared to the corresponding period in 2013.

This leads us on to the order book now. And the present order book to fleet ratio stands at one of the lowest levels since the year 2000. We currently hover below the 20% mark against peaks of 60% in 2005 and 2008. The order book is dominated by large vessels, while orders for ships in the 3,000 to 7,999 TEU size range have been scarce in the past few years; more specifically according to Clarksons, at the beginning of October, there were 469 vessels capable of carrying just under 3.5 million TEU on order, which represented about 19.6% of the existing fleet.

Ships can be 3,000 to 7,999 TEU, Post-Panamax sector, from orders; or 7.3% of the existing fleet, while there were only four 3,000 TEU Plus-Panamaxes on order. During 2015, a total of 33 ships in the 3,000 to 7,999 TEU size range are expected to be delivered. Scheduled deliveries in 2016 for this size range are only five vessels.

In this respect, it is interesting to note that the fleet of 4,000 to 5,100 TEU vessels grew by a mere 2.2% in 2013, according to Braemar ACM, and their order book represents a minute 1.7% of the existing fleet. The order book in the next size sector up, namely the 5,000 to 7,499 TEU, is only 2.3% of the current capacity in service.

It is interesting to note that according to Clarksons, charter orders currently account for 63.1% of total container ship capacity on order, up from a low of 33.8% in June 2012. Maybe the battle by [larger] companies for market share is at long last subsiding, and more rational decisions on fleet expansion are prevailing.

As for slippage, according to RS Platou, this year it has been running at about 13%, which is down from 28% in 2013.

Turning to the laid-up ships. According to Alphaliner, at the end of October the idle box fleet stood at only 114 vessels, which represents just 1.1% of the total fleet capacity. The idled fleet included no Panamax container ships, and only one vessel over 3,000 TEU. We should remember that the number of these vessels, which may have been laid up for a long period, will never trade again and will eventually be scrapped.

The cascade now. This phenomenon has been most pronounced in the West African trade. As an example, the Mediterranean Shipping Corporation has decided to run a pioneering service to the region that, according to Alphaliner, will deploy ships of over 6,000 TEU. This loop will only call at a single West African port, Lome, in the Gulf of Guinea, with multiple feeder connections linking the new hub port to the rest of the region. A general trend has been stronger demand for larger ships in West Africa. This trend has provided a lifeline for Panamax ships, with 26 Panamax ships currently being deployed on the Far East to West Africa route, compared to only four units per month ago. Prior to 2010, geared ships of 1,500 to 3,000 TEU were the mainstay of the West African trade.

As we have said in the past, we agree with Clarksons that the ability or inclination to cascade will slow down, owing to the absorption of easily sustainable tonnage and the demand from cumulative trade growth. In the long-term, the slower cascade, along with a thin order book in the medium and small sizes and rapid demolition should tighten supply. Small and medium charter market sizes may eventually see a supply deficit as demolition continues to outstrip delivery, and the availability of selectively cascading opportunities gradually declines.

Looking at demolition now. According to Clarksons, demolition in 2014 is expected to reach a record high of 460,000 TEU, and to continue at elevated levels in 2015. The average age of container ships sold for demolition so far this year is estimated by Greymar at 21.8 years compared to 22.7 years in 2013. The average size of units [pegging] for demolition increased this year to 2,600 TEU from 2,260 TEU in 2013. High demolition, a low order book -- which is particularly thin for medium and smaller sizes -- and global container demand growing faster than container capable supply have led Clarksons to the conclusion that supply pressures in the market will eventually ease.

Let's look at supply-side risks. According to Alphaliner, lower bunker prices might constitute a new threat to the container ship market. With a prolonged period of cheaper fuels, carriers might be tempted to increase vessel speed, which could exacerbate the current oversupply. Also the economic benefit of fuel-efficient tonnage could be eroded; which, if it happens, would erase some of the rate premiums that this category of vessels currently enjoys. More specifically, however, based on Alphaliner calculations, ships' costs could be lowered by means of adopting moderately higher operating speeds if fuel prices were to fall below $400 a ton.

Further reductions to about $300 per ton could trigger an increase of service speeds up to 21 knots, or even more. Under this relatively unlikely, in our view, scenario, vessels enabled to provide such service speeds will be at a disadvantage compared to the older units with the larger engines that would be able to offer such high speeds.

Let's turn to the supply-demand balance. As regard to supply of vessels, the fleet expands by an average of 11% per annum from 2000 to 2008. This is a staggering number, and caused the devastating results for container ship [turn-ins] that we have witnessed recently. Furthermore, it created a surplus that could not be absorbed within a few quarters, even with a healthy rate of demand growth.

Howe Robinson argues that 2014 will be the first time since 2010 that demand grows by more than supply in the container ship industry. They believe that demand will grow by 5.3%, and supply will probably grow by 5.8%. This should start eating into the cumulative supply surplus that has built up since the market crashed in 2008. This will then allow for improvements in vessel utilization [actions]. Howe Robinson expects the supply to increase by just 4.4% in 2016, and possibly retain in 2017.

According to Howe Robinson, in spite of the obvious risks, the best case scenario is for a growing increase in world GDP through 2015 and into 2016. This would be accompanied by an increase in world trade goods and services of about 4.5% to 5% in 2015; and between 5% and 5.5% in 2016. If you [more than multiply reflect] supplies going forward, then containerized demand should increase by 6.2% in 2015 and by 7.2% in 2016.

According to Howe Robinson again, this year will see additional oversupply of around 100,000 TEU in the North-South trade, but an undersupply of 550,000 TEU in the regional trade. The main trade lanes should see a surplus of 350,000 TEU, which will be cascaded down through the intermediate and regional trades to cover the potential shortfalls resulting from the continued negative fleet growth in the sub-5,000 TEU sectors. A net position for the year will probably be an undersupply of 100,000 TEU. This will be the first year for some time that small ship deficits outpace large vessel excesses.

Looking further out into the future, Howe Robinson sees the fundamental demand and supply [into] starting to turn in the market's favor. There are still many hurdles to overcome, and there remains a legacy of tonnage surplus to be absorbed. But there is now good reason to suggest that fleet utilization factors will improve over the next year or so. Such statements are indeed risky, and will rely on the continued recovery of Western economies and contracting restraints, mainly from the liner company sector.

A brief look at the Panama Canal. We agree with the view expressed recently by container market analyst Jonathan Roach of Braemar ACM ship broking on the future of Panamax vessels. Despite the obvious threat that the expansion of the Panama Canal poses, these vessels have a future which is not as bleak as everyone makes out.

Both operators and ship owners still have faith in these ships because of their ability to operate on numerous trades, their flexibility, to ultimately ensure their longevity, says Mr. Roach. Panamaxes will also be deployed by liner companies, as indeed mentioned above, in ports that were not really designed for them. And this might create new demand which was not foreseen in the so-far published supply-demand analysis, and which have nothing to do with the Panama Canal.

Let's turn to the outlook now for the industry. Looking at 2015, Howe Robinson believes that the industry may be starting to move forward to a position where stronger trade growth for smaller ships, a net fleet reduction in the sub-4,000 TEU sectors, mean that bottom-up demand for Panamaxes is outpacing the top-down pressure from the cascade, as explained above. This is a first, and has taken a long time to achieve, but could signal a fundamental and structural change that will move charter rates upwards and may stimulate a little more speculative inquiries from the liner companies in the coming months.

Howe Robinson points out that secondhand Panamax prices remain extremely weak, and arguably this is then one of the best buys in the entire shipping space on a dollar per ton basis. There remains huge uncertainty as to the timing and expense of the recovery, but the lack of [confidence] in future earnings is fully priced into a market that the calculating the values of 10-year-old-plus Panamaxes have the small margin over their scrap value. This leaves very little downside exposure to those buyers willing to accept close to breakeven cash flows in the initial stages of their investments.

The sub-5,000 TEU fleet is expected by Howe Robinson to shrink next year, and will be unable to support the anticipated demand for the 7 million to 8 million TEU of extra cargo that will be moved in the world feeder and regional trade. This suggests that there might be a shortfall of 600,000 TEU, as mentioned above, which will have to be supplemented by the cascade.

According again to Howe Robinson, the cascade is perfect in this application to create a net supply-demand change in 2015 which should be about neutral. However, time lags associated with vessel redeployment should act as a stimulus to the charter market, and it is expected that the annual average container ship earnings should be 10% to 15% higher next year than in 2014.

As for 2016, Howe Robinson predicts that [half of a line] for scrapping of about 350,000 TEU, and delivery delays of about 200,000 TEU, net fleet growth will stand at 850,000 TEU; which, as a percentage of the fleet, would be its lowest level for at least the last 16 years.

So, our concluding comments now. We agree with the comments made by Howe Robinson that it is some time since the container ship industry experienced improving economic conditions and had an order book that did not look too burdened.

If the industry does not grab this opportunity to steady the ship, as the saying goes, it will have lost out on a unique and glaring opportunity. It may now be time to put the legacy of three rounds of horrendous over-ordering behind us, and benefit from the more harmonized investment decisions that should evolve from liner companies grouping into four major alliances, with comparable market shares for each by capacity deployed.

Namely, these are the 2M, with Maersk and MSC controlling 28.6% of the market. The Ocean Three -- CMA, UASC and CSG -- have about 14%. The G6, with Hapag-Lloyd, NYK, OOCL, APL, MOL and Hyundai Merchant Marine, have just under 18%. And CHKY, which is COSCON, K Line, Yang Ming line, Hanjin, and Evergreen controlling just under 17%.

Now, this is the environment in which we at Diana Containerships are trying to make the best possible investment decisions. We adhere to the principle of disciplined acquisitions with modest leverage. We firmly believe that today, buyers have the opportunity to purchase ships at very low prices and at historic discounts to the replacement costs. It will only take a small improvement in the charter market conditions to put such investments in the money from a cash flow and asset appreciation perspective.

In conclusion, therefore, we can say that the light is starting to appear at the end of what has been a very long and very dark tunnel. As Howe Robinson points out, there is a very real risk/reward dilemma to play out. But it should be remembered that, as William Shedd once wrote, a ship is safe in harbor, but that's not what ships are for.

I will now pass the call to our CFO, Andreas Michalopoulos, who will present the financial highlights of the third quarter and first nine months of this year. Thank you.

Thank you, Stasi, and good morning. I am pleased to be discussing today with you Diana Containerships Inc. operational results for the third quarter of 2014 and the nine months ended September 30, 2014.

The third quarter of 2014, net income of Diana Containerships Inc. amounted to $1.4 million, and the earnings per share amounted to $0.02. Time charter revenue, net of prepaid charter revenue amortization, amounted to $13 million compared to $11.1 million in 2013. The increase in time charter revenues was mainly due to increased average time charter rates, and was partly offset by decreased ownership days in the third quarter of 2014 compared to the same period of 2013.

Ownership days were 755 for the quarter compared to 786 in the same period of 2013. Fleet utilization was 100% for the quarter compared to 99.7% for 2013. And the daily time charter equivalent rate was $17,177 compared to $14,022 in 2013.

Voyage expenses were $0.1 million for the quarter. Operating expenses amounted to $6 million in 2014 compared to $6.9 million for the same quarter of 2013, a decrease of 13%. This decrease was attributable to the 4% decrease in ownership days, and was also due to decreased average crew costs, stores and spares expenses, partly offset by increased insurance costs. Daily operating expenses were $7,891 for the third quarter of 2014, compared to $8,775 in 2013. Depreciation amounted to $2.5 million for the quarter.

General and administrative expenses were $1.4 million compared to $1.2 million in the third quarter of 2013. The increase was mainly attributable to increased payroll costs of the office employees, and increased compensation costs on restricted stock awards. Interest and finance costs for the third quarter of 2013 (Sic-see press release �2014�) amounted to $1.7 million compared to $1.3 million for the same quarter of 2013. The increase was a result of the increased average debt and increased average interest rate.

Turning now to the nine months ended September 30, 2014, net income of Diana Containerships Inc. amounted to $2.4 million, and the earnings per share amounted to $0.05. Time charter revenues, net of prepaid charter revenue amortization, amounted to $39 million compared to $38.5 million in 2013.

The time charter revenues increased due to the increase in the average time charter rates in 2014 compared to the same period of 2013, and was partly offset by decreased ownership days in 2014 compared to the same period of 2013. Ownership days were 2,254 in 2014 compared to 2,608 in 2013.

Fleet utilization was 99.6% compared to 97.3% in 2013, and the daily time charter equivalent rate was $17,212 for the period compared to $14,565 for the same period of 2013. Voyage expenses were $0.2 million. Operating expenses for the period amounted to $18.8 million compared to $23.6 million for the same period of 2013.

The decrease in operating expenses was mainly due to the decrease in ownership days, and also due to decreased average crew costs, stores, and spares. Daily operating expenses were $8,337 for the period ended September 30, 2014, compared to $9,033 in the prior period.

Depreciation amounted to $7.4 million. General and administrative expenses amounted to $4.5 million compared to $3.9 million for the same period in 2013. The increase was mainly attributable to the full operation of Unitized Ocean Transport Limited, our fleet manager in 2014, compared to the previous year when the company started its operation in March. The increase in general and administrative expenses was partly offset by decreased compensation costs on restricted stock awards.

Loss on vessels' sale amounted to $0.7 million and relates to the sale of the vessel Sardonyx in the third quarter of 2014. Interest and finance costs were $5.1 million for the period ended September 30, 2014, compared to $2.8 million for the same period in 2013. As mentioned earlier, in 2014 we had increased average debt outstanding compared to 2013, as well as increased average interest rates.

Turning to dividend policy for the third quarter of 2014, the Board of Directors has decided to declare a dividend of $0.0025 per share. Thank you for your attention.

We will be now pleased to respond to your questions, and I will turn the call to the operator who will instruct you as to the procedure for asking questions.

(Operator Instructions). Donald McLee, Wells Fargo.

The first question is just around the Santa Pamina acquisition. It looks like the time charter attached to the vessel is a bit shorter than some of your previous charter-attached purchases. Could you talk about what that might indicate for the availability of charter-attached Panamaxes? Or maybe does it reflect a change in your 2015 outlook?

Hi, Donald. This is Ioannis. No, the time charter attached to Santa Pamina is what we found the vessel with. The vessel had the time charter attached, and we will either take the vessel with that or without. It has nothing to do with our strategies.

Got you. And you also mentioned that your 2015 charter coverage, I think, drops down to about 27%, while current rates for larger Panamaxes and Post-Panamax vessels are in the $10,000 to $12,000 per day range. Do you think you might begin to charter some of your open vessels longer-term in 2015?

Well, the main idea is that -- as our President, Stasi Margaronis said -- that we start to see light out of the tunnel; and, therefore, we have to go for shorter-term rather than longer-term, and try to take advantage of this upturn that possibly is going to come. That's the idea.

Yes, that makes sense. And that just last question. Based on your current cash position, should we expect incremental acquisitions, kind of that same charter-attached Panamax level? Or are you looking at maybe newbuilds or larger vessels?

Mainly, we are looking for purchases similar to Santa Pamina without time charter attached, or short-term time charter attached. Newbuildings for us is not the best option right now.

All right. Thanks, guys. That's all my questions.

(Operator Instructions). Kevin Sterling, BB&T.

First, touching on the vessel you recently acquired, it seems like it's a little bit smaller than the two vessels you acquired in August, and a year newer. But on the other hand, I also think you got a little bit better purchase price on the vessel, when you look at it on a per TEU basis.

Then I guess my question is, given that asset values seem to have held steady since August, and in some cases moved up slightly, just curious as to what drove that opportunity for you to maybe get a little bit better purchase price -- whether it was just market timing or maybe opportunistic distressed seller, or someone looking for a cash buyer, given the strength of your balance sheet and cash on hand. What's driving what you're seeing out there in terms of vessel acquisition opportunities?

No. The difference between the YM March and YM Great is not only 500 TEUs. The ones are Post-Panamaxes and the other -- the Santa Pamina is an Panamax vessel. Meaning that their intake as regard towards [income] homogeneous -- it's not homogeneous containers. It's much lower for Santa Pamina rather than on the YM March and YM Great; and, hence, the difference in the price.

What we say here is that two kinds of around 5,000 TEU vessels; they are lengthy ones, and we want with a wide beam; meaning that either you are there to pay something in the vicinity of $15 million, $16 million for a 2005 build vessel, a Panamax one, or around $22 million for a 2004 or 2005 Post-Panamax, which are the YM March and YM Great.

Okay. Thank you, Ioanni. And you guys, listening to Stasi's commentary, it seems like your outlook for the container market -- it seems to be definitely more positive than in years past. And you guys seem, I think, more opportunistic, and have a better outlook on the container ship market than I've heard from you in quite some time.

So with that backdrop in mind, as you look at your acquisition strategies, you look to acquire vessels, do you plan to stick with the 5,000 to 6,500 TEU range ships? Or maybe would you move into larger asset classes, such as an 8,000 TEU range?

We have stated in the past that we are interested in the mid-sized sector of containers, which includes the vessels that you just mentioned. And the interest that we have at the moment is in the vessels of 5,000 up to 8,000 TEUs.

Okay, great. Thank you. And then one last question here. Can you maybe talk about the charter environment? I know you gave some good data points, but my question revolves around bunker prices. We've all seen the drop in oil, the drop in bunker prices. And I know you typically don't carry the cost of bunkers since [following] the charter. But given the recent drop in oil and bunker prices, has this changed charterer sentiment in any way, i.e., are charterers willing to pay maybe a higher rate, longer duration, demand relative to the age of vessels? I'm just curious, given this drop in bunker prices, have we seen a change in sentiment of charterers?

Well, for the time being, we haven't, because it hasn't been long enough that we have been living with these lower prices. I think we will have to address this question, which is a very valued one, sometime next spring if we have the bunker prices hovering around the $450 per ton. So, if that happens, it is likely that some charterers might begin to address the issue of their operational costs and consider increasing speeds.

Even though, as we will mention again tomorrow in our conference call in Diana Shipping Inc., this trade -- container vessels, in other words -- is less scientific than the bulk area trade on the value of bunkers. It's a complicated reasoning behind it. But we've seen that we have to see considerably lower rates, as I mentioned -- or prices, I beg your pardon -- for bunkers, before we see a significant increase in the service speed of container vessels; which will in turn, of course, bring more supply to the market, more than we were anticipating.

Okay, great. That's all I had. Thank you so much for your time this morning.

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session.

I will now turn the floor back over to management for closing comments.

Thank you again for your interest in and support of Diana Containerships. We look forward to speak with you in the months ahead. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.