New Market Landscape to Question Commodity Shipping

In a recent article in the Splash 24/7, a debate was initiated on whether shipping is a “commoditized” business. We define “commodity business” as any business or industry whereby there is little pricing power and the product can be procured from many different suppliers with little effort or additional cost (interchangeable product.)

Certain sectors of shipping, such as the cruiseship business, have positioned themselves as far from “shipping” as possible, and their relevance to the shipping industry is limited to the loyalty and romance and affinity they can offer on behalf of the differentiation of their cruiseship fleet to their guests and passengers. For those who have talked with vacationers who are frequent cruiseship passengers, we all have moved by their affection for the cruiseships individually and their loyalty to the brand collectively and the type of cruiseship they cater to. The cruise-line industry has managed to create a clear image for the industry and individual cruiseship companies have created a “brand” and appeal to a certain segment of the market, ranging from the luxury and discerning high-end of the market to the “cattle class” segment of cruising appealing to the younger crowd on a budget. The cruiseship industry is a clear example of a sector in shipping that has not been a commodity and it has created a brand and has charging a premium pricing for its product.

The dry bulk market, however, with the very long tail of charterers – with some of them trading in obscure ends of the globe and the freight cost being of paramount importance, is a highly commoditized business. As long as a dry bulk ship can transport a certain amount of cargo from port A to port B, price is the only differentiating factor: the age of the ship, the quality of the vessel management, the financial strength of the shipowner, and several more factors could easily be sidestepped. A ship with a shiny, bright smokestack would get almost exactly the same freight revenue as a ship with a heavily darkened-from-smog smokestack; and given that the former ship has a higher cost basis (the cost of the fresh paint, at the very least), the owner of the latter dry bulk vessel was enjoying better overall economics. Dry bulk is the least regulated of the shipping sectors and the sector closest resembling what economists call “perfect competition” and staying closest to a commodity business model has made sense. Charterers objectively would barely differentiate vessels besides pricing, and pricing was set by the market, not a shipowner or a ship.

But again, the last few years forced the shipping industry to take quickly many steps at a time: the freight market crashed and controlling vessel operating expenses became critical, new regulations came to effect (whether for emissions or ballast water, etc), bunkering costs could not be neglected by the charterers, etc Therefore, some differentiation started entering the market in an effort to separate the wheat from the chaff. And, large charterers and trading houses, under the luxury or pretense of a weak freight market, have been pushing for higher vessel and vessel management standards in terms of safety, performance, security, accountability, predictability, efficiency, consistence, etc which further allowed some shipping companies to differentiate their “product”.

The tanker industry, having to live with higher standards ever since the tanker MT ‘Exxon Valdez’ became a household name three decades ago, has forced shipping companies to be more cognizant of their “brand” and reputation. The tanker industry is also driven by a group of select charterers (oil majors, etc) who themselves are held to high standards and a few minimum standards we established for the tanker market (i.e. OCIMF, CFR, etc) Still the tanker market is far away from a “branding” strategy when tanker owners can differentiate themselves, but nevertheless there is a higher level of “name recognition” in this market sector.

The shipping industry is a “price taking” industry where the shipowner has to take and accept what price the market offers at any time. Unlike the yacht industry where the customer invests in a “I want” or desire product, in the shipping industry, the customer invests in a “I need” or mandatory product. In the first case, the level of desire can be graded and the optimal product and pricing can be found. In the latter case, the product is a basic need (transport of cargo) which by itself doesn’t allow for price differentiation. However, for shipping companies that have a strategy of differentiating the product at any market price, likely to be more successful in the future.

Since 2008, there have been tectonic changes in the shipping industry. What worked in the past likely will not work equally well in the future. There are many reasons for that and the fact that the landscape of shipping financing has changed is just one of them. It’s hard to create a brand in a commodity-driven market and charge a premium price, but charterers and financiers and the rest of the stakeholders will want to see distinct companies with a quality product. “Me too” shipowners of a handful dry bulk vessels will be pressed hard to stand out in a new market. Setting a shipping company apart from the competition will eat into earnings (once again, shipping is a “price taker” industry) and shipowners will have to deliver more value for every dollar earned.

It’s hard to create a “brand” in a commodity world, and there is little in extras one can offer for a basic need of transporting raw material (hard to abuse most of the time, never complains, doesn’t have any demand for comfort and pampering, etc). The only way really to differentiate and build a “brand” would be by providing the charter with the offering of a better product: a ship with good performance with tight ranges of consistency, performance, etc, by optimizing voyages and minimizing downtime and damage, by having a solid balance sheet and not jeopardizing vessel and cargo arrests, etc. And, in order to be able to offer these and any more attributes that would define their “brand”, they would need a critical mass of a fleet in order to be able to spread SG&A and overhead across many ships, and also being able to obtain competitive financing in a world where shipping finance is tough to be found.

Shipping is a B2B (business-to-business) model where the end consumer has little saying. It would be impossible to have an “Intel Inside” marketing campaign to differentiate the product and drive demand via “pull” by the end-consumer (except possibly in the containership sector), but still, charterers and financiers and stakeholders would like to see a product that stands out in terms of quality and value. Probably such a model may not offer the best profitability that the competition over time, but most likely, it may ensure survivability when the market takes another dive. Charterers likely to “fly to quality” and shipping companies that have moved away from a commoditized world with a better product have better odds of survival.


Article originally appeared in the Splash 24/7 website under the title: “New Market Landscape to Question Commodity Shipping”. 


The containership terminal of the Port of Piraeus: trying to get more efficient with commodity shipping under new ownership. Image credit: Karatzas Images


© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information here within has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

Basil M Karatzas and Karatzas Marine Advisors Quoted in the News

We are delighted that Karatzas Marine Advisors & Co., and its founder Basil M Karatzas have become the contact to have for shipping market expertise; with prompt access to market information and a vast network and access to senior executives worldwide, in the shipping industry and several complimentary industries, the company has had a front row seat to today’s developments in the maritime industry and has been enjoying an active deal-flow and the trust of many in the shipping industry.

Five shipping and logistics influencers you should follow (Veconinter, March 13th, 2017)                                                                                                                            Basil Karatzas was named one of the shipping industry’s influencers by Veconinter, a Venezuela-based logistics company; tweets on shipping, and everything about it, by Basil Karatzas can be followed at @KaratzasMarine and @BasilKaratzas

Πήρε «φωτιά» η αγορά πλοίων μεσαίου τύπου για ξηρό φορτίο (Ναυτεμπορικἠ, March 14th, 2017)

ZIM Shipping Names New CEO in Face of Possible Sale (The Wall Street Journal, March 10th, 2017)

Gibraltar Shipping Interview: Basil Karatzas Talks Alternative Bunkers, S&P Markets, Vessel Financing, and Trump by Gibraltar Shipping (March 10th, 2016)

Ναυπηγήσεις – διαλύσεις, διπλή πρόκληση για τα bulk carriers (Ναυτεμπορικἠ, March 6th, 2017)

Still at sea Shipping’s blues: The many barriers to scrapping cargo ships (The Economist, March 2nd, 2017)

Σε «bad bank» το 5% του παγκόσμιου στόλου των containerships (Ναυτεμπορικἠ, February 15th, 2017)

Sinking Feeling: Shipping Is Latest European Banking Worry (The Wall Street Journal, February 10th, 2017)

From the crossroads to the world… Image credit: Karatzas Images

© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information here within has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

2017 03MAR07 N Ναυπηγησεις-διαλυσεις, διπλη προκληση για τα bulker carriers

Shipping industry’s “Neither a borrower nor a lender be”

2016 for the most part has been a difficult year for every sector in the shipping industry: weak rates for dry bulk, containerships, offshore and even tanker vessels exacerbated the financial distress for many owners and their lenders. Recently however the market has shown signs of hope, here and there, with freight rate and asset price improvements, but in general, the greatest hope of all has been that the worst days in shipping, likely, are behind us.

Great name for a bank by the water, but regrettably no shipping loans offered. Image credit: Karatzas Images

One driver in shipping that has not shown any signs of promise are shipping banks in terms of expanding their book in the industry. The market collapse since 2008 has been especially hard for the shipping banks which first saw their clients (shipowners) facing a weak freight market and rendering them unable to sustain the original ship mortgage payments, and then, a precipitous decline in the value of the assets (ships pledged as collateral for the ship mortgages) killed any motivation to keep making payment on underwater assets. Most shipping banks are in an expressed course of departing from shipping and actively have been selling their existing shipping loans for the last several years. The news of certain shipping banks turning their backs to the industry is challenging, but the more disheartening prospect has been that shipping banks still dedicated to shipping have not been able to adapt their models for the current market developments; probably because of the fact that they have to act within strict regulatory and auditing guidelines, shipping banks still active in shipping have been maintaining an almost religious focus on a handful of clients who seem to ‘check all the boxes’, while the vast majority of the market remains un-serviced.

As we had mentioned in the past, the funding gap left in the wake of shipping banks has provided opportunities for institutional investors to enter the ship lending market. Whether these funds are categorized as credit funds or lending funds or alternative capital funds or even disguised as leasing funds on occasion, effectively they are providing capital to the industry in the form of debt, as supposed to equity, and effectively in a sense are substituting for the role of a bank as a lender. On the surface of it, shipping is a capital intensive industry and someone, sooner or later, would had to step in to fill the gap left by the banks.

Credit funds, being institutional investors, have by default higher cost of capital than the funding cost of a bank (read customer deposits), and therefore one would expect that obtaining debt from a fund would have to be at a higher cost. And, indeed, debt financing from a fund typically starts in the low double-digits, all in, even for relatively conservative projects. In a sense, it’s unfortunate that credit funds cannot adjust downwards (below their threshold) the cost of debt of a project depending on risk, since their investors (LPs) have been assured of a certain minimum return, typically in the high single digits after expenses and fees. As expensive the cost of debt financing from credit funds as it may sound, one has to compare it not to what shipowners were accustomed to (and possibly spoiled by indulging shipping banks) a few years ago of a couple of hundred basis points (bps) above Libor (L), but to the real risk of the industry overall and the intricacies of the transaction in particular. If risk can accurately be described by variance and volatility, what risk a rational investor would assign to the dry bulk market when the BDI has varied between almost 13,000 and 300 points in a decade, or when the BDI has varied between 300 and 1,300 points in timeframe shorter of a calendar year?

In need of capital… ‘Ships in a Harbor’, ca 1873, Oil on canvas, Claude Monet; Denman Waldo Ross Collection (1906); Boston Museum of Fine Arts. Image credit: Karatzas Images

As expensive the cost of debt from a credit fund as it may sound, it’s still a relatively low return given that institutional investors typically aim at returns in excess of 20% by taking (mostly market) risk. In a sense, it begs the question why institutional investors would bother with debt investments in shipping. Probably, there are several answers to that: many private equity funds entered shipping aggressively in the last few years and their equity investments have shown a misunderstood industry and its risks; debt investments, on the other hand, either by the same institutional investors or funds who were browsing the industry, is a more measured undertaking of risk, in an industry notoriously volatile. Further, the state of the shipping industry has been so bad that shipowners these days casually consent to high debt financing given the alternative, or lack thereof. Thus, market conditions have pushed shipowners to modify their financing cost expectations and move from bank-related debt financing and closer to fund-related debt financing. And, last but not least, let’s not forget that we are living in an usually low interest rate environment where investors are starved for yield and returns from credit investments in shipping can be acceptable given the interest rate environment.

Depending on how one counts this, more than $5 billion have been committed to credit funds and platforms by institutional investors in the last three years. The mandate of some of these platforms includes investments in shipping loans in the secondary market (not just originations); and, discouragingly enough, some of these credit funds are not completely realistic in their expectations, so we hold doubts on whether their capital can be deployed (still, we cannot get over a really nice ad in the Financial Times a few years ago for a fund having just raised $1 billion to invest in distress, including shipping; they managed to deploy exactly zero dollars in the shipping industry so far, and their in-house shipping guru departed for balmier seas). And coincidentally, $5 billion is still a minuscule amount of money for the debt needs of the shipping industry given that the market of shipping loans stood at more than $700 billion at the top of the market a few years ago. Credit funds will not be able to fill the gap left behind by the banks, but again, that’s not their main mandate or concern.

Can credit funds be considered a strategic partner to the shipping industry? Probably a hard question to answer given that credit funds are still driven by institutional investors who are industry agnostic and tend to gravitate to industries / sectors / geographies in distress, and will not be able to accommodate shipping over the long term. But, for time being and for as long as credit funds are active in shipping, their relatively high cost of capital and their more conservative approach (than equity funds of recent or shipping banks of the last decade), one can be assured that shipping asset prices or newbuilding ordering will not get out of hand, as it has happened twice in the past decade. Credit funds may not be suitable for establishing ‘ceilings’ in the shipping industry but mostly to provide ‘floors’ and holding the market from dropping lower.


© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information here within has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

The World Is Not Flat, Anymore

Only a few years ago, it seemed that our world, despite its spherical shape, was stretching to fit into a two-dimensional level playing field. The internet softly, almost hesitantly, started disrupting industries since the dot.com era, and technological innovations have been aggressively destroying market inefficiencies and rent-seeking industries ever since. During the last two decades, it had been easy to access information, to make decisions, to trade; it was easy for people to travel and for goods to be traded and shipped around. A few well-timed events (such as China’s accession to the WTO in 2001) only helped catalyze and amplify the impact of technology.

However, in the last couple of years, it seems that our world, especially when it comes to trade and shipping, sails against the winds. Clouds have been gathering slowly – politics and the outcome of elections are just a symptom for now, and trade volumes have been declining.

Basil M Karatzas had recently published an article in the Cayman Financial Review (Winter Edition) on the subject, mostly evaluating the topic from the shipowner’s point of view. The original article as posted online can be accessed by clicking here. A pdf version of the article from the print version / magazine can be be accessed by clicking on the image below.

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It seems flat… Click on the picture to access the pdf article. Image credit: Karatzas Images


© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information here within has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

2017-02feb01-cfr-trade-and-shipping_the-world-is-not-flat-anymore

Sailing Winds on Wall Street

Shipping is an industry full of surprises. And, volatility. While until February this year the surprise mainly had been about the really terrible state of the freight market, the last few months have shown a tendency for the market to surprise on the positive side. Freight rates for the dry bulk market have moved to cash-flow positive levels in the last few months and tanker freight rates have been fair despite some relative weakness.

It’s a long way from saying that the market has recovered, no doubt. Many shipowners still remain in financial distress and several of the options available to shipping banks can only have adversarial impact on shipowners. But again, when shipping has been in a miserable stage for the last eight years, there are no overnight cures – short of a major macro or geopolitical event.

Besides freight rates, the overall mood for the market seems to be improving; we do not mean only shipowners, who by nature are always an optimistic bunch and they seem pre-conditioned to be looking to buy more ships – always. The capital market seem to have gotten a sense of euphoria too after the presidential elections in the US, whether on a sense of a perceived catalyst of definitely a new approach to governing or on the hopes of an infrastructure investment spree. The fact that capital markets didn’t melt after the results of the Italian elections last week is a further sign of pervasive optimism.

And, we are glad to see that market optimism getting tangible for shipping companies, especially for publicly listed companies. After several years of a bone-dry draught for IPOs and secondary offerings, the last month, just in time for the holidays, brought several successful fund raisings. Most recently, Seanergy of Greece (ticker: SHIP) raised $15 mil in a secondary offering and Safe Bulkers still of Greece (ticker: SB) raised $14 million the week prior; both companies are active in the dry bulk market and intend to finance vessel acquisitions with the proceeds. A couple of weeks ago, Costamare of Greece (ticker: CMRE) raised $72 mil in the containership markets and Höegh LNG of Norway (ticker HMLP) raised $106 mil in the LNG tanker market. A month ago, Saverys in Belgium raised $100 mil in the US for a blank check (SPAC) to acquire dry bulk vessels via their Hunter Maritime Acquisition Corp (ticker: HUNTU) investment vehicle.

The amounts involved are a small fraction of the golden days of the capital markets for shipping companies a decade ago; however, until recently it has been a very quiet market in the capital markets for IPOs and secondary offerings for all types of companies. However, this is a positive development under any light seen. All the offerings mentioned above took some serious effort and / or a serious management team and sponsor behind the companies to raise the money; and still, some of the raisings took place at a discount to the market. Thus, not all news is as rosy and sunny as they appear. However, again, we want to take the view that a successful raising today for shipping is a major accomplishment irrespective of the circumstances. These are five successful attempts for different amounts of money and circumstances and in three different industry segments, two of which (dry bulk and containerships) were left for dead four months ago. It shows in our opinion the resilience of the capital markets and the investor appetite for shipping overall. To that extent, we tend to take the view that the news is just fantastic!

Hopefully the momentum will continue and there will be more offerings in the new year. And, hopefully, any fund raisings will be utilized to build solid shipping companies or strengthen balance sheets of shipping companies and the capital markets will not serve as a fodder for speculative newbuilding orders as it happened a couple of years ago, a course of action that has been detrimental for both the instigators and innocent bystanders whereby the freight market crashed under the burden of huge tonnage oversupply. Hopefully there is a lesson to be learned here.

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Smooth seas… Image credit: Karatzas Images.

Another lesson to be learned too, hopefully, by the recent developments is that the capital markets, especially the US capital markets, are deep and substantial and can be depended upon for shipowners to keep raising money; as long as they have solid management teams and transparent corporate governance and decent business plans. All the companies mentioned above successfully check almost all of these points. Taking a broader historical view of the capital markets and shipping, there has been a wide and diverse populace of shipping companies that opportunistically went public in the last decade and now a few of them ended as penny-stocks or and others soon will be delisted. One cannot blame the market for some of these companies falling into hard times, but there is plenty of blame to go around seeing the management of these companies aggrandizing for themselves by exorbitant executive compensation packages, usurious vessel management agreements and plain old-fashioned self-dealing. Hopefully the present success of shipping companies raising money will be a painful reminder to some of the ailing companies that greed is not always good as it can kill the goose that lays the golden eggs.

We long have taken the position – and have advised our firm’s clients accordingly, that shipping finance is facing structural changes; the old model of committing to lending in shipping based on a hand-shake is extinct. Raising money from shipping banks is and will be getting tougher and more expensive. Capital will be coming to shipping in different ways (capital markets, etc) whereby only few owners will be able to benefit from. The work for shipowners adjusting to the new market circumstances is not done yet.

As we said earlier, we are a long way from a market recovery.


Disclaimer: Karatzas Marine Advisors & Co. has advised or otherwise has been involved with some of the market transactions referenced above. This article is strictly intended for information purposes.


The article was originally appeared on the Maritime Executive under the title “Setting Sail (Again) on Wall Street on December 13, 2016.


sounion-13-bmk_8541

Where the winds are strong… Image credit: Karatzas Images

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information here within has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

Good Old Days for Shipping

The dry bulk freight market has put an impressive performance of late; the Baltic Dry Index (BDI) has tripled since reaching bottom in February. Now, dry bulkers are in cashflow positive territory, sufficient to cover daily operating expenses (OpEx) and, partially, the financial cost. On the other hand, for tankers, it’s a different story, as tanker freight rates have dropped significantly with primarily shale oil being the game changer; but still, in cash flow positive territory.

On the sale & purchase front, there has been strong demand by buyers for bulker vessels; demand for tankers has been lackluster on the other hand. Prices for bulkers have improved in the last several months by as much as 30% for certain types of vessels. Prices for tankers, on the other hand, have been softening. All along, shipping finance is getting ever more difficult to source; and more expensive.

mv-panangia-tinou-4-bmk_9135

A listing ship and a church. Probably a good reflection of shipping today: lots of troubles and prayers in the same port… Image credit: Karatzas Images

Buying interest for vessels earlier this year had been dominated by a handful of big players who either had raised funds or had their own deep pockets to depend on. Such buyers have bought most of the quality, modern expensive (in absolute terms) ships that owners were forced to sell when the market was abysmal and cash flows were negative. Now, we see a great deal of buying interest from smaller shipowner who have to depend on expensive financing to acquire vessels and who actually will have to stretch themselves for acquisitions, even for still cheap at today’s prices – by historical levels. We have seen buyers putting all the resources together tightly to buy one or two vessels but with little cash reserves on the side for a rainy day. These are the typical speculative buyers who try to time the market by buying low and selling high, and who trade their vessels on the spot market in the interim.

If one were to ‘grade’ buying interest, the strong buying interest at present is definitely of low quality. Earlier in the year, there were substantial buyers with deep pockets buying several sistership vessels or fleets of vessels. Now, small players with no strategic or competitive advantage, with thin pockets and lots of dependence on luck and circumstance are looking to buy a cheap vessel here or a cheap vessel there. Now that freight rates have been improving and the market seems to breathe again some sign of life, they all rush to ride the wave. For bulkers it’s a ‘buy’ mode, but for tankers it’s a ‘stay away’ mode as in the latter market rates have going south and the momentum has been evaporating. All in all, a highly speculative approach to the shipping market, especially by the weaker hands who borrow expensively and they bet that the market will turn around sooner than their short runway will disappear.

We view with concern the recent resurgence of buying interest in the dry bulk market and the flip side, the absence of interest for the tanker market. Buying interest is not driven by access to cargoes or fundamental analysis of stronger demand; it’s mostly predicated on the fact that dry bulk vessels are cheap and the freight market is improving, at least in the short term. Pure speculation without much analysis; honestly, we are not the ones to judge on that, if that’s how one wishes to apply a market model. On the other hand, speculation has brought much of the present tonnage oversupply from owners who were ordering them to shipyards that were building them to shipping banks that were financing them.

Having experienced a cashflow negative market for almost two years which saw many shipowners burn their cash to survive or seen their vessels ‘re-allocated’ by the banks, the amount of speculative action in the market is scary. We appreciate that shipping and volatility (and speculation) go hand-in-hand, but one would had thought that two years of bleeding should had taught a lesson or two.

A sign of froth in the stock market is when small investors get all their little savings together and step to open a brokerage account and try to participate in a rally, buying odd lots of shares, and trying to ride the tail of the wave. It’s interpreted that when weak hands get the itch for speculation and getting sucked in, it’s when one knows that there is little more money to be pulled into the vortex.

We are all for entrepreneurship and active capitalism, but buy because ‘ships are cheap and the market will recover’ is not always the best business plan. Typically assets that are out-of-favor will again be back in favor, no doubt, but there is more to the story in order to make money by other than just speculating. Otherwise, it seems a sucker’s game.


This article was first published on the Seatrade Maritime News under the title: “Is it really the right time to buy ships?” on November 28, 2016. We’d like to thank them for their finding it worth publishing on their esteemed website!

© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.


IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information here within has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

Basil M Karatzas and Karatzas Marine Advisors Quoted in the News

The shipping industry has been maintaining a very active profile in the mainstream international business press. Major bankruptcies, reorganizations, merges, vessel arrests and auctions are daily routine these days. Shipping banks, shipping loans actively and non performing loans (NPL) along with provisions are of concern or interest to many.  And, the  freight market that keeps surprising in terms of volatility.

We are delighted that Karatzas Marine Advisors & Co., and its founder Basil M Karatzas have become the contact to have for shipping market expertise; with prompt access to market information and a vast network and access to senior executives worldwide, in the shipping industry and several complimentary industries, the company has had a front row seat to today’s developments in the maritime industry and has been enjoying an active deal-flow and the trust of many in the shipping industry.

Dry-Bulk Shipping Owners Get Reprieve as Rates Rebound
(Wall Street Journal, November 24, 2016)

What Will Save the Shipping Industry? Eight Industry Thoughts Leaders Weigh In   (LLoyd’s List, November 17, 2016)

Taiwan Approves $1.9 Billion Aid Package to Troubled Shipping Companies
(Wall Street Journal, November 16, 2016)

Varsler shippinghavari (translated as ‘Warning Signs for Shipping’)
Dagens Næringsliv, (November 11, 2016 – In Norwegian)

Τα απόνερα από την εκλογή Τραμπ
(Η Ναυτεμπορικἠ, November 10, 2016 – In Greek)

Israel’s Zim Looking to Sell Most Global Shipping Operations
(Wall Street Journal, November 4, 2016)

Japan’s Largest Shipping Firms to Merge Container Operations
(Wall Street Journal, October 31, 2016)

Offen Group Selling Two MR Tankers
(Lloyd’s List, October 25, 2016)

Pressure on German shipping lenders unlikely to ease
(The Financial Times, September 21, 2016)

Guest Voices: Shipping Banks Face Sinking Prospects as They Postpone Reckoning
(Wall Street Journal, September 19, 2016)

It’s not over – Shipping industry adapting to difficult times
(Wärtsilä, September 12, 2016)

Shipping industry not buoyed by low fuel costs
(The Cayman Islands Journal, June 1, 2016)

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Aptly named containership vessel MV ‘King Basil’ departing the port of Piraeus. Image credit: Karatzas Images

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