Wednesday, February 25, 2009
Idle capesize numbers fall by more than two thirds
Michelle Wiese Bockmann - Wednesday 25 February 2009
THE number of capesizes without employment has dropped by more than two thirds in the last three months, with 30 of the vessels now idling at ports around the world.
But a different story has emerged for older and smaller bulk carriers, or those rendered too “toxic” to trade, because they are connected to financially troubled Asian-based owners or operators.
About 4%, or 64, of the 1,550-strong fleet of panamaxes is currently in full or partial lay-up, or longer-term anchorage, according to data from Lloyd’s Maritime Intelligence Unit.
Overall 484 bulk carriers, or 6% of the global bulk carrier fleet, representing 17.9m dwt, is classified as “inactive”.
“All older vessels are having trouble finding employment, and they’re getting such a deep discount [in rates] compared to modern vessels, owners are preferring not to trade,” said a London-based dry cargo broker.
Brokers and traders familiar with the panamax sector thought the actual figure could be even higher, with unemployed vessels numbers remaining high since freight rates collapsed in the final quarter of last year.
Of the handymax fleet, 6%, or 105 ships, and 286 smaller handysize bulk carriers, or 10% of the fleet, are also idle, according to Lloyd’s MIU. The handysized fleet’s average age is 20 years.
“I have a perception that older [panamax] ships aren’t doing any business. I don’t see them fixing and I’m sure they’re sitting around and doing nothing,” said Steve Rodley, director of London-based shipping fund Global Maritime Investments. He said many panamax charterers had also refused to trade any modern “toxic ships”.
These vessels had complicated time charter chains of hire involving bankrupt owners or operators, or those who had defaulted on payments. “Those are the ships with nothing to do,” he said.
One London-based broker estimated at least a dozen panamaxes were in full lay-up. Lloyd’s MIU data was collated yesterday by tracking AIS movements, classifying inactive bulk carriers as those without registering any movement for at least 35 consecutive days.
Brokers familiar with the capesize market said the 30 unemployed vessels identified by the Lloyd’s MIU data most likely had “toxic hire chains”.
Those capesize owners had returned to the market in January, when Chinese and European steel mills resumed iron ore shipments from Australia and Brazil. Many had withdrawn their capesizes from trading in the last months of 2008, when spot rates fell below operating costs to as low as $2,000 per day amid widespread payment defaults.
By early December, an estimated 12% of the capesize fleet, or more than 100 vessels were idle. Seven months earlier fleet utilisation had been at 100% and freight rates as high as $300,000 per day.
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