A friend calls from Athens this morning moaning and groaning about the sorry state of the shipping industry. I ask, “What’s new that makes you so grumpy?” He points me to this story concerning the bankruptcy of a Korean shipping company called Korean Lines (“KL”) .
My friend made the following points on this development:
-KL owns about 30 ships and manages another 120. As a result of the chapter filing almost all of these ships are coming back onto the spot market. The KL financial status was known by many insiders (bankers/brokers/shippers). This was a contributing factor in the big run off of the Baltic Dry index recently.
-Spot shipping rates have nowhere to go but down as a result.
-The Chinese ship construction schedule will bring many new ships into service this year. This will depress rates further. Cargo ship asset values are falling.
-Some banks will take big losses. Other shipping companies like KL are now on the edge.
-The dry bulk cargo industry has crossed (once again) from boom to bust.
This is just one man’s opinion. He happens to own a dozen vessels.
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This is a sad news in business world. That's life, sometimes we are on high then suddenly drop down. All we need to do is focus and manage well our life and business.
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