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.

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