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An Arica cargo ship laden with containers. (Photo: Compania Chilena de Navegacion Interoceanica)
Global shipping sector devises formulas to face crisis
CHILE
Monday, September 07, 2009, 08:30 (GMT + 9)
The shipping lines of the world have devised different formulas since September of last year to face the crisis gripping the sector as a result of the reduction in transport volume and the fall in freight rates.
Among others measures, some companies chose to partner with shipowners, to inject capital and/or sell dispensable assets. The renegotiation of contracts with shipyards was another strategy chosen.
According to Cristina Acle, director of studies of Variable Income of Corp Research, “the shipping lines have leasing contracts for ships they cannot fulfill. The owners of the ships could file for bankruptcy of the firm and see what they can obtain.”
“Alternatively, they can capitalise on debts. This mechanism consists of transferring debts from indispensable liabilities to the patrimony, so that shipowners are no longer creditors but rather shareholders,” Acle continued.
At present, some shipping lines cannot pay the boats they ordered to build and must request credits, but “the banks are hesitant to give credits to buy ships that are going to be added to a saturated market,” she added.
In Chile, for example, two of the main shipping companies - Southamerican Steamer Company (CSAV) and Chilean Interocean Shipping Company (CCNI) - are putting financial fortification plans in practice.
Last April, CSAV announced the implementation of their financial plan in a bid to raise USD 710 million in capital.
The strategy entails the entrance of 80 German boat proprietors to the company, those of whom could accede to nearly 18 per cent, El Mercurio reports.
A report released in August by CorpCapital Stockbrokers contends that CSAV “will end up being strengthened by the successive increases in capital.”
The company CCNI presented its fortification plan involving resources worth USD 105 million, with funds from three sources: a reduction in leasing payments of operational ships near USD 65 million, a contribution of capital worth USD 20 million from the present shareholders and the achieving and/or renegotiation of banking credits worth USD 20 million.
Meanwhile, the Danish shipping company Maersk Line registered net losses of EUR 712 million in the first half of this year, linked to the reduction in freight rates and transport volumes.
In total, group AP Moller-Maersk, proprietor of the Maersk Line, reported a net loss of EUR 406 million in the first six months of the year, a result of the international economic downturn affecting the marine transport sector.
Related articles:
- Maersk Line reports EUR 712 mln loss in H1
- Maersk to increase transatlantic shipping rates
By Analia Murias
editorial@fis.com
www.fis.com
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