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Bulk Shipping Bankruptices Begin As Baltic Dry Collapse Continues

Tyler Durden's picture




 

With one of the world’s leading dry bulk shipping companies, Copenhagen-based D/S Norden, having made huge losses for the last 2 years and expected to report dramatic losses in 2014 also, it is hardly surprising that the smaller bulk shipping firms are struggling as The Baltic Dry Index collapses ever closer to record all-time lows. As Reuters reports, privately-owned shipping company Copenship has filed for bankruptcy in Copenhagen after losses in the dry bulk market, with the CEO exclaiming, "we have reached a point where there is not more to do." We suspect, given the crash in shipping fees, that this is the first of many...

On Thursday the index stood at 564, close to the historic low level of 554 set in July 1986.

As Reuters reports,

Privately-owned shipping company Copenship has filed for bankruptcy in Copenhagen after losses in the dry bulk market, its Chief Executive Michael Fenger told Reuters.

 

Copenship had been operating over 50 chartered small-sized dry-bulk vessels carrying goods such as grain, iron ore and timber.

 

“We have done what we could to raise the funds to save the company, but we have reached a point where there is not more to do,” Michael Fenger wrote in a text message to Reuters on Wednesday.

 

The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, fell to its lowest level in nearly three decades on Tuesday, hurt by weaker rates across all four vessel segments.

 

...

 

“First of all, we have found ourselves in an extremely bad dry cargo market. Secondly, there are several counterparties that have caused us losses, and then thirdly there are different insurance cases that could hit us,” Fenger wrote.

 

Insolvency administrator Per Astrup Madsen from Copenhagen law firm Lett said the vessels will be handed back to owners.

 

“Copenship expected to turn around the business in 2014 but the dry bulk freight rates continued the falling trend,” Astrup Madsen said.

 

One of the world’s leading dry bulk shipping companies, Copenhagen-based D/S Norden, posted a net loss of $326 million for 2012 and 2013 combined, and said in December it expects a full-year 2014 EBITDA loss of between $290 million and $230 million.

*  *  *

Shipping analyst Peter Sand at shipping organisation Bimco said 2015 looks set to be dull on the demand side, whereas the supply side is likely to provide the same amount of new capacity as in 2014. “Such a development will not improve the fundamental market balance,” he wrote in a note.

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Thu, 02/05/2015 - 09:26 | 5746682 wallstreetapost...
wallstreetaposteriori's picture

Who needs a real economy with real trade, when you can have a fake central bank economy which keeps everyone drinking the Coolaid? 

I blame Barry!

Thu, 02/05/2015 - 09:31 | 5746690 GetZeeGold
GetZeeGold's picture

 

 

300 points up.....easy I'm thinking.

 

Insert theme music here.....don't shoot the messinger. Sing along if you know the words.

https://www.youtube.com/watch?v=StTqXEQ2l-Y

Thu, 02/05/2015 - 09:37 | 5746746 db51
db51's picture

Cone On Tylers.....Let's focus on some REAL NEWS!   Bruce Jenner will soon be a woman......that's the kind of brreaking headlines the "folks" want to hear.   Who gives a flying fuck about the BDI when Bruce is growing breasts and his family is confused.    Carry on.....All of this Financial Talk is making my head spin...

Thu, 02/05/2015 - 09:40 | 5746757 Unix
Unix's picture

what are you saying!! is he going to be decatheleted, oh my!

Thu, 02/05/2015 - 09:48 | 5746787 TruthInSunshine
TruthInSunshine's picture

Bruce Jenner has delegated all of his market day trading authority over to Mr. Hat.

Thu, 02/05/2015 - 10:59 | 5747193 BuddyEffed
BuddyEffed's picture

"Privately-owned shipping company Copenship has filed for bankruptcy "

 

1. Abandon ship!

2. Deploy the Golden Parachutes

Thu, 02/05/2015 - 13:01 | 5747781 TeethVillage88s
TeethVillage88s's picture

Did he say if he was going to cut off his dick yet??

Thu, 02/05/2015 - 09:38 | 5746747 mvsjcl
mvsjcl's picture

Is it too conspiratorial to say that the dry goods price regime is also manipulated?

Thu, 02/05/2015 - 10:04 | 5746887 NoDebt
NoDebt's picture

It's only manipulation if it goes up.  If it goes down, it's evil market forces that require a bailout and more government oversight.

Thu, 02/05/2015 - 10:05 | 5746893 NEOSERF
NEOSERF's picture

Maybe 400 pts as productivity dropped 1.8% in Q4 which HAS to mean more QE...no?

Thu, 02/05/2015 - 11:30 | 5747363 Apply Force
Apply Force's picture

The whipsawing of oil is a preview of the whipsawing most things will experience as the structure of our current economy is shredded.  More QE = bigger whipsaws = no stability

Thu, 02/05/2015 - 09:33 | 5746723 TruthInSunshine
TruthInSunshine's picture

"Bear Stearns is fine, and DryShippers is even finer!"

Look at the incredible spin/propaganda already being uttered by the MSMFinancialPresstitutes:

2/05/2015 @ 4:53AM
"Why You Shouldn't Worry About The Baltic Dry Index Hitting A 29 Year Low"

By: Tim Whorestall

http://www.forbes.com/sites/timworstall/2015/02/05/why-you-shouldnt-worr...

Thu, 02/05/2015 - 09:40 | 5746753 Oldwood
Oldwood's picture

Media is supported by advertisers. We are relying on salesmen to tell us the truth. Salesmen are seldom truthful unless there are consequences. What are the consequences to their lies? None, so we KNOW they are lying. If they had any credibility they would not be selling what they are selling. And they are selling, all day, everyday.

Are you buying?

I'm not.

And they will NEVER "see IT coming" because it is not in their interest to do so.

Thu, 02/05/2015 - 22:15 | 5750238 mkhs
mkhs's picture

Tim Whores-it-all.  Enough said.

 

Thu, 02/05/2015 - 10:04 | 5746896 g speed
g speed's picture

Forbes etal refuse to go futher with supply and demand unless it suits their adgenda  The real supply and demand is not the cargo or the supply of bottoms. The real suppy problem is cheap money looking for a place to go and a lot went into commodities and ship building and production capacityand inflating EMs--a whole lot of it. So now we have a complete glut of bottoms and a complete glut of cargos and over capacity to use them and no customers-- oh ---you mean its channel stuffed???  fucking a right-- Get a clue Tim Whorestall--Its going to take a decade to clear it out and in the mean time all the margin calls and all the debt restructering and all the collateral rehypothifacation and all illiquidity and all the trade wars and all the currency wars are moving right along---Believe me Tim it ain't your daddy's BDI--

Thu, 02/05/2015 - 13:44 | 5747975 Tenacious Trader
Tenacious Trader's picture

Looks like your having trouble typing here too, my guess? But theres a word here I never seen before, call me a nuub but ahh what the h3ll is : rehypothifacation ? And no I'm not looking it up...

Thu, 02/05/2015 - 10:34 | 5747057 PTR
PTR's picture

Look at the incredible spin/propaganda already being uttered by the MSMFinancialPresstitutes:

 

Matrix....must....hold....

Thu, 02/05/2015 - 09:33 | 5746724 ZH Snob
ZH Snob's picture

now here's some stats the govt can't spin into a lie.  too bad only a small number of people in the world even know what the baltic dry is, much less follow it. 

Thu, 02/05/2015 - 09:35 | 5746737 101 years and c...
101 years and counting's picture

this guy isnt even trying to reassure "the markets".  afterall, when it gets serious, you have to lie.  if he ever enters the US or Germany, he will be arrested for treason.

Thu, 02/05/2015 - 10:34 | 5747067 JRobby
JRobby's picture

If they can't spin it, they downplay it or outright ignore it.

Thu, 02/05/2015 - 13:13 | 5747854 Poundsand
Poundsand's picture

You guys!  Just like in '08, they index fell not because of a slow down in global trade, but in an oversupply of ships.  Trust me...

Thu, 02/05/2015 - 09:45 | 5746766 divingengineer
divingengineer's picture

The dumb bastards should have shorted their own futures, purchased a discounted CDS bundle, hedged that off with a Interest Rate Swap stomped down 60 basis points and rounded it out with a Reverse Split Stock Buyback with ECB/IMF loans.

Where the hell did these guys go to Business School, Austria or something?

Sheesh, you can't help people who won't even try to help themselves.  Someone needs to tell them that shipping dry bulk has nothing to do with the Dry Bulk Shipping Industry.

Thu, 02/05/2015 - 09:57 | 5746851 Its_the_economy...
Its_the_economy_stupid's picture

Are you available for business consulting?

Thu, 02/05/2015 - 10:38 | 5747082 JRobby
JRobby's picture

Seriously! How can you expect to run a business unless you financialize every single aspect of it?

Then when the cash rolls in you can buy more financialized stuff that has absolutely no relationship to your business!

Thu, 02/05/2015 - 11:21 | 5747296 divingengineer
divingengineer's picture

Or cash out the equity and buy cororate lease Lambos for all the executives at the very least. 

Cause everyone knows that looking good is most of it. 

Thu, 02/05/2015 - 13:17 | 5747872 Hacker
Hacker's picture

It was privately held and didn't own any of the vessels. They very well could have executed your plan a while back selling their vessels to some sucker and were just waiting for a good excuse to put the final nail in the coffin.

Thu, 02/05/2015 - 10:02 | 5746882 amadeus39
amadeus39's picture

The problem is not Obummer. He's a nice guy, like Jimmy Carter. But their kind are helpless against the oligarchs and global companies.  Sovereignty is dead. Milo Minderbender will rule the world. Mindless growth is not the answer.

 

Thu, 02/05/2015 - 10:05 | 5746901 NoDebt
NoDebt's picture

So if it wasn't for the oligarchs and global companies Obama would be a good president?

I'm not sure that's what you meant to say.

Thu, 02/05/2015 - 10:22 | 5747005 amadeus39
amadeus39's picture

That's what I meant to say. Redistribution of wealth is a good idea. Unfortunately, only revolution can solve the problem, not nice guys.

 

Thu, 02/05/2015 - 11:25 | 5747328 divingengineer
divingengineer's picture

Redistribution of wealth from the Elite class to the hopeless poor would be a good policy.  

Redistribution of wealth from the struggling middle class to the Elite is what we are actually doing, the hopeless poor are still hopelessly poor.  

 

Thu, 02/05/2015 - 09:26 | 5746687 foodstampbarry
foodstampbarry's picture

Steve LIESman: "This just doesn't make sense, the fundamentals are strong"

Thu, 02/05/2015 - 09:54 | 5746828 mayhem_korner
mayhem_korner's picture

 

 

I bet he says the same thing when he steps on the scale and it blips back "250"

Thu, 02/05/2015 - 10:38 | 5747095 JRobby
JRobby's picture

Euthanize Liesman

Thu, 02/05/2015 - 09:28 | 5746691 ekm1
ekm1's picture

Remember what I said that QE and Zirp kill world trade BY DESIGN?

 

Yes, it does, yes it does,.

 

Prediction fulfilled.

Thu, 02/05/2015 - 10:37 | 5747032 Element
Element's picture

Sorry, over indebtedness did that, all ZIRP and QE are, are the symptoms of vast debts that can not be repaid. QE is not a cause, it's just a failed alleged 'policy' tool.

Got serious hard-arm heroin problems? Great, just go back-packing in Burma's highlands for three months.

That was basically Ben Bernanke's recommendation, for a global reserve currency smacked-out on hard-arm drugs in 2007-2008.

Allan Greenspan had simply said, "up the dosage, we're fine! Debt makes for growth!"

Lying cunt.

Thu, 02/05/2015 - 11:01 | 5747211 disabledvet
disabledvet's picture

Capital itself has been stranded.

I agree...too much debt. "Default is near."

Oil at a billion barrels in storage. "Once the deep freeze breaks...

Thu, 02/05/2015 - 12:58 | 5747770 TeethVillage88s
TeethVillage88s's picture

Yes, too much debt, too much cash in corporations, too much malinvestment, too little CAPEX investment, too much Decapitalization in the USA, too much loss of industry in the USA... and too much spin and BS Stats about the Economy... too much welfare to cover-up the feedback mechanism that says people don't have good full time jobs anymore.

USA Gets Sick... the world economy slows down.

US Middle Class Squeezed out of good Jobs and lost their wealth... the world economy slows down.

Thu, 02/05/2015 - 10:50 | 5747148 NotApplicable
NotApplicable's picture

Did you also predict that the sky is blue? Water wet?

Thu, 02/05/2015 - 09:28 | 5746696 jmcadg
jmcadg's picture

On 20 May 2008, the index reached its record high level since its introduction in 1985, reaching 11,793 points. Half a year later, on 5 December 2008, the index had dropped by 94%, to 663 points, the lowest since 1986;[11] though by 4 February 2009 it had recovered a little lost ground, back to 1,316.[12] These low rates moved dangerously close to the combined operating costs of vessels, fuel, and crews.[13][14]

Interesting and we are at 564!!!

Thu, 02/05/2015 - 09:30 | 5746703 Oldwood
Oldwood's picture

I don't understand. Isn't printed currency considered "dry freight"? So how can the BDI be collapsing?

Thu, 02/05/2015 - 09:35 | 5746732 TruthInSunshine
TruthInSunshine's picture

Video killed the radio store.

Electronic printing press killed the dry shippers.

Thu, 02/05/2015 - 09:43 | 5746761 Oldwood
Oldwood's picture

Good point!

So BDI IS meaningless as we have adapted to a full electronic market place where we buy only crap that can be transported via the internet.

Tell me we aren't living in the Matrix!

Delusion's end game.

Thu, 02/05/2015 - 10:50 | 5747160 NotApplicable
NotApplicable's picture

If only they could run their ships at a negative speed, like the central banks are doing.

Thu, 02/05/2015 - 11:02 | 5747219 BuddyEffed
BuddyEffed's picture

Instead of setting a heading in the local X and Y plane, many are probably destined to take a heading along the negative Z axis.

Thu, 02/05/2015 - 11:27 | 5747347 divingengineer
divingengineer's picture

more like the imaginary plane

unemployment is (5.6i + 1)

Thu, 02/05/2015 - 09:28 | 5746706 spellbound
spellbound's picture

BULLISH!!!

Thu, 02/05/2015 - 09:29 | 5746707 Truther
Truther's picture

The writing is on the wall.... Better fucking prepare for what we call a shit of a collapse. Got Phizzz Bitchezzzzz?

Thu, 02/05/2015 - 09:40 | 5746752 Unix
Unix's picture

Got lead bitchezzz?

Thu, 02/05/2015 - 09:47 | 5746778 divingengineer
divingengineer's picture

That used to be called a "correction", and they used to happen all the time in the old days (the 1990s).  

Thu, 02/05/2015 - 09:31 | 5746714 Fidel Sarcastro
Fidel Sarcastro's picture

Remember when this index mattered & was constantly mentioned on cnBS? Good times...good times.  

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