Dear Fellow Shareholders,

I am writing these words in what we hope is a slow return to normalcy following the rapid spread of the worst pandemic in recent history. While lockdown measures are gradually being lifted, the depth and duration of the economic fallout caused by the pandemic remains unknown. Some industries, like airlines and tourism, will take longer to recover, and others will be changed for years to come. In the shipping front the most immediate operational challenge has been with respect to crewing our vessels. Strict travel and embarkation/disembarkation protocols have rendered crew changes difficult to impossible, and we hope that the International Maritime Organization can help to put forth a solution.

Amidst all the travel restrictions during this crisis, the one thing that has been kept intact to connect an otherwise isolated world is shipping. The transportation of goods continued without major hurdles so that countries can continue to import and export goods to ensure minimal disruption in local markets. Of course, the volume of trade has been significantly impacted, which is reflected in the considerable number of cancelled or amended sailings by the liner companies. The positive effect of this strategy is that box rates have remained steady, and a dramatic drop in fuel costs partially offset the cost of idling vessels. There is considerable belief that a recovery will commence starting in the third quarter of 2020.

For Danaos Corporation, 2019 was a very productive year when the company began to realize the benefits of our restructuring and the strengthening market. Following the restructuring, we have also been able to opportunistically expand and optimize our fleet. Over the last several quarters, we have acquired four 8,500 TEU vessels, including one vessel acquired by our affiliate Gemini Shipholdings, and we have also installed exhaust gas cleaning systems on 11 vessels in our fleet. We also removed the last restriction from our 2018 restructuring when we successfully raised $57 million in a public offering. This not only served to increase our liquidity but also removed the final impediment to Danaos’ ability to pay dividends.

The charter market is currently very weak due to the Covid-19 pandemic. However the lower rechartering rates we expect to receive for our vessels coming off charter in 2020 will be partially offset by the dramatic drop in interest costs on our floating rate debt and a recent refinancing. From an industry perspective, the newbuilding orderbook is at a record low level of less than 10%. This is in stark difference from where things stood during the financial crisis in 2008-2009 when the orderbook equaled more than 40% of the fleet.

Last year, we were anticipating a significant drive into green technology and investments as the new sulphur fuel regulations were set to come into force. The transition to new sulphur fuels has gone relatively smoothly, and we have not experienced any incidents related to fuel quality and availability. The COVID-19 pandemic has put new environmental initiatives on hold, in part because much lower fuel costs do not incentivize green technologies. Once the current crisis subsides, the industry will need to refocus on these initiatives, and we continue to actively participate in research on the future of our fleet and the industry.

Danaos is well positioned to weather this storm through substantial contract coverage and very competitive financing arrangements without any balloon until end 2023. We will be exploring further opportunities to grow the company and enhance value 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