Dear Fellow Shareholders,

In our annual report for 2020, I shared my expectation that 2021 would be a stellar year for Danaos. Indeed, the company’s results surpassed even my most optimistic expectations. Across the container industry, companies realized earnings unseen not just during the last decade, but in many cases, for a company’s entire operating history. In 2021, Danaos reported net income in excess of $1 billion as a result of both fleet operating as well as the appreciation of our investment in ZIM.

The current container market has been characterized by well-documented supply chain disruptions. These disruptions and resulting shortage of shipping capacity benefitted the industry and led to extraordinary profits. Thus far in 2022, this dynamic has continued. While it appeared that the COVID-19 pandemic has begun to subside towards the end of 2021, the Omicron variant emerged. Most recently, it is testing China’s “zero COVID” policy and adding fuel to the supply chain disruptions.

The global economic recovery has been abruptly clouded by the war in Ukraine, which have exacerbated, supply chain, driven energy prices higher and furthered inflationary pressure. Globally, central banks are considering raising interest rates to tame inflation, which will slow economic growth if not lead to a recession. This will definitely affect demand of finished goods.

Regarding the tragedy unfolding in Ukraine, we employ a significant number of Ukrainians onboard our vessels. We are particularly concerned about families of our crews, and we have assisted a significant number of refugees in Greece. I hope that this humanitarian disaster will end soon for the benefit of the people of Ukraine.

As for the supply side, the current orderbook has more than doubled since the start of the pandemic, although it is not extraordinary in terms of size and new ordering was concentrated in larger vessel classes. Danaos ordered six 7000 TEU vessels for delivery in 2024, our first orders from shipyards in over 10 years. Importantly, we have invested in the most underbuilt vessel segment where there is minimal capacity with efficient speed to serve the trade. The vessels we ordered will be capable of utilizing methanol as a fuel source, which “future proofs” our investment and creates a significant advantage, particularly if fuel prices remain elevated. The wild card on the supply side is the speed reduction that will be mandated by the environmental regulations due to be enacted from 2023 and any voluntary speed reductions that may occur due to the high cost of vessel bunkers.

Our chartering strategy insulates us from any near term rate volatility. Indeed, our operating income will be significantly better in 2022 than 2021 solely based on secured contracts. The market has certainly recognized the value of our enterprise and strategy, and our market capitalization surpassed $2 billion. We are pleased to be in the position to return value to our shareholders through our dividend, which we already increased by 50% after initiating it earlier in 2021. We have also retained a strong liquidity position to continue to grow our fleet and increase our earnings potential.

I would like to thank all my colleagues and our crews for their dedication and I want to assure you that we will continue undeterred our goal of bringing exceptional results for our shareholders.

Respectfully,

signature Dr. John Coustas
President & CEO

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Corporate

C/O Danaos Shipping Co Ltd.
3, Christaki Kompou Street Peters House 3011, Limassol Cyprus
Tel:  +30 210 419 6480
+30 213 017 6480
Fax: +30 210 419 6489

Athens Branch
14, Akti Kondyli, Piraeus Athens, 18545 Greece