Ship Finance Review — Challenging Market Drives Cooperation

financial buildingsImpairments on credit for shipping and petroleum investments of Danske Bank fell in the first quarter of the year, according to the Danish bank’s newest interim report. Loan impairment charges saw a “sig­nificant reduction” in the quarter against loan exposures to the industries of shipping, oil and gas, said the report, noting that high reversals were especially seen in the area of Norwegian shipping, oil and gas. Net reversals of DKK 48m in total in the quarter were described as a “very low level” of impairment charges for the bank, according to the report, though these industries remain a “focus area” considering that the shipping market has had a “slower pickup” than was expected. Danske Bank’s Stage 1 gross exposure to shipping, oil and gas was at DKK 41.6m in the quarter, down from DKK 43.9m in Q4-2018.

Driven by the challenging business environment that the dry bulk freight market has found itself in, pooling appears to have returned in a big way for shipowners looking for new survival strategies. The pools—or RSAs (Revenue Sharing Agreements) more specifically—of John Radziwill’s C Transport Maritime (CTM) seem to be enjoying an especially high level of success at the moment. CTM’s Supra­max RSA has been particularly vibrant in terms of gaining new members with this week adding its third owner over the past month. Greek owner M/Maritime has joined CTM’s Supramax RSA, ac­cording to a company statement, adding its Supramax “Areti.Gr” to the pool. The owners d’Amico and Eastern Pacific Shipping this month also entered ships into the Supramax RSA, which CTM calls the “largest and most flexible Supramax pool” in the market. The pool has grown, since its founding six years ago, to include 18 members with 67 vessels.

As with the growth of pools, cooperation in the dry bulk industry is becoming increasingly common. Talk this week of a new dry bulk joint venture be­ing negotiated in Taiwan is only the most recent example. Taiwan Power Company (TPC), Taiwan’s biggest power company and coal importer, is said to be in negotiations with possible partners to set up a JV to facilitate its coal shipping requirements. At least two Taiwanese dry bulk companies—U-Ming Marine and Kuang Ming Shipping—and one Japan­ese owner, Kawasaki Kisen Kaisha, are said to be speaking with TPC about the JV, likely be completed by Q3 of this year, TPC confirmed this week. TPC imports upwards of 30 Mt in coal annually and al­ready has its own fleet of six post-Panamax bulkers.

To read shipbroking and investment analysis like this every day, subscribe to the BMTI Daily Report.

Comments are closed.