What’s hot today ?
Let me try in the next days, to come back and comment the Bimco Report dated 6th october which again is full of good information and their analsysis, eventhough I strongly believe it can be discussed on some points is in any case worth to comment.
Let’s start with this assessement made by BIMCO :
The current industry model in dry bulk shipping is characterised by very fragmented ownership of the 10,800 ships in the global fleet. There are only four companies owning more than 100 dry bulk ships and on a DWT basis, the largest owned fleet represents less than 4% of the total fleet. This means that each individual owner has very little influence and bargaining power with its customers and is often reflected in low levels of mutual trust.
Many shipowners in dry bulk shipping today have highly leveraged fleets and are focused on the asset play (buy low, sell high) rather than acting as logistics providers focused on return on capital employed. The asset play is a high risk business model especially when it is combined with a high proportion of ships on the spot market.
There are owners who are more conservative and had a strategy of running many of their ships on long term charter. They have been caught out by the length and severity of the downturn with most, if not all, of their long term charters now expired. Today, when the dry bulk shipping market is scraping the bottom, locking ships into loss making time charters is not an attractive option for the owner.
You might have seen, or not, the resignation of Peter Georgiopoulos from the position of chairmanship of Genco Shipping & Trading. Genco, being listed on the NYSE, is one of the big public Companies owning and running ships. But how big is Genco and what’s Genco strategy is looking like ?
They own a fleet of 70 vessels with an average age of 8.8 years and an aggregate carrying capacity of approximately 5,159,000 dwt, consisting of 13 Capesize, 8 Panamax, 4 Ultramax, 21 Supramax, 6 Handymax and 18 Handysize vessels and are expecting (if not done yet) the delivery of 2 Ultramax newbuildings (source Genco’s website). Still according to their website, and last published financial report, in August 2016, at that time none of their ships are operated internally on the spot market, they do not charter in ships to operate them but to the contrary, all the ships are under medium or long period to third parties. As mentionned by Bimco in their last report, Genco can be defined as an asset player more than a logistic provided. Few of the ships, 1 panamax, 10 supras and 10 handies are under pool management either with Clipper or Bulkhandling… In this tough time, and seeing, still in their financial report, which you can easily find on your own, for sure it could not last for ever without investors injecting USD 125Million in the group. Few example of what’s reported in their financial report
- a period on the 2009 built caper Genco Maxiumus at $3’250 daily (with 50% profit sharingCaper) until March 2017,
- Panamax Genco Vigour built 1999 at 95% of the Bpi daily until dec 2016
- Genco Predator smx built 2005 until oct 2016 at 98.5% of the BSI
- Baltic Jaguar, smx built 2009, redelivered on august 2016 after making $3’000/day during 35days
Fixing on period at index level is prooved now to be probably a mistake. Knowing the Supra average net daily value in 1H16 was at US$’4570 (-27% vs previous year), on the Handy it is down to US$3’900 daily (-22%).
Sure, Genco’s board of director did their absolute best, but nobody (or very few) is cleverer than the market, and financial result passed on Aug 2016 were showing a net loss of $110.7 Million for the 2nd quarter of 2017, for the 1st half of 2016, the total net loss is down to Usd164.8million, when previous year, on same period, the loss was at usd131Million.
As a comparison, in terms of size and strategy, PacificBasin (source their interim 2016 report), is controlling 212 drybulker, including 87 owned, and is mentionning 58% of their 19’420 handysize revenue days for second half 2016 is covered at usd 7’670/day net. Remember, 1st half of 2016 daily handy spot rate was at US$ 3’900. Financially, PacificBasin on 30 june 2016 loss is « only » at 49.8M US$, when same period in 2015, the Company were showing positive result at +5.8MUS$. PacificBasin seems to be in between from Genco’s set up and Oldendorff (to name one).
Oldendorff’s not public, so no financial results available, but Oldendorff is having something like 500 ships on the water, with a quarter, ie 125, being their own fleet for a total of dwt capacity of 45’000’000. Oldendorff, strategy is clearly to be a logistic provider and a quick look at Oldendorff’s website is clearly showing that delivering goods from port A to port B with proposed taylor made solutions is their goal.
With these 3 examples, you can see from 3 big players in our Industry what’s Bimco is describing in the ownership set up. For sure, whichever the size of the ownership company, whichever the strategy, our industry is badly lacking of cash. I don’t know if mister Peter Georgiopoulos is a billionnaire, or if he used to be, or if he will be. I’m not much concerned about his financial health, I was also reading a report today about billionnaires. They’re getting poorer, on average having « only » 3.7BUS$ in their pocket, when last year on average it was 4billionusd each. Going further in this report, billionaires who made their fortune in the commodity markets are the ones who saw their fortune dropping the most… Cash for shipowners will have to come from elsewhere !
If you really need to have spot chartering market information, you can still give us a call or drop an email or a skype or an instagram and I’ll be pleased to share my point of view and analysis on what we do/see/hear.