Friday, July 31, 2009

Two shipping companies called D'Amato

D’AMATO di Navigazione has filed for bankruptcy protection.

From Lloyd's List

John McLaughlin - Monday 27 July 2009

D’AMATO di Navigazione’s recent filing for bankruptcy court protection or concordato preventivo under Italian law is likely to lead to the liquidation of the company’s assets to pay off creditors, sources close to the operation said on Monday.

There is another company with a very similar name, also involved in shipping.

which is not related to D'Amato di Navigazione

Global Ship Lease buys time

Lloyd's List reports Global Ships Lease has convinced the banks to postpone (again) the loan-to value tests on their ships.

Janet Porter - Friday 31 July 2009
GLOBAL Ship Lease, the containership owner in which CMA CGM has a sizeable interest, has obtained a further loan waiver from its banks while the two sides discuss amendments to its $800m credit facility.

The existing waiver expires today, but New York listed GSL said it had agreed with its lenders to extend its waiver for loan-to-value tests until the end of August. In the meantime, dividend payments remain suspended.

At issue are ship prices, with bankers concerned about the decline in charter free market values of containerships.

The company had initially been required to submit vessel valuations in April and previously received a waiver from loan-to-value tests until the end of July.

OK, that doesn't bother me too much.

However, when I got down to this comment in the article, I started get that funny feeling.

GSL currently owns 16 vessels and has contracted to purchase an additional three ships. That includes the CMA CGM Berlioz, to be bought from the French line for $82m in September, contingent on financing.

Oh, that's just great. Like something DryShips would do. Sell a ship from CMA CGM to Global Ship Lease, probably for a price much higher than current market value.
I am just guessing. I don't know for sure, but if the price was fixed even 6 months ago, it's more than it's worth today.

And, they have contracts for a couple of more ships, to be chartered out to Zim??!!

The company also has contracts in place to buy two newbuildings from German interests for approximately $77m each, which are scheduled to be delivered in the fourth quarter of 2010 with charters to Zim.

Zim isn't going to need any more ships. They are having financial troubles of their own.

Thursday, July 30, 2009

CSAV trying to raise more cash

Back in June I declared CSAV dead.

But, I feel a bit bad about doing so. It's like working in a hospital, and giving up on a patient.

Sometimes they surprise you.

CSAV is trying to raise more cash through a stock offering. Their major shareholder will have to throw in some more money to make this happen.

From Lloyd's List

CSAV seeks extra $300m via new offering

Rainbow Nelson - Thursday 30 July 2009
CSAV, the Chilean shipping group battling to steer a course through the hazards of the container market, has told investors that it will seek to raise another $300m through a new equity offering.

Shareholders have been invited to an emergency general meeting in Valparaiso to approve the fund-raising initiative on August 18.

The second of three equity offerings planned by the group is higher than original designs to raise $220m, reflecting the failure of the group to raise $400m from shipowners with vessels on hire to the Chilean group.

In April, CSAV released plans to raise $750m from the capital markets and by offering shares to shipowners controlling most of the company’s 99-strong box fleet.

The funds are needed to cover first half losses of more than $400m, as the line has suffered at the hands of downturn in box trades.

A group of shipowners owning 78 vessels have signed up to take a $350m stake in the company following the completion of two equity placements on the Chilean stock exchange.

CSAV raised $145m from the first offering in June ($15m more than first planned), with investors such as the Claro Group injecting $68.9m through its holding company, Maritima de Inversiones.

If shareholders approve the second offering, it will be implemented in September.

With a 46% stake in the group, the Claro Group is likely to have to dig deep once again to ensure the success of any second offering.

It has said it wants to maintain its dominant holding. To do so it would need to inject another $138m into the group.

UK looking at oil speculation

From the Financial Times (click here for link)

The Financial Services Authority, the UK market regulator, has called a special meeting with major oil companies, banks, hedge funds and oil brokers to review regulation in the oil and commodity market.

The meeting, scheduled for August 5, comes as US regulator have said that they intend to clamp down on financial flows into the oil and other commodities markets. The Commodity Futures Trading Commission is currently holding hearings about possible changes to position limits.

Apparently the reason for the spike in oil prices earlier this month was due to rogue trading.
The meeting organised by the FSA follows an episode of rogue trading earlier this month at PVM, the London-based oil brokerage, which triggered losses of $10m for the company and pushed oil prices to their highest level this year at $73.50 a barrel.

WTI Cushing Spot price is trading around 64 as I write this. It was down under 60 a couple of weeks ago.

OPEC has said they want the oil prices around 65 a barrel, or they would cut production, so perhaps that is the magic number.

I thought oil would fall down to around 55, but so far that hasn't happened.

Wednesday, July 29, 2009

Mr Kühne speaks out concerning Hapag-Lloyd

I was wondering what Mr. Kuehne had to say regarding the cash injection into Hapag-Lloyd.

He refused to participate, along with a couple of the other investors.

From Lloyd's List

Janet Porter and Friederike Krieger - Wednesday 29 July 2009

TEMPERS flared in Hamburg today as logistics entrepreneur Klaus-Michael Kühne called for Hapag-Lloyd to be restructured just hours after refusing to participate in the first stage of a refinancing package that had been agreed late Tuesday.
... the Kuehne+Nagel chairman, along with insurer Hanse Merkur, and the merchant bank MM Warburg, which were supposed to give €72m, refused to participate.

Neither will the world’s largest shipping bank, HSH Nordbank, be buying shares in CTA. Instead it has agreed to grant a €15m loan to Hapag-Lloyd.

The reason Mr. Kuehne is a shareholder, is because the Germans (he being one) want to keep it a German company.

Mr Kühne founded the Albert Ballin consortium a year ago to prevent the sale of Hapag-Lloyd to a foreign owner, and is its second largest shareholder after the city of Hamburg.

Perhaps they are changing their minds, considering how much money it is costing.

Following this week’s progress, shareholders have to reach a decision over the coming weeks on the next €400m tranche that Hapag-Lloyd requires before approaching Berlin for further assistance.

Mr Kühne said that his refusal to participate in the CTA purchase did not constitute a preliminary decision about long-term aid.

He also indicated that a merger with a bigger partner from Europe or Asia could not be ruled out.

The only other Germany company with a liner service is Hamburg-Sued. They are smaller than Hapag-Lloyd, privately owned, perhaps still making money but one never knows.

It could be, the German government will try to get Hamburg-Sued to take over Hapag-Lloyd, just to keep it a German company. I can't imagine Hamburg-Sued would take on all the debt. There might be some sort of structured bankruptcy agreement beforehand.

Just a guess.

Tuesday, July 28, 2009

Hapag-Lloyd gets cash, but not from all shareholders

Hapag-Lloyd will get the cash it needs to continue operating, but it wasn't easy, and, this will not be the end to their problems.

Hapag-Lloyd gave up their ownership in a container terminal to get the money, AND, some of the new investors have refused to give them additional funding.

Their old parent company, TUI, who got stuck with owning a good chunk of the company after the sale almost collapsed earlier this year, will be putting in the bulk of the additional funding.

Mr. Kuehne (of Kuehne & Nagel) has been very vocal about the poor management of Hapag-Lloyd.

Too bad they haven't listened to him, as Kuehne & Nagel is a well run and profitable company.

From The Financial Times

Tui, the German tourism group, is to provide more than two-thirds of the short-term financing needed by Hapag-Lloyd after many of the container shipping line’s other shareholders refused to take part in a rescue deal.

Most of the €330m lifeline will come from the €315m sale to shareholders of Hapag-Lloyd’s 25.1 per cent stake in Hamburg’s Altenwerder Container Terminal, one of the world’s most advanced.

However, Tui, which owns only 43 per cent of Hapag-Lloyd, will have to provide €215m of the price for the container terminal. Of the members of the Albert Ballin consortium that owns the remaining 57 per cent, only Hamburg’s state government and Signal Iduna, the insurance group, agreed to take equity in the transaction after two days of talks. A third shareholder, HSH Nordbank, will provide a €15m loan.

The deal deepens Tui’s involvement with Hapag-Lloyd, only four months after it sold a 57 per cent stake with the intention of getting out of container shipping. Tui faces severe problems in its core package tourism business.

“They are becoming more involved in the container business, not less,” Mark McVicar, a transport analyst at Nomura International, said. Tui said it had agreed to put in fresh capital to secure its investment.

The short-term funding provides only part of the €1.75bn Hapag-Lloyd believes it needs to secure its long-term survival in the face of the economic downturn and container shipping’s worst-ever crisis.

The company lost €222m on €1.1bn turnover in the first quarter of 2009. The failure of most of the Albert Ballin consortium to take part in the deal underlines the divisions that have opened up since the group took its stake in the container line in March. Klaus-Michael Kühne, the logistics entrepreneur who is the second-largest investor, has been particularly critical of the company’s decision-making

click here for link

Federal Maritime Commission still has a job to do

I still find it rather strange the requirement for tariff and contract filing with the Federal Maritime Commission is still in place.

But, it is, and people continue to violate the rules.

At least the FMC is collecting some money to offset part of their expense.

From the Journal of Commerce

FMC Assesses $748,000 in Penalties

Hanjin Shipping paid the Federal Maritime Commission $440,000 to settle allegations that it violated the Shipping Act of 1984, the commission announced this week. Hanjin allegedly charged shippers less-than-tariff rates, and allowed access to contract rates for ocean transportation intermediaries that were not signatories.

Then there's a whole bunch of freight forwarders/OTI's/NVOCC'S they went after.

click here for link to complete article

CGM CMA, Hapag-Lloyd and Hamburg-Sued in new joint service

From The Journal of Commerce (click here for link)

CMA CGM, Hapag-Lloyd and Hamburg Sud will reduce vessel capacity by combining two of their liner services in August into a new direct service between the East Coast of South America and North Europe.
Hamburg Sud will operate the six 5,900-TEU vessels deployed on Sling 1.

Sling 2 will deploy six 2,800-TEU vessels of which four will be operated by CMA CGM and its partner Maruba and two by Hapag-Lloyd.

I don't know how much capacity each carrier had before, but Hamburg Süd is definitely providing the most in this new scenario.

Of course, this is Hamburg Süd's biggest trade lane, whereas the others operate more in the east-west trades.

Possible merger partners for Hapag-Lloyd

The Journal of Commerce names two potential merger partners for Hapag-Lloyd

Hamburger Abendblatt also reported Hapag-Lloyd is open to a merger or partnership with rival ocean carriers following a review of its operations by Roland Berger, a consultant.

The most likely partners are France's CMA CGM or APL, a unit of Singapore's Neptune Orient Line, it said citing sources in Hapag-Lloyd.

click here for link to article

The City of Hamburg is voting today regarding a cash infusion to Hapag-Lloyd. The problem is, it is contingent on the other shareholders also putting in a substantial amount of cash.

They have been reluctant to do so.

I suspect they won't get the cash.

Guess we should know by the end of the day.

COSCO warns of more losses

COSCO is the largest Chinese carrier, and the 5th largest container carrier in the world. Tradewinds reports Cosco will post a loss for the first half of 2009.
click here for link to article

They have not said how much, but they lost CNY 3.35bn in the first quarter (approximately 490.4 Million USD).

Here's the top 10 carriers, and their market shares, as reported in April 2009 by AXS-Alphaliner.
(see my blog post Top 100 International Carriers)

1 APM-Maersk 15.3%
2 Mediterranean Shg Co 11.5%
3 CMA CGM Group 7.3%
4 Evergreen Line 4.7%
5 COSCO Container L. 3.7%
6 Hapag-Lloyd 3.7%
7 APL (NOL) 3.7%
8 CSCL 3.4%
9 NYK 3.2%
10 Hanjin Shipping 2.9%

Maersk, MSC, CMA CGM, COSCO, Hapag-Lloyd, APL have all announced loses.

The others I don't recall, but I can't imagine any of them are making money this year.

Monday, July 27, 2009

CMA CGM and Hapag-Lloyd to merge?

Well, apparently that's the rumour going around

From comments to this blog

I work at Maersk; a customer told me that he hears rumours of CMA and Hapag merging. That ought to shake things up!

July 27, 2009 3:33 PM

I find that rather unlikely, but who knows.

D'Amato is bust

They can sugarcoat it all they want, but it looks like D'Amato will be liquidated, and my best guess, closed down.

From Lloyd's List

John McLaughlin - Monday 27 July 2009

D’AMATO di Navigazione’s recent filing for bankruptcy court protection or concordato preventivo under Italian law is likely to lead to the liquidation of the company’s assets to pay off creditors, sources close to the operation said on Monday.

The procedure will allow the mortgage holders to get 100% of what they are owed and the other creditors 65%.

A spokeswoman for the company said the aim was to satisfy the creditors while maintaining the company as a going concern, though industry sources cast serious doubt on its prospects of survival.

click here for link

Sunday, July 26, 2009

Global Ship Lease update

I did a blog posting about Global Ship Lease back in Feb. 2009

Here's the link. How Independent is Global Ship Lease

Apparently it got picked up this weekend by some people who invest in this stock.

So, I thought I would take a look at what's going on with Global Ship Lease. I do not pretend to be a stock analyst, so if someone can clarify anything I get wrong, feel free.

I had trouble getting the entire recent SEC filings to pull up from their web-site. It named PINE RIVER CAPITAL, but as it was dated July 23, 2009, maybe they have a couple of days to complete the paperwork.

Here's the link to their SEC filings. Perhaps someone smarter than me can figure it out.

They also filed a "safe harbor statement" on June 26, 2009 as part of their "Update on Credit Facility". (click here for link)

In this they list 21 types of "risk and uncertainties".

I haven't read a lot of these types of statements, but this one looks excessively long to me. They did not mention the possibility of a giant meteor hitting the earth, but they covered just about everything else.

These 2 caught my eye.

- Global Ship Lease's ability to enter into long-term, fixed-rate charters;

- the continued performance of existing long-term, fixed-rate charters;

That's enough for now. It's Sunday, and I should get a life.

D'Amato di Navigazione files for.....?

They deny filing for bankruptcy, but maybe it's something like protection from creditors. Appears there might be a new law in Italy, and no one knows how it really works.

From Tradewinds

D'Amato di Navigazione has filed for court protection but rejects that it is in bankruptcy or insolvency.

The Italian bulker and tanker owner filed for a "new procedure provided by Italian law" in the Court of Naples, a spokeswoman told TradeWinds Friday.

"This procedure has nothing to do with bankruptcy but it is a guarantee for the creditors, who will be satisfied thanks to the business continuity and the conduct of regular operations in the manner and within the terms agreed," the spokeswoman said.

I don't know. Bunker suppliers are getting skittish about giving credit to vessel operators, banks are getting nervous, everyone is tightening up their credit requirements, and this could certainly put a squeeze on a vessel owner/operator.

International shipping companies generate a huge cash flow. In fact, some companies have been known just to make money on the "float", not on operations. If the credit tightens up, it's going to be tough.

click here for link to article

Friday, July 24, 2009

Is Hapag-Lloyd close to bankruptcy?

Lloyd's List has a lenghty article today regarding the current situation at Hapag-Lloyd.

It says they are asking shipowners for charter price cuts, similar to what was received by CSAV. This, in addition to needing more cash from their shareholders.

I find this a bit disturbing, because I thought they negotiated with the shipowners last month, with the shipowners investing money in the company in exchange for equity.

At the time, I thought it was a bad move not to get lower charter rates, but maybe this was the plan all along.

I doubt it. I think things are worse than they thought.

This comment really caught my eye.

Without financial aid from its shareholders, the line would face bankruptcy within weeks, industry insiders said.

click here for link to complete article

Thursday, July 23, 2009

Two more years of losses for Hapag-Lloyd

No wonder there is some concern about putting more money into Hapag-Lloyd.

Reports are surfacing losses are expected for 2009 and 2010.

Hapag-Lloyd AG, Germany’s largest container-shipping company, probably won’t make a profit before 2011, Die Welt reported, citing unidentified people from the company. Falling freight orders and prices will create a loss of at least 700 million euros ($998 million) at the Hamburg-based company this year, and about 200 million euros in 2010, the newspaper reported.

click here for Hellenic Shipping News article

If this is the projection for Hapag-Lloyd, it will probably be the same for many container carriers.

Tough times in international shipping.

Wednesday, July 22, 2009

CGM CMA and MSC in dispute with Korean Ex-Im Bank

From Lloyd's List

TWO of Europe’s largest containership operators are heading for a showdown with Korea Eximbank over demands for extra money to cover the cost of newbuildings that were already financed, and are ready to be delivered.

Mediterranean Shipping Co and CMA CGM are said to be the companies most immediately caught up in the wrangle. But unless some solution is found, many others could find themselves in a similar position, say industry sources.

Korea Eximbank, which has financed the ships at the centre of the dispute, is applying strict loan-to-value terms and telling owners to provide more of their own equity to compensate for declining ship prices.

This is the problem with declining ship values. The banks don't want to be stuck with ships valued less than they are owed, which occurred this week due to the Eastwind Maritime Bankruptcy.

The Korean Ex-Im Bank is also hanging their hat on international guidelines.

Korea Eximbank’s ship financing director Hoseob Jeung said there had been no change of policy, and that loan covenants had always been based on market value.

Mr Jeung said that the bank was following Organisation for Economic Co-operation and Development guidelines, in line with other international banks.

click here for link to article

Mobster convicted of controlling ILA for 30 years

The trial in NY regarding mob control of the ILA in Newark is over. They convicted the "reputed" mobster, who controlled the union until 2007.

From the Journal of Commerce (click here for link)

Reputed mobster Michael Coppola was convicted of racketeering charges that included extortion of one of the International Longshoremen’s Association’s largest locals for more than 30 years.

Federal prosecutors said Coppola controlled ILA Local 1235 in Newark from 1974 to 2007 through the extortion of three consecutive local union presidents -- Vincent Colucci, who pleaded guilty to racketeering charges in 1980; Al Cernadas, who resigned in 2005 after pleading guilty to extortion conspiracy; and Vincent Aulisi, ousted in 2007 after the FBI wiretapped his son and Coppola discussing what prosecutors said apparently were payoffs to the mob.

My question is, who is in control now? Is it really "cleaned up"? Or, has it just been taken over by the next one in line.

click here for link to New York Daily News article, which focuses more on the fact that he wasn't convicted for murder

Tuesday, July 21, 2009

Ship values decline

The trustee handling the Eastwind Maritime bankruptcy is giving a bank possession of 6 ships for which they held the mortgages. The value of the ships is now less than half of the loan amount.

Tokyo Star Bank is owed $54.7m in mortgages on the chemical tankers and the 28,300-dwt bulker Yamaska (built 1985), but the ships are worth just $22.7m, according to court documents.

This takes care of 6 ships, but there is a bunch more...

Before its bankruptcy filing, Eastwind Maritime owned more than 70 reefers, bulkers, tankers, boxships and other vessels, according to legal records.

click here for complete article from Tradewinds

Monday, July 20, 2009

Hapag-Lloyd could be a money pit

When I read the headline that a major shareholder of Hapag-Lloyd was balking at putting in more cash, my first thought was, Mr. Kuehne.

Turns out, it is TUI who is having second thoughts about pouring more cash into Hapag-Lloyd.

From The Journal of Commerce (click here for link)

....But tourism giant TUI, Hapag-Lloyd’s former parent and still one of its biggest shareholders with a 43 percent stake, is reluctant to provide its $450 million contribution in cash. Instead, it wants to convert some of its $1.4 billion of loans to Hapag-Lloyd into an increased equity stake, according to a source close to the negotiations.
TUI, like most shareholders, is reluctant to put money into companies while “cash is king” in current market conditions, a source close to the Hanover-based company said.

TSA should be closed down

I've said it before, and I'll say it again.

The carriers which are members of the TSA (Transpacific Stabilization Agreement) should disband, close down, the TSA.

It's not just because the TSA has outlived it's usefulness. It's also because the carriers need to be looking at every dime they spend. And, this organization costs money to run. Probably quite a lot.

NOL/APL has today stated they can't get the rate increases announced by the group.
So, that means the drive for the rate increase has fallen apart.

From Lloyd's List (click here for link)

HOPES that freight rates for containerised cargo had stabilised appear to have been dashed after Neptune Orient Lines disclosed another considerable lurch downwards.

The latest decline reflects both cheaper core rates and lower bunker recovery.
In the year to date, average revenue per feu has fallen 20% to $2,375 compared with $2,972 in the corresponding period of 2008, while cargo volumes were 24% less at 970,600 feu.

I'll stand by my previous forecast of a decline of 20 percent for 2009 vs 2008.
I don't know why everyone thinks this is so outrageous. Considering there have been 10% increases every year for about the past 5, this only erases 2 years of gains.

And, I think it will probably stay at that level for 2010 also.

The only good news for the carriers is the price of oil is coming down. But, if they really hold to their "bunker adjustment factors" that would mean they will be giving bunker credits.

I would not want to be an owner in an international shipping company right now.

Friday, July 17, 2009

Rotterdam Rules

Rotterdam Rules is not the name of a soccer (football) team.

It's the name being given to a new set of rules covering liability, because the official name is "United Nations Convention on Contracts for the International Carriage of Goods".

At least that is what was reported in Lloyd's List.

I thought it use to be called .....Carriage of Goods by Sea, but the new rules are to incorporate intermodal movement, meaning, shipments which are delivered by sea and land combined.

I believe that was at issue, which is why the rules are being rewritten.

I haven't really read up on all the proposed changes, but will try to do so and give a thumbnail sketch of the old rules and the new rules.

It's pretty complicated, but maybe I can hit just the highlights...

This is one reason international shipping gets so complicated.

More later.

Thursday, July 16, 2009

If this was such a good deal...why sell?

Upfront I want to say I don't trust George Economou, the Chief Executive of Dryships, and, I guess, Primelead.

Why would George want to sell off Primelead to DryShips, if it was a good investment? Why not keep it for himself?

But, what do I know. I read the DryShips stock has been going up, again.

From Tradewinds

DryShips has closed a deal to buy George Economou's stake of its drilling arm, the Nasdaq-listed company said Thursday.

The bulker and offshore drilling owner is paying $330m in cash and shares to buy the 25% stake from its chief executive.

The transaction makes Primelead a wholly-owned DryShips subsidiary.

click here for link to article

International shipping is a strange business.

An idea to save German shipowners

Boy, the Germans are upset at how bad the charter market is.

There has been a plan hatched to form a new company. Banks, shipowners and KG companies (basically private banks specializing in financing ships) will put their assets (ships) into the same pot.

Then, it will be managed by one group who will set minimum charter rates.

No more chartering out a ship at a loss.

Sure, it will decrease competition, but is it technically against the EU anti-trust laws?

That remains to be seen.

From Lloyd's List

An idea has been circulated to set up a new company, Baltic Max Feeder, that would take control of as many as 500 ships and set hire rates considerably above current levels.

Vessels of up to 1,400 teu would be put into the new company that could be jointly owned by banks, KG funds, and owners.
Mr Neemann said he does not think Baltic Max would violate European antitrust regulations as the scheme aims at securing the supply of feeder tonnage by numerous small and medium-sized companies. A law firm had supported this view, Mr Neemann said.

click here for link to article

Vacation home from shipping containers

The New York Times has an article and slide show of a vacation retreat in West Texas, made from 5 x 40ft shipping containers.

Containers are being used more and more for housing, and I think it's a great idea.

Well, they have always been used for housing, the same as box cars were used for housing during the depression.

It just wasn't so luxurious.

click here for link to slide show

Wednesday, July 15, 2009

The BBC Box empty for 2 months

I guess The BBC has abandoned the project. The tracking device kept breaking down, and since world trade is down dramatically, it's not so easy to find cargo to move in the container.

You can keep checking the status of the container. The last record was returned empty May 19, 2009 in Yokohama, Japan.

Input the prefix (the letters) and numbers, no spaces.


click here for NYK tracking

Tuesday, July 14, 2009

Oil analysts predictions

I think I will declare myself to be an oil analyst. Surely, I can do as good of job as these folks.

In June I said oil would drop down to $55.00 a barrel by Oct., 2009, and possibly as soon as Aug. 2009.

This morning I read 2 different reports (actually 3, as Morgan Stanley has 2 different scenarios).

All of these from Bloomberg News

1) Morgan Stanley - headline reads "Morgan Stanley Raises 2010 Oil Forecast to $85"

Perhaps it was in the "updated 2" someone realized this was old news, or, I don't know what. Anyway, later in the article it says.

Crude may average $50 a barrel in the second half and $55 next year in a “bear” case scenario, and reach $90 a barrel in the second half of 2009 and $100 in 2010 if the global economy recovers rapidly, the report said.

So, somewhere between $50 and $100 a barrel. That certainly narrows it down.

click here for link

2) July 14 (Bloomberg) -- Crude oil in New York may fall below $45 a barrel by the end of August as the global recession stalls a recovery in fuel consumption in the U.S., the world’s biggest energy user, BNP Paribas said.

click here for link

There will be more forecasts tomorrow, as official reports giving usage and supply will be released today and tomorrow.

We shall wait and see.

My guess is it's going down.

Which means the bunker adjustment factors should be going down as well.

Actually, some of them should already be negative, based on the original assumptions of oil prices.

Why the mob took over the ILA

There is a trial going on in New York. It's about the New Jersey docks being controlled by the mob. I guess the reason they are not holding the trial in New Jersey is pretty much the whole state is mobbed up.

This from The Daily News.

Barone, a prolific killer and founder of the Hell's Kitchen gang The Jets - the model for the "West Side Story" gang - played a key role when the Genovese and Gambino crime families carved up the waterfront.

why the Genovese crime family took over the longshoremen's union.

"So we could make money! Is that a good enough answer for you?" snapped 85-year-old George Barone. "Crissakes!"

click here for link to Daily News article

Monday, July 13, 2009

Shipping from U.S. to Cuba

I was surprised to see that Crowley (a U.S. company) was carrying cargo from the U.S. to Cuba.

I know there is cargo moving, but I thought most of it was foodstuff, in bulk vessels. Apparently Crowley is offering service to Havana on an "alternate port" basis. I'm not postive what they mean by this. Sometimes this term is used to say, they will call at that port if they get enough cargo. Sometimes this term is used to say we will take your cargo, but that ship might not call there, it might get transhipped onto another vessel.

It's probably just a way for them to take the booking, and then figure out how they will get the cargo delivered.

From The Journal of Commerce.

The Crowley containership Elb Carrier, transported the Royal Ballet’s equipment in eight 40-foot containers that were delivered on July 7 for the troupe’s performances this week in Cuba’s two most iconic theaters, the Gran Teatro de la Habana, Sala Garcia Lorca and the Karl Marx Teatro.

Crowley is authorized to ship licensed cargo to Cuba. Currently, Crowley sails to Havana, Cuba from Port Everglades and Jacksonville, Fla. as an alternate port every week.

Eligible commodities for export to Cuba are detailed under Section 902(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000.

click here for link to article

Sunday, July 12, 2009

Bunker Prices lower than in 2007

According to the Bunkerworld tracking for TSA, the recent bunker prices are lower than they were in 2007.

click here for link

Friday, July 10, 2009

Hapag-Lloyd is saved, for now

From the Journal of Commerce

Hapag-Lloyd, the world’s fifth largest container carrier, will get approximately $1 billion in financial support from its owners as it seeks additional aid from the German government and lenders.

click here for complete article

There are a lot of numbers thrown around. A mention of $2.4 Billion. Probably everyone is scratching their head and writing down numbers on napkins.

Who really knows.

But in my opinion, this is throwing good money after bad, or, as they say in the oil patch, pouring money down a dry hole.

Anyway, I would say Hapag-Lloyd is in a whole heap of trouble.

Thursday, July 9, 2009

Zim considered a credit risk

I guess that's what this headline means...

From Lloyd's List (click here)
TRADE credit insurers are refusing cover to struggling shipping companies’ fuel suppliers, with boxship line Zim emerging as an initial casualty in this latest turn in the economic crash.

I don't know much about Zim. I thought it was owned by the Israeli Government, but apparently by 2004 it was completely privatized.

I knew someone who knew someone (talk about here say) who worked there. It was assumed Zim was a cover for Mossad operations. I have no idea if this was true.

Anyway, the Israeli government no longer has any investment, and it appears that Zim is in some financial trouble.

I think this is one of the carriers which won't survive in this downturn.

Sorry to say.

Ocean Carriers bankrupt or taken over 1980-2005

This comment in the Journal of Commerce article started me thinking

(In reference to the carriers whining they need higher rates)...
At issue here appears to be the ability of shipping lines to convince customers that if they do not pay increased rates, carriers will further downsize their services to save money, and shippers will face capacity constraints.

If the problem persists, bankruptcies and an unhealthy level of consolidation in the liner shipping industry are inevitable, carriers maintain.

I think all of the managers must be under 40.

Below is a list I came up with just off the top of my head.

Many liner carriers (meaning shipping carriers who offer regular scheduled service) have gone bankrupt. Obviously, today there is no problem with capacity or competition.

Whoever is speaking for the carriers need to study the history of the industry, before they open their mouths.

1) Seatrain 1929-1981

2) Moore-McCormick 1913-1982 click here for an account of their decline

3) United States Lines 1921-1992

4) Ivaran Lines 1902-1998 taken over by CP Ships

5) CP Ships 1884-2005 taken over by Hapag-Lloyd

6) Sealand 1960-1999 (Taken over by Maersk)

These are others I can think of, but many were National Carriers.

Argentine Line
Peruvian Line
Grace Line
Lloyd Brasileiro
Pacific Australia Direct
Karlander Kangeroo

I may have to pull out my coffee mug collection to come up with other names.

If you can think of more, please note in comments.


Wednesday, July 8, 2009

Hapag-Lloyd in trouble

Yesterday it was reported the shareholders of Hapag-Lloyd met, and agreed to help the container line.

That's not exactly correct, because Mr. Kuehne did not attend.

Today it's reported they need about 1.4 BILLION dollars to survive.

That's a nice chunk of change.

I'll bet Mr. Kuehne is wishing he had done something else with his money, rather than buying part of Hapag-Lloyd.

Patrick Hagen, Cologne - Wednesday 8 July 2009
HAPAG-Lloyd’s shareholders have agreed to help the stricken container line.

At a meeting held today in Hamburg, the members of the Albert Ballin consortium and tourism group Tui decided unanimously that they will give financial aid to Hapag-Lloyd.

Tui’s chief executive Michael Frenzel, chief financial officer Rainer Feuerhake and controlling chief Horst Baier were at the meeting. Neither Klaus-Michael Kühne nor his deputy Karl Gernandt attended.

This was seen as an affront by some of the participants, who were unhappy with Mr Kühne’s public comments on the financial situation at Hapag-Lloyd.

click here for link to Lloyd's List July 8 article.

And from Lloyd's List July 9
GERMANY’s largest container line Hapag-Lloyd needs fresh capital of more than €1bn ($1.4bn)

The actual amount will depend on market conditions and could be as much as €1.8bn in a worst possible case scenario, sources said.

click here for link

Evergreen cutting capacity, Yang Ming considering

Evergreen and Yang Ming have apparently figured out things are NOT getting better any time soon.

Evergreen has already taken steps to cut their fleet by about 1/6th, and Yang Ming is considering putting ships in "hot lay-up". They really should be looking at cold lay-up, but time will tell.

This from Lloyd's List

EVERGREEN Marine, Taiwan’s largest liner company, has confirmed it will either scrap or redeliver back to owners 31 boxships up to 26 years old in a programme that will continue until 2013.

Evergreen spokeswoman Katherine Ko told Lloyd’s List the programme started at the end of last year or earlier this year.

Ms Ko said chartered-in tonnage would be returned at the end of the charter period with no early redeliveries.

Evergreen operated a combined owned and chartered-in fleet of 180 ships and the disposals would represent about a sixth of the Evergreen fleet, she said.


Yang Ming Marine Transport also confirmed that it was mulling the possibility of putting 10 boxships operated by both itself and other members of the CKYH Alliance into hot lay-up at the end of this year.

A Yang Ming spokesman told Dow Jones: “We are concerned demand on US and Europe routes will be weak in the fourth quarter.”

click here for complete article

Aries Maritime Transport in trouble

Aries Maritime Transport Limited is one of those Greek shipping companies listed on the NASDAQ exchanged in the last few years. Their symbol is RAMS. click here for link to google finance.

As I write this, the stock is trading for .64 US. That's less than 1 USD.

As recently as May 28, 2008 they paid out a stock dividend of .10 USD, when their stock price was trading around 6.00 USD. They are just like most of the Greek companies listed in the U.S. Paying out big dividends to keep investors buying their stock, but not putting any money away for a rainy day.

Well, it's raining cats and dogs, and they are in big trouble.

This, from Lloyd's List.

ARIES Maritime has said foreclosure of its ships is a real possibility, and it does not expect to meet its loan covenants in the near future unless its lenders provide relief.

PricewaterhouseCoopers, the company’s auditor, has raised “substantial doubt” about Aries Maritime’s ability to continue as a going concern, even as Aries pushes ahead with an intended takeover by fellow Greece-based company Grandunion.

click here for complete article

Don't buy this stock, and if you can get 64 cents for any shares you own, be happy.

Australian iron ore employees detained in China

Shipments of iron ore have been driving up the demand for bulk carriers. China is the biggest buyer of iron ore.

I guess the Chinese think "playing hard ball" includes detaining those who are negotiating.

Just kidding. I hope there is some other explanation.

From Bloomberg News

By Jesse Riseborough and Brett Foley

July 8 (Bloomberg) -- Rio Tinto Group, the world’s second- biggest iron ore exporter, has four employees detained in China amid a deadlock in annual price talks for the ore.

Rio hasn’t had contact with the workers from the Shanghai office since they were detained July 5, spokesman Nick Cobban said yesterday by phone from London. ....

Chinese steel mills are seeking a bigger price cut than the 33 percent agreed on in May between London-based Rio and Japanese, Korean and Taiwan producers, Hebei Iron & Steel Group Vice President Tian Zhiping said on July 2. Rio was criticized in China after it rejected a planned $19.5 billion investment by Aluminum Corp. of China in favor of a share sale and an iron ore joint venture with BHP Billiton Ltd.

China is “playing a bit of a dangerous game,” Ric Ronge, who helps manage the equivalent of $1 billion at Pengana Capital Ltd. in Melbourne, said today. “The fact of the matter is China needs the material and Rio needs to sell the material.”

click here for complete article

Tuesday, July 7, 2009

Container Lines once again try to increase rates

From my blog posting of March 20, 2009

Ocean Rates Will Not Go Up

(In reference to the TSA)...What these guys don't understand is, you can't restore market discipline by saying "don't do that". You restore market discipline by getting the supply more closely matched with demand.

I am repeating this, because once again, the idiots at the TSA are getting together to once again attempt to fix prices. But, they aren't very good at it.

The lines decided on a $500 increase for carrying a 40-foot box from Aug. 10 as a “voluntary guideline,” the Transpacific Stabilization Agreement said in an e-mailed statement yesterday. The companies will also raise fuel levies and may add peak season surcharges as well, the group added.

click here for complete article from Bloomberg

Carriers will start going bankrupt, or be taken over, in the next year (my best guess).

Some of these carriers are so badly managed they deserve to go out of business.

Survival of the fittest.

Containership order changed to bulkers

Lloyd's List has a long article regarding the delay of newbuildings.

SOUTH Korean shipbuilder Hanjin Heavy Industries has apparently delayed an order for eight super post-panamax boxships on its own initiative, in an attempt to save the $1.3bn deal from the risk of cancellation.

Initially, the eight 12,800 teu ships ordered in 2007 by German owner NSC and Lloyd Fonds were scheduled for completion between 2010 and the end of 2011. Hanjin Heavy’s website now shows delivery dates of between 2010 and 2014.

What caught my eye was this comment about an order change.

However, Hanjin confirmed that Belgian shipowner Delphis has converted an order for four 3,400 teu vessels into three capesize bulkers.

Looks as if Delphis is betting the capesize bulker market will recover before the containership market.

click here for link to Lloyd's List article

Ship values to fall further

Everyone keeps saying it looks as if the recession has hit bottom.

But, that is merely that the free fall appears to be over.

We have not yet seen the fall out. Without a strong recovery expected for probably a few years, there will continue to be excess capacity which will keep international shipping companies from earning money.

This from Lloyd's List blog

The potential for ... a bleak scenario was implicit in remarks made last week by Peter Georgiopoulos, a leading shipowner, who predicted that markets have further to fall.

He noted the low rate at which banks were repossessing vessels compared to previous shipping crises. “The question is, what happens when that starts? What happens to values in the industry?”

click here for link to blog

Monday, July 6, 2009

Daewoo Logistics Corp. files for bankruptcy

According to Lloyd's List

SOUTH Korea’s Daewoo Logistics has filed for receivership in the Seoul District Court, according to market reports.

Daewoo Logistics was much more than just a logistics company. They also (according to their web-site) were "rising into a General Carrier encompassing Car, Tank, Cement, with the center of Bulk Carrier".

I cannot determine if they owned or chartered their tonnage, as the fleet part of the web-site says "being updated" (no kidding).

It looks as if they got involved in too many things, without thinking there would be a downturn in international shipping.

Another one to add to the list of bankrupt companies.

Friday, July 3, 2009

Container carriers in trouble

The next six months will be crucial for the international containership carriers.

Consumer demand is not rebounding, and these type of products are the mainstay of container lines.

I have already stated I don't think CSAV will survive this downturn. They got a reprieve from the ship owners, but assuming things don't pick up (which I don't think they will), look for another refinancing, or takeover, sometime early next 2010.

CMA CGM is also having trouble. Their bonds have been downgraded so much they finally told the rating agencies to no longer rate their bonds. I guess it will be buyer beware.

And now, Hapag-Lloyd, having pulled off their partial sale to the founder of Kuehne and Nagel, Klaus-Michael Kühne, has seen a big drop in their share price. They must be in quite serious trouble as it is mentioned they might seek help from the German government.

This from Lloyd's List

Patrick Hagen, Cologne - Friday 3 July 2009
BAD news from Hapag-Lloyd put pressure on the share price of Tui, the German tourism and shipping conglomerate, today.

Tui is the largest single shareholder in the container line.

Hapag-Lloyd came under further pressure from major shareholder and logistics tycoon Klaus-Michael Kühne, who told German press that he would not rule out the line asking for government help.

Revealing the critical financial situation at Germany’s largest container carrier, Mr Kühne said it would “certainly make sense” to apply for state aid.

He added that the help would then have to be approved quickly.

Hapag-Lloyd did not comment on Mr Kühne’s remarks. The company said earlier that it was considering options to secure its future

If they don't get state aid, it's quite possible the other German container carrier, Hamburg Sued, would buy them, if the price were right.

I'm not saying any of these companies will go bankrupt (although they might), but I certainly think they are in danger of being taken over. There will be a big cash drain on all carriers for the next few years, and most just don't have to cash to survive.

Wednesday, July 1, 2009

Waterfront Commission of New York Harbor

The Waterfront Commission of New York Harbor was created in 1953.

From Wikipedia
..... (a year before the movie On the Waterfront) to combat labor racketeering. It is held that the Gambino crime family controlled the New York waterfront and the Genovese crime family controlled the New Jersey side.

By most accounts, they haven't really taken care of the problem. But then again, if they had cleaned up the waterfront, they would put themselves out of a job.

This from the Daily News
BY John Marzulli

Monday, June 22nd 2009, 4:00 AM

The Waterfront Commission of New York Harbor has the stink of a patronage swamp.

The bistate agency created to keep the harbor free of mob corruption is fending off allegations that its two top commissioners doled out plum jobs in a practice known as "horse trading," according to a knowledgeable source who has talked to investigators.

The claims are part of a wide-ranging corruption probe by the state inspector general, whose report is due out soon.

click here for complete article

ILA and the Mob...continues

The Journal of Commerce has a small article in their "Roundtable" remarks today.

What I find interesting is this case is being prosecuted in New York, although the racketeering was in New Jersey.

Wednesday, July 1, 2009
The mob, the feds and the ILA
Joseph Bonney | 1:46PM GMT

Federal prosecutors are ready to have another go at proving links between organized crime and the International Longshoremen's Association.

The venue will be federal court in Brooklyn, where reputed Genovese mobster Michael Coppola goes on trial next week for racketeering and conspiracy. Coppola’s alleged offenses include a 1977 mob murder, conspiracy to possess false identification during 11 years as a fugitive from that crime, and the use of extortion to control ILA Local 1235 in Newark from 1974 to 2007.

Most of the indictment against Coppola is devoted to the ILA racketeering charges. Prosecutors allege Coppola and his mob cohorts controlled three past presidents of Local 1235 and extorted money and favors, including jobs and contracts with mobbed-up firms.

This is like something from the Soprano's, or perhaps today "The Housewives of New Jersey".

Cernadas’s co-defendants in the 2005 case -- ILA officials Harold Daggett and Arthur Coffey and Genovese mobster Larry Ricci – were acquitted. Ricci, however, wasn’t around to celebrate the verdict. He vanished in mid-trial and his body was found weeks later in the trunk of a car parked outside a New Jersey diner. In court documents, prosecutors state that their informants say Ricci was murdered on mob orders to ensure his silence and that Coppola was involved.

.... prosecutors have said one likely witness is octogenarian labor racketeer George Barone, who testified for the government in the 2005 case. Barone, a onetime ILA vice president, was convicted in 1979 for shaking down Miami port businesses and testified that he committed several mob murders during his younger days but couldn’t recall how many.

click here for complete article from the Journal of Commerce

More ships to have armed guards

There has been a quiet movement to arm more of the vessels sailing through "Pirate Alley".

Belgium will shortly arm vessels flying a Belgian Flag, for a price. Armed guards are being put onboard vessels delivering relief goods to Somalia. Shipcraft started arming their vessels after the first hijacking attempt.

I suspect once it is shown armed guards can be successfully deployed, others will follow. Especially as the price of ransom is now around 3 million for a vessel, as opposed to 1 million less than a year ago.

It's coming down to economics.

Soon, the cost of security teams onboard vessels will be just another operating cost for international shipping companies.

This from Lloyd's List, regarding the increase in ransom demands.

Ransom payments for an individual vessel have jumped from less than $50,000 five years ago to over $3m today.

“The bottom line is that people are paying these ransoms and that is naturally fuelling the increasing demands,” said Mr Trelawny.

“It is being run as a business and the pirates are out to make money. If they see ransoms being met the natural instinct will be to raise the price.”

click here for complete article