More Horror Stories Told In The Global Shipping Industry!

Here's yet another article on how badly hit the global shipping industry, Greek shipping industry hit by global financial crisis

• GREECE, which controls nearly 20% of the world’s merchant fleet, is feeling the pinch of the global financial crisis.
  
  “The shipping industry is at the forefront of the free economy, and we’re the first ones to feel the recession as well as the boom,’’ said shipping broker Francois Savaricas of ACE Chartering.
  
  “In this case, what we’re going through is not so much a shipping crisis as a whole financial crisis.’’
  
  With the international financial crisis leading banks to sharply cut back on lending, and consumer spending contracting in many places, it is much harder to move goods, and there are fewer goods to move.
  
  The crisis means that “fewer consumer products are sold because people don’t have money to buy them, therefore this has a knock-on effect on our sector, which is particularly globalised and prone to all these fluctuations,’’ said Nikos Efthimiou, head of the Union of Greek Shipowners.
  
  Efthimiou said there had been “a violent drop from June to today’’ in the dry bulk and container sector, with oil and gas tankers weathering the storm the best so far.
  
  Shipowners, brokers and analysts said ships that earned US$50,000 to US$100,000 a day a few months ago were now struggling to take in US$5,000-US$10,000 a day.
  
  The Baltic Exchange Dry Index, an indicator of dry bulk freight rates, had plunged from a record high of 11,793 points in May to a nine-year low of just above 847 points on Thursday.
  
  Analysts and brokers said the scene outside the gritty port of Piraeus, with ships anchored and awaiting orders, was being replayed across the world, particularly outside Asian ports such as Singapore and Shanghai.
  
  Savaricas said about 25% of the world’s fleet was at anchor because it was uneconomical to trade.
  
  ”The lack of liquidity in the banks meant there’s no cargo moving, and so from one day to the other there’s been no volume, no cargos and no movement for the ships,’’ he said.
  
  It’s no small matter for Greece. Shipping makes up about 7.6% of gross domestic product and brought 16.9 billion euros into the country in foreign exchange last year, 18% more than the previous year, according to the Union of Greek Shipowners.
  
  The wider shipping industry employs 160,000 people, or roughly 4% of the Greek workforce.
  
  The Greek-controlled fleet, counting vessels of more than 1,000 tonnes under Greek and foreign flags, came to 4,173 ships and more than 154.5 million gross tonnes in February, Hellenic Union of Shipping figures show.
  
  Just a few months ago, the picture was completely different. Shipping had enjoyed four or five years of burgeoning trade that had seen companies ordering new ships while still keeping old vessels in service, reluctant to decommission and sell them for scrap.
  
  “Everyone knew that the shipping market was heading for a downturn, and they prepared for it. But when it hit, it hit so hard and so fast,’’ said David Glass, managing editor of the Greek shipping publication Naftiliaki.
  
  “One morning, everything was a few clouds on the horizon. By evening, the thunderstorm had flooded. It just happened so fast.’’
  
  Now, companies with old vessels are selling them for scrap in India, Bangladesh, China and Pakistan. Others are cancelling orders, forfeiting millions of dollars in down payments to shipyards.
  
  Harry Vafias, who heads StealthGas Inc, the Nasdaq-listed gas arm of the Vafias Group, said oil and gas tankers had not suffered the same freight rate drops. Of the Vafias Group’s 82 ships, only five are bulk carriers.
  
  With orders for 24 new vessels in shipyards in China, Japan and South Korea, the group had the fourth-largest order book in Greece, Vafias said. But with banks unable to provide financing, or giving it only on very expensive terms, companies are forced to use a lot of their own money to take delivery of the ships.
  
  “The banks are virtually shut for new business,’’ he said.
  
  Industry experts say it can’t last forever. “Trade can’t stop,’’ Efthimiou said. “People don’t stop needing goods, food, certain things. All the world’s industries haven’t stopped working, thankfully. Therefore there is demand, it’s just very much reduced.’’
  
  Greeks, with 2,000 islands and a seafaring tradition that stretches back thousands of years, feel they are better prepared than most to ride out the storm. — AP