Gloomy News

If you want a snapshot of the state of the shipowning business, just look at the headlines in the August 16 issue of Lloyd’s List, reporting on quarterly earnings reports from publicly held shipowners.

• “Thoresen Shipping Reports Operating Loss”
• “Torm Cuts Losses But Is Still Hampered by Debt”
• “Evergreen Marine Posts Second-Quarter Losses”
• “Yang Ming Dips Into Red Amid Weak Rates”
• “Wan Hai’s Second-Quarter Net Profit Tumbles 67%”
• “Spot Rates Blamed as U-Ming Profit Falls over 50%”

Stephen Chen, spokesman for Taipei-listed U-Ming, summed it up nicely. “The problem is there are too many ships in the market, so better demand can help but not much. And the ordering spree from private equities this year may prolong the downturn.”

In a business climate characterized by persistent overcapacity, weak demand, disastrous freight rates, tight credit, low scrap prices, rising fuel costs and an increasingly burdensome regulatory regime, shipowners, already encumbered by high levels of debt, face a bleak near-term future. Many are already teetering on the edge of insolvency. It will likely get worse. As the new ships on order are delivered into a market that is already oversupplied, freight rates will almost certainly remain depressed in most segments.

To be sure, the owners placing orders for new-generation more fuel-efficient ships may emerge the winners. They are betting that savings in fuel costs will give them a competitive advantage over other shipping companies operating older less-efficient tonnage. They may be right, but they will still continue to struggle for solvency.

Regardless, it is clear that owners must reduce operating costs. That’s the subject that will be on the table at the SHIPPINGInsight 2013 Fleet Optimization Conference, of which my company is co-producer. The conference convenes Oct. 23-24 at the Sheraton Stamford Hotel in Stamford, Conn. We have assembled a lineup of speakers, panelists and moderators that includes senior executives from 17 major shipowners, as well as classification societies, shipyards, naval architects, consultancies, IT companies, engine manufacturers and suppliers of products and services. This year’s conference also includes a focused LNG Workshop, featuring a panel of experts discussing the issues, challenges, solutions and best practices for widespread adoption of LNG as an alternative marine fuel.

In addition to the conference agenda, there will be ample opportunities for less formal networking at the lunch breaks and evening cocktail receptions.

The deadline for Early Bird registration expires soon, so I encourage you to register now and take advantage of the $200 discount off the full conference rate. And while you’re at it, you can book your room online at the Sheraton Stamford Hotel at the special conference rate of $165/night.