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What goes around, comes around...
World shipping crisis threatens German dominance as Greeks win long game
10:04PM BST 13 Aug 2012
10:04PM BST 13 Aug 2012
Over 100 German ship funds have already shut down as the long-simmering crisis in global container shipping finally comes to a head. A further 800 funds are threatened with insolvency, according to consultants TPW in Hamburg.
They are not alone. Britain’s oldest shipowner, Stephenson Clark, dating back to 1730, went into liquidation last week, closing the final chapter of Britain’s coal trade and the industrial revolution...
...Germany is the superpower of container shipping, controlling almost 40pc of the world market. The Germans also misread the cycle and have been struggling to cope ever since with a legacy of debt and a glut of ships. Now everything is going wrong at once.
...Germany is the superpower of container shipping, controlling almost 40pc of the world market. The Germans also misread the cycle and have been struggling to cope ever since with a legacy of debt and a glut of ships. Now everything is going wrong at once.
Container volumes arriving at European ports plunged in June, dashing expectations of a summer rebound. Imports fell 7.5pc from North America and 9pc from Asia. Flows into the Mediterranean region crashed by 16pc, reflecting the violence of the recession in Greece, Italy, Spain, and Portugal...
...“The market is barely paying above operating cost. If you are loaded with debt, you are in trouble,” said Martin Smith from ship operators Norddeutsche Vermögen in Hamburg.
...“The market is barely paying above operating cost. If you are loaded with debt, you are in trouble,” said Martin Smith from ship operators Norddeutsche Vermögen in Hamburg.
It is much same story in the Pacific region where Danish shipper Maersk said that it is losing over $200 for every container on the Qingdao-Melbourne route. But what the Germans face is the double-whammy of a funding squeeze...
...“It’s familiar territory,” said Clarkson’s Shipping Intelligence Weekly. “As pressure builds, owners are forced to lay up ships and, with no cash flow, they can’t pay their bankers. As their ships are forced on to the market, prices spiral down. Well-heeled companies snap up the good ones and the rest go for scrap.”
...“It’s familiar territory,” said Clarkson’s Shipping Intelligence Weekly. “As pressure builds, owners are forced to lay up ships and, with no cash flow, they can’t pay their bankers. As their ships are forced on to the market, prices spiral down. Well-heeled companies snap up the good ones and the rest go for scrap.”
The odd twist is that Greek shippers are the ones quietly snapping up bargains from distressed German companies “The Greeks are sitting on a pile of cash. They are in their own special cocoon completely removed from Greece’s political troubles,” said Dimitris Morochartzis from Lloyd’s List Intelligence.
“They played their cards really well during the boom, selling ships for a profit at the top of cycle. They are now buying them back for a fraction of the price,” he said.
The Greek group Costamare has spent $1.2bn (£764m) since early 2011 expanding its fleet. Last month it bought the Stadt Lubeck from an insolvent German group for $11.3m.
The striking feature of the deal was that Hypovereinsbank provided 100pc financing, a privilege denied to German shippers. “They like their Greek customers more than us,” said one German shipper, quoted by Lloyd’s List...
...German shipping experts say that two-thirds of the country’s marine fleet is in financial distress. If the crisis drags on much longer, the Greeks may leapfrog ahead to become world leaders in container shipping. The irony of prudent Greeks cleaning up after a reckless debt spree by the Germans is lost on nobody.
...German shipping experts say that two-thirds of the country’s marine fleet is in financial distress. If the crisis drags on much longer, the Greeks may leapfrog ahead to become world leaders in container shipping. The irony of prudent Greeks cleaning up after a reckless debt spree by the Germans is lost on nobody.