breakbulk americas 2016 EVENT COVERAGE Exchange. The trust does not own or manage any of the Rickmers-Linie MPP/ heavy-lift vessels, Ulrichs said. He added that reports on the Rickmers Maritime Trust-related Singapore bond, which matures in May 2017, did not relate to the German bond, which is tied to parent group Rickmers Holding AG and due to mature in August 2018.
Ulrichs pointed out that Rickmers is not the only company having to answer probing financial questions in the current market. “There are many other shipping bonds in the world that have similar issues. For example, there are shipping companies with stock listed in the U.S., for example, that have big issues and they have had to find solutions. Rickmers’ relationships with the banks are good, MARKET OUTLOOK | Supply vs Demand Balance and the group is Demand (million tonnes) Demand (million dwt) very open and 30.0 1,200 transparent with Effective demand (million tonnes) regards to its comEffective fleet (million dwt) 1,150 munication with bondholders and 1,100 other stakeholders.” Rickmers-Linie 29.5 1,050 has a fleet of nine long-term fixed 1,000 ships which it supplements with 950 anything from five to 10 ships from the 900 29 short-term charter 2014 2015 2016 2017 2018 market to meet speSource: Drewry’s Multipurpose Shipping Market Review and Forecast cific demand. The (www.drewry.co.uk/publishing)
long-term chartered ships come with options to extend, but those will only extend the charters to 2019 at the latest. Five of those ships are owned by the Rickmers Group, with gives additional security for Rickmers-Linie, but does reduce its influence on time charter rates. “In good times it’s nice to have those ships, but in bad times we’d like to reduce the time charter rates, which we can’t do for most of those ships.” The chartered ships are aging, with one turning 15 next year and the rest between 12 and 14 years. But age is not an issue, Ulrichs said. “Newer ships of that size are perhaps slightly more efficient on bunker consumption, but with current bunker prices there’s not much of a difference. There’s also not much of a difference in terms of productivity advantages. If we order new ships today for our around-the-world service, they would look very similar to what we already have. Perhaps they have a smaller engine, but that makes only a two- or three-ton per day difference, which isn’t dramatic.” More critical is ensuring that the ships are well maintained and that crews are well trained, he concluded. BB
LOW RATES PUSH BACK MPP RECOVERY Multipurpose vessel owners’ ability to invest in new tonnage is “close to zero” as historically low freight rates continue to bite, according to Ulrich Ulrichs, CEO of Rickmers-Linie. Whether this state of affairs might soon lead to a Hanjin-style collapse in the multipurpose sector was a moot point, he said, as the collapse of a player would not automatically lead to real improvements in rates because the capacity would remain in the market. Ulrichs saw little respite from the current market situation within the next 12 months. Ship owner and operator AAL was more downbeat on market prospects, anticipating that the markets that generate project cargoes would not improve until 2018 at the earliest. Kyriacos Panayides, managing director at the Singapore-based company, told Breakbulk: “The project cargo indus58 BREAKBULK MAGAZINE www.breakbulk.com
try has sunk to new all-time lows over the last six months. Although 2016 was expected to generate the same levels as 2015, we are experiencing more pressure from much reduced project activity. “Freight rates have dropped from 20 percent to up to 40 percent in some locations, compared with a year ago. Cargo shippers now set the freight ideas, dictated by the lowest bid they can get. It is regrettable that service quality, hardware, capabilities and track record reputation are now not the drivers. They have been replaced by the pricing factor.” Shippers are unable to resist the temptation of rock bottom freight rates. Speaking on a panel at Breakbulk Americas, Lee Tipton, corporate logistics specialist at FMC Technologies Inc., said she must keep the best interests of the shipper front of mind. “I have a soft spot for the steamship clients, but it’s not my fault that these
container carriers built Noah’s Ark,” she said. “Am I going to take advantage of the low rates while I can? Yes, of course.” She conceded that while she did not want her company’s preferred shipping lines to go out of business, there is a constant need to be aware of the market and “take advantage where you can as a shipper.” Those ‘’advantages” could well continue for some time yet. Panayides noted that even when the market recovers on the demand side, there would be a lag before higher freight rates were accepted. “Thus, there is no optimism of recovery in the short or even medium term and we expect no change until 2018.” Ulrichs added that more consolidation is to be expected. “Everybody is of the same opinion, that it makes sense to do something with somebody else. It will be very exciting to see what has happened by this time next year.” BB ISSUE 5 / 2016