The dry bulk industry is going to be hit by another wave of bankruptcies, according to Golden Ocean CEO, Herman Billung, commenting on the depressed market which is suffering from chronic oversupply and lowest ever rates.
“In the coming months there will be a lot of bankruptcies, counterparty risk will be on everybody’s lips,” Billung is quoted as saying at a conference in Oslo, Thursday by Reuters.
As explained by Billung, this is the worst time for the dry bulk market since the Viking age and it has never been so bad in the modern history.
The forecast seems to be spot on as it came on the same day as Norwegian dry bulk company Bulk Invest ASA (formerly Western Bulk) announced its intention to file for bankruptcy having been unable to reach a deal on restructuring with its creditors.
The year start has seen numerous owners and operators of dry bulk ships amend their loan terms and even sell vessels to remain afloat, including Golden Ocean, Safe Bulkers, Eagle Bulk and Paragon Shipping, to name just a few.
Specifically, on February 18th, GOGL struck a deal to amend all its bank loans and said that it was in talks with yards about further postponements of newbuilding deliveries. The agreement with the banks was conditional upon the company raising USD 200m of equity, which the company completed shortly after hitting the target.
However, the only light at the end of the tunnel seems to be restoring balance between supply and demand. As a result, this year is projected to be the busiest year with respect to scrapping activity. Namely, around 40 million DWT is to be sold for demolition during 2016, BIMCO forecasts.
On record for scheduled deliveries, Clarksons reported 92 million DWT for 2016. BIMCO assesses that 40% of the scheduled deliveries will be delayed by one year, nevertheless, the new deliveries of 50 million DWT are to join the global fleet despite extensive postponements, delays and rescheduling.
World Maritime News Staff