Monday, September 14, 2009
Shipping disputes stemming from crisis set to provide hefty settlements for ship owners
Monday, 14 September 2009
One year after the outbreak of the financial crisis, which almost immediately transferred into global trade and the maritime industry, ship owners around the world continue to face serious challenges, whether they are involved in dry bulk trade, or in tanker trade, or even both. But, one can argue that things are starting to feel a little bit better, with the freight market having reached its bottom as early as the beginning of December 2008. Despite the big turbulence of the dry bulk market ever since (the BDI reached 4,200 points by early June, to slip back into the 2,500 point territory today), most ship owners have managed to stay afloat, although with heavy losses and large cutbacks of their investment programmes.
Nowadays, some may even reap added revenues from the agreements they could forge regarding shipping disputes with charterers, clashes which erupted during the boom of the crisis. An example of that came this Friday, after Fortescue Metals Group, Australia’s third largest iron ore producer announced it reached a settlement with Angelicoussis Shipping Group (ASG), one of the largest in Hellas, with three major shipping companies, Anangel Maritime, Kristen Navigation and Maran Gas. The company said that “following extensive negotiations with the Angelicoussis Group, Fortescue is to pay to ASG an upfront amount of US$5.25 million upon which the arbitration action in the United Kingdom will be withdrawn and the Rule B Attachment Orders sought in the United States will also be discontinued. Fortescue will restructure its future cargo obligations with ASG whereby three new time charters have been agreed with respective terms of 5 years each commencing progressively from October 2009 out to end June 2010”.
The Angelicoussis Group had sued Fortescue in December last year for $130 million, as a collapse in vessel-rental rates at the time had triggered an increase in industry lawsuits. The Australian miner had cancelled a contract to hire the Angelicoussis-controlled Anangel Splendour, for as long as 61 months at $77,500 a day, according to the documents filed in U.S. federal court in New York. Freight rates for dry bulk ships, used to haul coal and iron ore, fell as low as $2,316 on Dec. 2 from a record $233,988 as China’s steelmakers cut output. That bankrupted some owners, made existing shipping accords less attractive and pushed owners toward breaching agreements with their bankers. From mid-November until late of 2008, the total of shipping-related claims filed had reached at least $300 million, with Arcelor Mittal, Louis Dreyfus & Cie. SA, and Zodiac Maritime Agencies Ltd. among the companies bringing cases or being sued.
Today, a year after, the majority of ship owners have managed to secure bank waivers, which provided the industry with a valuable lifeline, until the market bounces back. At the same time, management is focused in cutting costs, not to mention acquiring ships at low prices (this applies to those with liquidity of course), which provides a chance of earning profits at least from a part of the fleet.
