Genco Shipping Files for Bankruptcy
Bloomberg News reports Genco Shipping has filed Chapter 11 Bankruptcy, which is reorganization, not liquidation.
The dry-bulk shipping market is recovering from the biggest
glut in history, according to Clarkson Plc, the world’s largest
shipbroker. The fleet has swelled 84 percent since 2008 while
trade advanced 31 percent, according to Clarkson’s data.
The "professionals" are saying the problem is due to the glut of ships. While this is true, the reason for the glut of ships is because after the 2008 crash everyone thought "oh wow, ships are really cheap...let's order a bunch and soon the market will turn around". But these people don't really know shipping, and there will be more shipping companies filing bankruptcy soon. Especially as China had been one of the big drivers for bulk cargoes, and they are facing an economic downturn.
for link to article
Labels: Chapter 11 bankruptcy, Genco
U.S. proposed changes to FMC in bill hr4005
The United States House of Representatives has passed a bill (drafted by the transportation committee)
regarding the U.S. Coast Guard, the Federal Maritime Commission (FMC).
The essence of the changes regarding the FMC appears to limit the terms of the commissioners, AND, put restrictions on a Commissioner having any investments in the industry, and prohibits commissioners from holding a job in addition to being an FMC Commissioner.
It's rather sad this must be added into the law, but can only presume there has been some breach of what should be good conduct by an appointed official. Well, certainly wouldn't be the first time.
It appears the committee is also trying to figure out why U.S. Flag Vessels are not competitive.
Really? It's quite sad they are asking the National Academy of Science and the U.S. Coast Guard
to prepare reports regarding this lack of competitiveness. I guess it will give some academic types something to do.
Here's the short version. The commercial shipping companies buy ships built in China, Korea, and places which have really cheap labor, AND crew their ships with people from countries such as Bangladesh, India, Indonesia. AND, these companies aren't even making money at the moment. This should be all that is needed to say, but logic is rarely introduced in Washington, D.C.
for the link to U.S. Bill hr4005
Labels: 2012 predictions, FMC, U.S. Coast Guard, U.S. Flag Ships
Hamburg Süd 2013 Results
Hamburg, 1 April 2014.
Growth in the global economy and containerised transportation by sea in
2013 was slightly below the level of the previous year. Once again,
available global slot capacity outpaced container transport volume as
deliveries continue to exceed the level of scrappage, which also
increased. As a consequence of the continuing overcapacity, freight
rates in most trades remained under pressure or declined still further.
The only positive support came from fuel prices, which have fallen
slightly from the highest level of the previous year.
to subdued market growth and operational problems in the vastly
overstretched ports in Brazil, Hamburg Süd and its Brazilian subsidiary
Aliança were only able to increase transport volume in liner services by
1 per cent year-on-year to around 3.3 million TEU (1 TEU = 20 foot
standard container). With freight rates falling slightly and devaluation
of the most important earnings currency (US dollar) by around 4 per
cent as against the euro, total revenues of the business field shipping
fell by 3.9 per cent to €5.3 billion.
2013, worldwide bulk shipping was still marked by substantial
overcapacity and transport volumes – particularly to China – falling
below expectations, even if there was an apparent improvement towards
the end of the year. Overall, Hamburg Süd’s bulk business and product
tanker business failed to generate positive results last year. Liner
services were slightly better than the previous year, and also performed
well by industry comparison.
number of staff employed by the shipping Group was almost the same as
last year at 4,491 employees (previous year: 4,512), of which 686 were
at sea. Including those seafarers employed by third-party companies (but
excluding trainees), the number of staff employed by Hamburg Süd and
its subsidiaries was 5,159.
the unsatisfactory business environment, investments totalling €450
million were considerably above the level of the previous year (€247
million). These investments mainly comprise instalments and final
payments for twelve 9,000/9,600 TEU ships and four smaller 3,800 TEU
in the European markets was only partially restored in 2013. Continuing
high levels of debt in some states contributed towards subdued growth
in the eurozone. After the end of the budget crisis in the USA, there
was a slight improvement in economic growth and positive developments on
the employment markets. The Chinese economy expanded again by around
7.7 per cent, thereby meeting expectations. In contrast, growth in
Brazil remained unsatisfactory. Weak economic development, rising
interest rates and inflation, and serious infrastructure challenges were
a cause for concern. Overall, global economic growth of around 3.0 per
cent was somewhat weaker than in the previous year.
worldwide container transport increased by 3.7 per cent in 2013, global
slot capacity increased by about 6 per cent (1.0 million TEU) to 17.3
million TEU. Scrappage reached record levels of around 500,000 TEU in
2013 (over 200 ships), but net capacity continued to grow due to the
high volume of newbuild deliveries during the year. Orders also
increased again, with new orders in the financial year 2013 for 234
ships with a total capacity of 1.83 million TEU and a total value of USD
16.8 billion, or 1.34 million TEU more than in the previous year. At
the end of December 2013, the order book again stood at more than 20 per
cent of the worldwide operative fleet capacity. In the segment for
9,000 TEU ships alone, the order volume increased from around 50 to
around 150 ships
over the course of just a few months.
to substantial overcapacity, charter rates for most ship classes remain
under pressure. Average rates for Panamax ships (4,400 TEU gearless) in
2013 of USD 8,700/day were only slightly above the historical low in
the summer of 2009, and barely covered operating costs, let alone
interest costs and capital repayments. Numerous German shipowning
companies became insolvent during the reporting year. Banks offering
ship finance still need to make substantial write-downs to their loans.
overcapacity means that there is no scope for the restoration of
freight rates that is so urgently required for liner services worldwide.
Increases were only possible for individual services for a limited
time. The freight rate recovery for refrigerated goods during the first
half-year did not last. Over the course of 2013, rates
for most services fell back to a level that is wholly insufficient in
light of the high level of investment, operating costs for reefer
containers, and on-board equipment.
prices reached an annual high of USD 646 per tonne during the first
quarter 2013. Over the further course of the financial year, the average
price for heavy diesel fell to just below USD 600, with an annual
average price decline of around 7 per cent.
business environment for bulk shipping is heavily determined by Chinese
coal and ore imports for steel production. In 2013, the People’s
Republic imported 801 million tonnes of iron ore and 214 million tonnes
of coal. Year-on-year growth was 10.7 per cent and 19.6 per cent
respectively. Global bulk transport increased by around 5.5 per cent. At
the same time, newbuild deliveries of bulk carriers capacity of around
62 million tdw were considerably lower than in the previous two years
(each around 100 million tdw), despite consistently high levels of
scrappage of old tonnage. At the same time, there was only a minimal
improvement in bulker charter rates during the course of the year. The
same applies to product tankers, which failed even to cover operating
Hamburg Süd ships and containers
at 31 December 2013, the Hamburg Süd fleet comprised a total of 154
ships, 45 of which were owned by the Group. Of these, 103 ships were
employed in liner services, and 51 chartered-in ships were employed in
tramp operations (bulkers, product tankers). During the course of the
reporting year, the fleet of owned ships was expanded by the first four
newbuilds of a total of six ships in the Cap San series. With a capacity
of 9,600 TEU, these are the largest-ever ships in the Hamburg Süd
Group. They have 2,100 reefer slots on board, and are therefore the
world’s largest reefer capacity vessels. The new ships were introduced
into the services between Asia or Europe and the East coast of South
America. The Hamburg Süd subsidiary Aliança also introduced four 3,800
TEU ships in the Brazilian cabotage service. These wide-beam newbuilds
set new standards for cost efficiency on the South American East coast.
Three older Panamax ships of the Bahia series (3,800 TEU) were sold at
the end of 2013, and another three at the start of 2014. The available
slot capacity in liner services increased by around 6 per cent to
approximately 457,000 TEU, and the average ship capacity by 7 per cent to 4,437 TEU.
Süd Group is continuing its strategy to further improve the efficiency
of its fleet. The increasing average capacity of its vessels is the
basis for a constant reduction in cost per slot.
the end of 2013, the order-book for Group-owned ships to be delivered
in 2014/2015 was around 78,000 TEU. The total number of containers
remained virtually unchanged year-on-year at around 458,000, thus
reflecting the moderate growth in cargo volume.
a background of a strong recovery in freight rates in the worldwide
transportation of refrigerated goods, liner services had a much better
start than in the previous year. Due to unsatisfactory volume growth and
overcapacity in the Asian services, earnings were under considerable
pressure during the rest of the year. The growth in carryings was weaker
than expected; strikes in Chile at the beginning of the year,
overloaded infrastructure in Brazilian ports, and political and economic
problems in Venezuela and in Mediterranean countries had a negative
impact on cargo operations. The service between Europe and
India/Pakistan – which suffered a rather dramatic fall in rates from
time to time – was particularly disappointing. Owing to unsatisfactory
seasonal business on the Asia routes, many services already adjusted
their capacity from the beginning of December in anticipation of falling
volumes in the off-season. Some individual routes or whole services are
not being offered for several months, and ships are being laid up in
order to reduce system costs and to offset at least some of the earnings
came in the form of a slight fall in bunker prices, the successful
implementation of service rationalisations, and measures to reduce
Hamburg Süd was able to post a slight year-on-year improvement in
results from liner services, although due to rate pressure in the
Asia-South America services, the still unsatisfactory development of
activities in the Mediterranean and the service between Europe and
India/Pakistan, none of our targets with respect to overall earnings
have been met.
bulk carriers nor product tankers generated positive earnings in 2013.
Their results were at the same level as last year.
conditions should improve in 2014. According to the International
Monetary Fund (IMF), the global economy should grow by 3.7 per cent, and
world trade by 4.5 per cent, with the US economy in particular set to
become more dynamic. In the eurozone, all signs point to some countries
coming out of recession, even if high public deficits continue to be a
cause of concern in many countries. Despite positive impulses from the
soccer world championships, there is no sign of a sustained solution to
Brazil’s economic issues. Growth in the Chinese economy will also be of
decisive importance over the coming year.
if the overall positive outlook as regards the growth of the world
economy and trade should turn out to be correct, we do not yet expect a
sustained recovery of container liner services over the next year. This
is mainly due to continuing increases in overcapacity. Although many
liner shipowners and the German shipowning
companies that are so traditionally prevalent in the container segment
mostly remain highly indebted, the number of orders for new ships is
rising again. Indirect government support from the large shipbuilding
countries Korea and China, and private equity – mainly from the USA –
are shoring up ship financing despite the failure of the German
KG-company system. The trend towards ever larger and more fuel-efficient
ships continues. At the same time, older ships are not being scrapped
at a sufficiently comparable rate. The recent revelation of a delay of
at least a year in the expansion of the Panama Canal – the expanded
canal is not expected to open now until 2016 – will mean that older
Panamax vessels will remain in service longer, whilst the newbuilds
ready to step into service cannot yet be utilised as originally planned.
remains to be seen if the intended pooling of operations of the world’s
three leading players Maersk, MSC and CMA CGM on the major East-West
routes will be successful in the long run, or if it will provoke similar
joint ventures or even mergers.
Süd will expand its activities in the core services to and from South
America and add to its network where it makes sense. Based on a high
owned share of modern ships and containers, the focus of corporate
management in 2014 will remain a continual improvement of all cost
year should see increases in revenues and charter rates in bulk
shipping due to uninterrupted global growth in volume of 5–6 per cent
per year and a decrease in newbuild deliveries. The tramp business of
the Group operated by Rudolf A. Oetker, Furness Withy and Aliança Bulk
is expected to increase results in 2014, though not to an acceptable
level. The same applies to product tanker operations.
Overall, we anticipate that the shipping Group’s operating result for 2014 will be at about the same level as last year.
high level of investment to renew the Group’s in IT equipment
continues, along with the projects to reduce the environmental impact of
our ship operations and improve the sustainability of our business
activities. We are preparing our fleet for the introduction of the
increased requirements under MARPOL IV as regards reduction of
emissions. This includes the use of low-sulphur fuels in coastal waters,
and equipping our ships that operate on the US West coast with
facilities to receive shore-side electricity. Initially, the additional
operational cost of Hamburg Süd will increase by at least USD 40 million
per year. Due to the strong pressure on earnings and the overall less
than satisfactory results, we will be forced to pass on these additional
costs to shippers as surcharges.
At www.hamburgsud.com (Press & Media section) you can
download photos relating to various shipping group topics.
For further information please contact:
Hamburg Süd Corporate Communications
Phone: +49 40 3705-2627
Fax +49 40 3705-2
Labels: Hamburg Süd