Friday, 10 April 2009

Industry Snapshots

Syndicated loan market ‘disappeared’ reports Lloyds List, quoting industry sources. This market, traditionally responsible for the industry raising massive quantities of capital, is showing signs of a major slowdown; just four deals have been struck so far in 2009 compared to 268 in the entire year of 2008, says Fortis Bank. In money terms, 2009 has so far raised around 330 million USD, a fraction of the almost 16 billion raised in the first quarter of 2008. “The syndicated loan market has disappeared. There are just bilateral and club deals only,” Harris Antoniou of Fortis says. “This is going to create significant challenges going ahead,” he said. Fortis is one of the top five in the business. Others are not optimistic either; HSH Nordbank’s Robin Das says that their order book “will be cut substantially.” Analysts say that of the almost 500 billion dollars required to finance ships by 2012 in Asia and Europe, only half the money has been raised. Part of the problem is that prices of ships have fallen drastically with bulk carriers being particularly hit; some of these have fallen to a third of their value in the last six months. As players look to new avenues for raising capital, the results have been discouraging so far; money is sitting on the sidelines worried that things could possibly get worse; some seem to be looking for even cheaper assets in the future. Meanwhile, reports in Indian financial newspapers suggest that the industry has been trying to get the government to float a ‘Shipping Development Fund’ to tide over the capital crisis, with SCI planning to purchase ten more ships this year.

Seaspan sees ‘sliver linings’ in tough times. Boss Gerry Wang claims that “the newbuilding over supply situation is not as bad as it is being shown in the headlines” and that this was one of many ‘silver linings’ in the present crisis. “I do not see any crash of major operators. Globalisation will continue and business will pick up,” he said, pointing out that many analysts disregard the likelihood of around half the newbuild orders for boxships being cancelled. (In related tanker news, UK broker Simpson Spence and Young says that a fifth of new tankers due this year will not be delivered) Seaspan is a major North American based container company. Wang also said that demand for boxships may be higher as many owners are now sailing around the African Cape instead of through the Suez Canal. Wang has also said that reports of a tenth of the global boxship fleet being laid up were wrong, and that many were “idling (waiting) to be activated”.

Indian Navy puts cargo ships under the scanner, says Chief of Naval Staff Sureesh Mehta. Speaking to reporters in Vizag, he said that surveillance of merchant ships has been stepped up to check terrorism. "Terrorists that operate against us and those are inimical to our development will quite often look for more innovative ways to do things”, he said, adding that “Measures have been put into place to make sure that cargo coming to the country through proper regulated shipping is inspected.” The naval chief also revealed that eight maritime reconnaissance and patrol aircraft would be purchased soon to shore up surveillance in the aftermath of the Mumbai terror attacks.

In the US, boat owners are sandpapering names off their prized possessions and filing off registry numbers before abandoning or scuttling their boats, the New York Times reports. Weekend sailors can no longer afford the maintenance, marina and operational costs and the second hand market is ‘dead in the water’. Insurance frauds are also on the rise. The dangers of derelicts clogging US waterways have prompted many States to draft laws so that legal action can be taken against the offenders. California, says the NYT, is planning a “boater bailout” that would encourage owners to surrender their boats to the State or pay a $1000 fine. Florida has seen 118 derelicts swamp its waters; in South Carolina, the figure is at 150 and counting, even though laws passed in January there allow for $5000 fines and a month’s jail term for abandoning a boat in S Carolina waters. “Our waters have become dumping grounds,” says Maj. Paul R. Ouellette of the Florida Fish and Wildlife Conservation Commission.


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