Low shipping rates may cause more Bankruptcy Filing even some ship owners are now considering to sell their ships for as low as scrap value, Alaric Nightingale suggest The cost of 15-year-old tankers fell 48 percent to $23.5 million this year as scrap values advanced 3 percent to $17.25 million. While scrapping would reduce the glut and raise rates, it won’t be enough to make ships profitable.
Data suggests, 5% of the world’s oil tanker fleet could be scrapped in the next 18 months, but that would only raise rates to an estimated $12,817 by 2013.
Dry bulk shipper DryShips Inc. (NASDAQ: DRYS) actually beat estimates in its third quarter, Navios Maritime Holdings Inc. (NYSE: NM), another dry bulk shipper, reported better-than-expected earnings yesterday, but We expect more bankruptcies and restructuring in the sector as companies struggle with a worsening world economic crisis and lower earnings driven by a build-up of ships ordered when times were good.
General Maritime Corporation (NYSE: GMR) provides transportation services for refined petroleum products filed for bankruptcy protection yesterday saying low shipping rates for its fleet of 33 crude oil carriers and the company’s inability to comply with its debt covenants.
Omega Navigation Enterprises Inc. (OTC: ONAVQ) filed for bankruptcy in July, Teekay Tankers Ltd. (NYSE: TNK), Overseas Shipholding Group Inc. (NYSE: OSG), Nordic American Tanker Shipping Ltd. (NYSE: NAT), and Frontline Ltd. (NYSE: FRO) could be next!