Vessel Operating Lease Commitments

Vessel operating lease commitments stood at US$675.4 million (2014: US$877.8 million), comprising US$455.7 million for Handysize, US$183.9 million for Supramax and US$35.8 million for Post-Panamax.

Our Handysize operating lease committed days decreased 24% to 42,980 days (2014: 56,560 days) while our Supramax operating lease committed days decreased 22.7% to 15,010 days (2014: 19,410 days).

The Group wrote back US$12.3 million and US$9.0 million for Handysize and Supramax onerous contract provisions in 2015 following the utilisation of this elements of the charters. At 31 December 2015, there remains a provision of US$63.6 million for Handysize and US$16.0 million for Supramax time charter contracts substantially expiring during a four-year period and whose charter rates are higher than the expected earnings for the remaining charter periods. The provisions will be released back to the income statement in the periods in which the charter payments for these vessels are due (see table below).

Onerous Contract Provisions

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 US$ Million
YearHandysizeSupramaxTotal
201619.58.227.7
201720.46.226.6
201816.71.618.3
20197.0-7.0
Total63.616.079.6

Commitments Excluding Index-linked Vessels

The following table shows the average contracted daily charter rates and the annual total number of vessel days of our chartered-in Handysize and Supramax vessels during their remaining operating lease terms by year, assuming the purchase options will not be exercised until the expiry of the charter-hire agreements.

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HandysizeSupramax
Average daily rate Average daily rate
YearVessel daysBefore provision
write-back (US$)
After provision
write-back(US$)
 Vessel daysBefore provision
write-back (US$)
After provision
write-back(US$)
201610,0309,8707,920 4,63010,51 08,750
20178,29010,3707,910 2,92012,97010,820
20186,94010,9308,530 2,77013,14012,570
20196,43011,0009,910 2,19013,170N/A
20204,00011,060N/A 1,65013,110N/A
2021+7,29010,980N/A 85012,130N/A
Total42,980 15,010
Aggregate
operating lease
commitments
US$455.7m US$183.9m

Commitments Including Index-linked Vessels

Our fixed, after provision, rate and variable rate index-linked lease commitments showing 2015 completed and 2016 outstanding lease periods can be analysed as follows:

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20151H20162H2016
HandysizeVessel DaysAverage
daily rate
(US$)
Vessel DaysAverage
daily rate
(US$)
Vessel DaysAverage
daily rate
(US$)
Long-term (>1 year)10,7908,9204,9407,9904,4008,090
Short-term9,6506,9206906,260--
Index-linked7,0405,9201,680Market rate1,260Market rate
Total27,4807,4507,3105,660
         
Supramax  
Long-term (>1 year)3,65010,4001,7409,3501,47011,000
Short-term12,7807,5101,4205,690--
Index-linked1 ,2407,250200Market rate180Market rate
Total17,6708,0903,3601,650

Index-linked vessel operating lease commitments refer to leases with market-linked variable charter rates. The variable charter rates are linked to the Baltic Handysize Index or Baltic Supramax Index (as applicable) and adjusted – usually upwards – to reflect differences in the vessels’ characteristics compared to Baltic indices reference vessels. Vessels we chartered are typically larger and more fuel efficient than index reference vessels.

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