More Woes for Shippers

[marmar]

from 24/7WallStreet:



More Woes for Shippers
Posted: September 5, 2011 at 12:02 pm


No matter what kind of cargo a shipping company moves, that company is likely to be in some financial distress. Rates for moving containers, dry bulk, and oil are all way down as the global economy continues its snail-like recovery.

Oil carrier General Maritime Corp. (NYSE: GMR) recently received a debt rating from Moody’s that puts the company’s debt at just one notch above default. Omega Navigation (OTC: ONAVQ) has already filed for bankruptcy, as have several other smaller tanker operators. The big problem is over-supply of vessels. Other tanker outfits that will be affected include Teekay Tankers Ltd. (NYSE: TNK), Overseas Shipholding Group Inc. (NYSE: OSG), Nordic American Tanker Shipping Ltd. (NYSE: NAT), and Frontline Ltd. (NYSE: FRO).

We noted last week the over-supply problems for container ships. Shippers ordered new vessels in 2007 and 2008, before the global economy went into paralysis. Now, those ships are being delivered and the added capacity is killing day rates. The container fleet has grown 17% since 2007 and new orders still to be delivered will increase the fleet size by another 28%. The dry bulk carrier fleet that hauls coal and iron ore and similar commodities is set to increase capacity by 36%. The very-large crude carrier fleet could expand by 14% this year alone.

In order to break even, the tankers must charge a day rate of nearly $30,000. The average short-term spot rate from the Persian Gulf to the Far East is now $1,795. Shippers try to make up for that by slow-steaming, which keeps the vessel on the water for a longer time, and by spending more time in port. ............(more)

The complete piece is at: http://247wallst.com/2011/09/05/more-woes-for-shippers-gmr-onavq-tnk-osg-nat-fro/#ixzz1X6ytsHxS

[msongs]

1. UPS is still gouging people as usual though.....->

I wanted to ship a small box to Hawaii. For what UPS wanted to ship it I could have bought the box a seat on an airliner and given it a complimentary meal and free head set.