Danaos (DAC)

The Landlord in the Container Chain

Danaos owns containerships and rents them, on charters that run for years, to liner companies: the firms that sell box shipping to cargo owners. When freight rates fall the liner takes the hit first. Danaos feels it only when a charter ends and the ship is re-let at whatever the charter market then pays, so its risks sit at those expiries and in a large newbuild programme.

At 31 December 2025 the operating fleet was 75 containerships and 10 Capesize dry-bulk carriers, the largest bulk ships. Across FY2025 it averaged 74.1 container vessels and 10.0 Capesize units. Container capacity is counted in TEU (twenty-foot equivalent units, one standard 20-foot box). Danaos is NYSE-listed, reports in dollars and has 18.3 million shares.

What the Daily Rate Measures

Shipowners report earnings as time-charter equivalent (TCE): daily revenue per ship after voyage costs such as fuel and port fees. For a ship on time charter that is close to the daily hire itself. Large containerships on long charters command more hire than bulk carriers, so Danaos's boxships earned far more a day in FY2025 than its own Capesizes or Star Bulk's dry-bulk fleet at $18,392/day.

ZIM's $1,551 per TEU measures something else. ZIM is a liner: it operates 707,528 TEU but owns only 16 ships, and its figure is freight revenue per box carried. The TCE guide keeps the two apart because they sit at opposite ends of the same charter and can move in opposite directions: fixed hire holds while spot freight falls.

Danaos discloses one cost line, cash operating cost (OPEX) of $6,969 per vessel-day in FY2025: crew, insurance and maintenance, before depreciation, drydock amortisation, G&A and interest. It publishes no all-in breakeven rate. Anyone testing whether the dividend is covered has to add financing, drydocking and overheads to OPEX, as the breakeven guide shows.

The Newbuild Programme

The order book is the biggest swing factor. At its 20-F annual report (the SEC filing for foreign companies) of 25 February 2026, Danaos had 27 containerships totalling 174,550 TEU and four Newcastlemax bulk carriers, the largest Capesize design, on order and none yet delivered. Each needs a charter that covers its instalments and running costs, and they arrive into a crowded market: BIMCO put the industry container orderbook at 37% of the existing fleet in Q1 2026, the highest of the major segments.

Net debt was $140.5 million at year-end 2025, against about $2,816 million at Frontline and $2,925 million at ZIM. Instalments can push it up before the new ships earn hire. In weak freight years the hire alone services that debt, so its size matters as much as charter length.

Three Ways to Lock the Cycle

The spot vs time-charter guide uses Danaos, Frontline and Golar as three answers to the same question. Frontline trades mostly at spot rates but, in an upturn, fixes some very large crude carriers (VLCCs, the biggest crude tankers) on one-year charters at $76,900-93,500/day. Danaos gives up spot upside on its containerships for years of known hire. Golar signs long contracts for floating LNG plants that stay moored at one gas field for years, though they can move between projects: Hilli left Cameroon in 2026 for a contract in Argentina.

The Excel model discounts contracted hire schedules at an illustrative 9.0% nominal rate. Box freight indices never enter that discount.

Valuation Framework

Value Danaos as its ships plus its contracts. Start with net asset value (NAV): broker valuations of the 75 containerships and ten Capesize units, charter-free (as if no charter were attached), less net debt, as the NAV guide builds it. Then add the value of the charter backlog where contracted hire sits above today's charter rates, or deduct it where it sits below. Book equity of $3,796 million is an accounting figure and no substitute.

The containerships carry the earnings. The ten Capesize ships are a satellite whose earnings track the Baltic Exchange's average of five Capesize routes (the 5TC), which these guides mark at $22,000/day mid-cycle. That mark is for teaching; check current rates when you build your own model.

What to Watch and What Can Go Wrong

• Charter expiries. Long charters delay spot exposure; they do not remove it. Each ship coming off charter is re-let at the containership charter rate of the day, which follows liner earnings but is a separate market from box freight indices such as the Drewry World Container Index (WCI).
• Newbuild delivery and funding. Watch delivery dates, instalments and whether each ship is chartered before it arrives. Yard slippage or a weak charter market at delivery hits returns on capital already committed.
• OPEX per vessel-day: inflation in crew, insurance and maintenance raises the rate every recharter has to clear, and OPEX alone already understates the cash breakeven.