‘Shipshape 10’ News for Week Ending December 18, 2016

‘Shipshape 10 List’, a list of news and articles published in the current week that a senior executive in shipping, shipping finance, commodities, energy, supply chain and infrastructure should had noticed; news and articles that are shaping the agenda and the course of the maritime industry.

Sometimes seemingly tangential, sometimes humorous, occasionally sarcastic, but always insightful and topical.

And, this week’s ‘Shipshape 10’:

It has been an overall slow week, as one would have expected. Just a week before Christmas, freight markets took a breather, especially for the capesize vessels, while sale & purchase activity (S&P) has slowed down, too. In the deal-making world, most people are preoccupied with putting the finishing touches on the deals already on their table and get them signed by the end of the year.

Meanwhile, in what we seemingly call ‘real world’ these days, for shipping finance, as deadlines approach, there are even more concerns about the state of the shipping banks in the future given new regulations and active regulators:

1. Proposed new capital rules threaten struggling shipping sector: bankers (from Reuters)

while all along, European banks have not settled yet with ‘legacy concerns’:

2. UniCredit to Raise $14 Billion, Shed Bad Loans and Cut Jobs in Overhaul (from The Wall Street Journal)

If shipping banks are not functioning and alternative funding is getting tight as well, capital markets seem to spring eternal hope according to the next two articles:

3. Setting Sail (Again) on Wall Street (The Maritime Executive)

Basil M. Karatzas: Ενθαρρυντικά σημάδια για τη ναυτιλία και τις κεφαλαιαγορές

The broader, macro-picture is even murkier than shipping finance as much has been said and postulated recently on trade, trade agreements and possibly tariffs and other trade growth curtailers:

4. An early salvo in a trade war between America and China? (The Economist)

5. The End of Globalism (Foreign Affairs)

However, in the short term, business seem at least decent for now, but again, one has to recall that we are at peak shopping season and in September and October, the containership liner market was shaken by Hanjin’s bankruptcy that pushed backwards deliveries:

6. Cargo Volume Surges at Nation’s Largest Port Complex in November (from the Wall Street Journal)

Staying with the containership liner business, Hyundai Merchant Marine was handled a major setback this week when the company was not accepted as a full member at 2M Alliance and had to settle for cargo slot sharing, etc agreements:

7. Hyundai Merchant Marine Reaches Cargo Agreement With 2M Alliance (from the Wall Street Journal)

AP Moeller Maersk have held their investment day in Copenhagen this past week in a light of a bouncing market that has been playing in the hands of the company with the recent developments instigated from S Korea (HMM, Hanjin, etc) The company is under new leadership of recent, and high expectations of managerial and financial engineering for splitting the business and focusing on the liner business while relegating the energy business to a stand-alone business entity:

8. Maersk’s Rose-Tinted 2017 (from Bloomberg)

Interesting that Maersk’s drive to potentially spin-off the energy business comes on the heels of OPEC agreeing to cut production in order to ‘stabilize’ the market (OK, to increase oil prices).

9. OPEC’s Historic Deal Won’t Be Enough to Drain Oil Stockpiles (from Bloomberg)

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Talking oil prices at Columbia University’s SIPA with OPEC’s Secretary General H.E. Mohammad Sanusi Barkinko, Center Director Jason Bordoff, CGEP Fellow Adrian Lajous, and Antoine Halff, CGEP Program Director. Image credit: Karatzas Images

At an event this week at Columbia University, School of International and Public Affairs (SIPA), attendees were treated to a detailed account by the OPEC Secretary General H.E. Mohammad Sanusi Barkindo on how the historic OPEC agreement came to pass.

For those in shipping you had an exceptionally good year and think of splurging on something major, the following article on superyacht sales may be of interest:

10. Superyacht Sales Rebound (from Barron’s)

while for those more inclined to spend some holiday spirit in a house by the beach, the following investigative reporting article from The New York Times on private equity may provide some leads on how to make big money in order to splurge on superyachts:

How the Twinkie Made the Superrich Even Richer (from the New York Times)

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Always seeing the bright side of things… Image credit: Karatzas Images


© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website.Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

‘Shipshape 10’ News for Week Ending November 27, 2016

‘Shipshape 10 List’, a list of news and articles published in the current week that a senior executive in shipping, shipping finance, commodities, energy, supply chain and infrastructure should had noticed; news and articles that are shaping the agenda and the course of the maritime industry.                                                                                                                                                                                                                               Sometimes seemingly tangential, sometimes humorous, occasionally sarcastic, but always insightful and topical.
                                                                                                                                             And, this week’s ‘Shipshape 10’:                                                                                                                                                                                                                                 The dry bulk market has been having an exceptional time, all things considered, and the Baltic Dry Index (BDI) has almost tripled since February this year when the market established an absolute bottom. Lots of researching whether this is due to a structural recovery or plain seasonality.

1. Dry-Bulk Shipping Owners Get Reprieve as Rates Rebound (from the Wall Street Journal)  

In the containership market, another bleak sign where a seven-year old panamax containership vessel was sold for scrap; less than a decade ago, such vessels were selling for $80 million. A sign of how bad the overall containership market is, and the high asset risk shipowners (and investors) have to undertake:

2. Seven-year-old Rickmers boxship sent for scrap (from Splash 24/7)    

While post-elections in the US has been lots of speculation about the direction of the new administration in terms of trade and infrastructure projects, a couple of articles on the subject:

3. TPP: What is it and why does it matter? (from BBC)

and,

4. China Touts Its Own Trade Pact as U.S.-Backed One Withers (from the Wall Street Journal)

In our last week’s report, we included an article about the Taiwanese government setting up emergency funding for their shipping sector; and, the week before that, another article about the S. Korean government supporting their shipping sector. Now, the Singaporean government falls in line, too, by supporting their offshore sector. Hopefully the Greek shipowners will manage to do without government support, if need be. (“One cannot take from someone who does not own” from the Dialogues of the Dead, Lucian of Samosata, 2nd century BC; cynic philosopher Menippos would not pay a coin (obol) to Charon, the ferryman of Hades of the souls of newly deceased, arguing as above; a very valid argument in today’s Greece, in any case.)

5. Singapore government intervenes to save struggling offshore sector (from Splash 24/7)

However, it’s worth noting that Korea Line Company (KLC), a company that had their own spectacular bankruptcy a few years ago in Korea, now has outbid the favorite Hyundai Merchant Marine (HMM) acquiring Hanjin Shipping’s container business; strangely, Korea Line never before had an exposure to or experience with the containership business. Having a previously bankrupt company rehabilitated and growing would seem to be the forces of capitalism at their best:

6. Why is Korea Line buying Hanjin Shipping’s Asia – US container business? (from Seatrade)

However, HMM who was poised to join the 2M Alliance (A.P. Moeller Maersk and MSC), now has been rejected by 2M; for sure, the containership liner industry is in the middle of major re-alignments in a market that keeps looking gloomy:

7. 2M Alliance rejects HMM (from the Korea Times)                                                        

Another week, and another shipping bank has to break some more bad news. NordLB in the news with additional provisions for their shipping loan portfolio:

8. NordLB warns on €1bn loss for year as shipping loans bite (from the Financial Times)

However, the capital markets show signs of thawing for shipping ideas, at least selectively. The Saverys family managed to raise $100 million for their Special Purpose Acquisition Vehicle (SPAC) for acquiring distressed shipping assets (ticker: HUNTU):

9. Hunters with a big warchest for dry bulk shipping (from Seatrade)

Some thoughts about shipping, mostly positive, ‘thankful’ thinking, in the spirit of the season:

10. A Thanksgiving for shipping (from Splash 24/7)

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A majestic sunset. Image credit: Karatzas Images


© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website.Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

‘Shipshape 10’ News for Week Ending November 6, 2016

‘Shipshape 10 List’, a list of news and articles published in the current week that a senior executive in shipping, shipping finance, commodities, energy, supply chain and infrastructure should had noticed; news and articles that are shaping the agenda and the course of the maritime industry.

Sometimes seemingly tangential, sometimes humorous, occasionally sarcastic, but always insightful and topical.

And, this week’s ‘Shipshape 10’:

1. The week started with a blockbuster announcement of the three largest Japanese container line companies (NYK, K Line and Mitsui O.S.K Line) where effectively creating a new, bigger business entity in order to compete in a bigger world of falling rates in the containership line business alone.
Japan’s Largest Shipping Firms to Merge Container Operations (The Wall Street Journal, Logistics Report)

2. The story of consolidation in the containership liner business kept going strong as on Friday, the Wall Street Journal broke the news that Israel’s ZIM has put themselves up for sale. The company really does not have critical mass or competitive advantages or the financial capacity to grow big alone in this now monster market. Zim has been one of the candidates to be absorbed and frequently mentioned in the ever growing game of shipping companies that will not live to see the next business cycle – not at least in their present form.
Israel’s Zim Looking to Sell Most Global Shipping Operations (The Wall Street Journal, Logistics Report)

3. If there’s need for evidence of the bad state of the containership market, this week it was reported that another young panamax containership was sold for scrap. When this class of ships started getting built were costing well in excess of $80 mil; now selling for scrap at $5 mil; even for the lucky vessels that had managed to secure long –term sky-high charter rates in the good days, it’s doubtful whether the investors saw their money back.
The 4,923 teu YM Los Angeles sets new boxship scrapping records (Splash24/7)

4. While demolition represents the strongest hope for a market recovery at present and under current circumstances, there are concerns that the cleansing powers of scrapping for shrinking tonnage often are exaggerated.
Holy scrap! (Splash 24/7)

5. And, as a reminder of the dangers in shipping and also un-predictabilities, a major explosion will scrapping an offshore storage tanker took place in Gadani, Pakistan, where a reported thirty workers lost their lives in the burning inferno that ensued for several days. We mourn the loss of life, even for a country where life seems to have little substance. From a commercial standpoint, the Pakistani scrap market has effectively closed for several months, which will drive prices for scrapping vessels lower and would decelerate the pace of vessel demolitions.
Dire safety conditions revealed in wake of Gadani fire as death toll feared to surpass 100 (Splash 24/7)                                                                                                                                                                     
6. Speaking of explosions, a Colonial petroleum products pipeline accidental breach in Alabama, the second in two months, has stopped the movement of petroleum products from the US Gulf to the New York area. There had been high hopes that the accident will boost the moribund tanker petroleum trades, both for Jones Act and international flag assets, but the impact from the closing of the pipeline seems to be manageable for now.
What Happens When the Most Important Pipeline in the U.S. Explodes (Bloomberg)

7. Volatility is high in shipping, everybody knows; however, volatility in related industries and markets is not much lower, and as reminder, one of the best investments this year has been the price of coal, whether thermal (mostly) or metallurgical coal. Some think that a bouncing commodities market would bring better fortunes to shipping too.
Coal Surge Leaves China Grappling With Runaway Market It Started (Bloomberg)

8. The Jones Act and offshore market in the US keep deteriorating, and a week after Tidewater formally mentioning the words ‘Chapter 11’ in their latest press release, now Hornbeck announced that they will be idling 80% of their offshore fleet.
Hornbeck to Stack Nearly 80 Percent of OSV Fleet (The Maritime Executive)

9. Reading such news about the state of the market, private equity funds keep moving aggressively in the space, and KKR, one the of the most active investors in shipping this year, have announced bigger plans for growth in the European markets via their Pillarstone platform.
Pillarstone to Snap Up Europe Shipping Loans (The Maritime Executive)                                                                                                                                                              
10. And, for those arguing that monetary policy alone is not sufficient for a market recovery and governments worldwide should be more active with investment, mostly in infrastructure, an article from Japan investigates the policy for the Japanese Coast Guard’s aging fleet. Possibly, at a time when ‘Shipshape 10’ News for Week Ending November 6, 2016, possibly a strategy to renew aging vessels could be stimulating in more than one way.
Many coast guard vessels operating past service limit (The Japan Times)                                                                                                                                                            

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Containership MV ‘Zim Piraeus’ entering majestically the New York Harbor with the World Trade Center in the background. Image credit: Karatzas Images


© 2013-2015 Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website.Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.