skipper54

Don't Let Bulk Shippers Sink Your Portfolio... For Now

I am reader 295273 (previous posting) - just getting the hang of this site. Now I have a pseudonym to hide behind instead of a number. Without wanting to be a prophet of doom, but being one, I reckon that at least 15 Nasdaq-quoted shipping companies wont make it past Christmas. The whole dry cargo shipping boom started with China joining the WTO around 2002 but as we have seen from the feeble consequences of China's announced injection of half a trillion dollars, not even they can save this one.

Don't Let Bulk Shippers Sink Your Portfolio... For Now

There are some 'foolproof' ways to get rich in these postings but they all go down the plug if the company goes bust. I've been in this market since 1975 and have never seen anything like the roller-coaster that took all these companies public, followed by the surreal collapse of rates in a matter of 3 or 4 weeks. A typical timecharter rate on a 150,000 ton iron ore ship has gone from as high as $200,000 per day in June to $7,000 today - and the running costs alone (crew, maintenance, insurance) are in the region of $12,000 per day. Not to mention the financing costs as some of these ships (over 20 years old) changed hands at over $80 million a pop (and today are not worth more than $6 million as scrap) . Add to this hundreds of new ships coming on stream to face a total freeze in world trade and you have a recipe for disaster. Shipowners are looking for sheltered anchorages to lay up their assets in the hope that dry cargo will start moving across the oceans again - but I fear many more will be heading for the scrapping beaches in India and Bangladesh as the creditors move in. Not a pretty picture but there it is.

Don't Let Bulk Shippers Sink Your Portfolio... For Now

Of all the scenarios mentioned, only one comment refers to shipping companies going out of business. The third quarter results that are coming out are ok but the market tanked big time end of September. The fourth quarter is a bloodbath and there appears to be no bottom. Cargoes should be moving but they are simply not.......sure there could be a dramatic turnaround but it better be quick. Sadly, I see a lot of dry bulk shipping companies, whose fleets are suddenly hugely overvalued, going for Chapter XI .