Firms that charter out ships to others to move cargo are in big trouble. There’s a squeeze, with overcapacity in the usage market, and capitalization issues in these asset based firms, who need to borrow to own ships, but do not try to use them themselves, instead finding others to rent to. Some of these firms will probably go down, as Rickmers Maritime Trust did. Stock price is no measure of a firm’s chance for success. Post-US election and Brexit, volatility of international trade factors is a given, and these firms, as intermediaries, are ideally placed to suffer most from the oscillations. They need predictability to buy ships for the long term, and rent (charter) them for a shorter term.
What’s the future? Interest rates are bound to go up! Charter rates are not going up, and may go down quite a bit. It will be harder to find credit worthy customers, since they cannot predict their demand as well as before. We will see higher bad debt problems, such as Hanjin posed.
Loss of some of these intermediaries will reduce the options available for those who want to move cargo, and will increase capital needs just as that is the last thing they need.
Source: Analysis: Rickmers Maritime not alone; we may see a modern Greek tragedy – The Loadstar
