The latest developments in the dry bulk market is in everyone's lips these days. Athanasios Samios, CEO of Samios Shipping is a ship owner that has escaped most of the weather storm, by selling off vessels before the market collapsed. He is now
among the many looking for investment opportunities in the market, while closely monitoring the freight markets and their behavior, trying to discern signs of recovery. Hellenic Shipping News spoke with Mr. Samios on these issues, in an effort to see what smaller ship owners think of the situation and how are they coping with this environment. Samios Shipping is a ship management company, located in Piraeus. The foundation of the Company goes back in 1973. InΒ 1993 the control of the Company was handed over to the new generation and Athanasios Samios is now heading the shore based team which is comprised by ex seagoing marine officers and personnel who have been with the Company over a long period and have built up an excellent modus of co-operation in order to effectively combine experience and innovation.
The main activity of the Company is the management of bulk carriers. Mr. Samios said that "since 2005 we have witnessed unprecedented levels of freight rates across the entire dry bulk market. In this booming market environment vessel's values skyrocketed. As a consequence a vast number of newbuildings have been contracted and many older vessels continue trading beyond their normal average trading life.
In the light of the above the Company decided to take advantage of the high values by selling almost all its fleet. Our last sale was back in September 2008. Today the Company has dramatically scaled down the number of her vessel to just one.
Going forward the Company remains firmly committed to its strategic plan for renewal and expansion in terms of tonnage.
Our financial strength and our position in the market make us very optimistic to believe that we will soon be able to commence our renewal programme by investing in younger and larger vessel at very favourable levels".
The dry bulk freight market collapsed during the past couple of months. Were you expecting such a violent behavior from the market?
I believe that even the most pessimistic scenario could not have predicted such a violent drop within such a limited time. As far as I know, it is the first time in history that an economic index of such gravity as the BDI, dropped almost 95% within a month.
Which factors acted as "accelerators" to this fall?
The credit crisis, the highs the market had reached before the crisis and the sudden lack of cargoes.
Is it safe to say that there are ships in specific routes which are not even able to cover their operating costs?
It is, under the circumstances safe to say so.
With reports about ships idling worldwide, would you adopt such a move or is it better to keep a ship running even with losses?
I am of the opinion that it is better to cut your losses than let them run. Probably idling a ship today it is not only better for the Owners cost wise but it is a factor that prevents the market from further deterioration.
Do you believe that with the market stabilizing at such low levels, we'll witness a wave of companies bankrupting or idling more vessels?
If the market stabilizes at today uneconomical levels we will experience more idle ships in the future.
Whether we will accordingly experience a wave of bankruptcies or not will largely depend on the length of the market slump. The longer it is the more catastrophic for companies, will prove to be.
How well can smaller shipping companies weather this crisis? Are they in more danger than larger ones?
Theoretically speaking and on an equal basis a larger Company is in more advantageous position than a small one. Under the crisis circumstances however, is a big highly exposed company in a better shape than a small, debt free and cash loaded company?
Would you say that some owners are trying to get away from the hefty new building contracts they signed?
Unless their new buildings are already committed in serious business commitments and they have arranged financing, I cannot imagine an Owner who has not regretted by ordering during the highs of the past.
Is it time to look towards scrap yards, or is this a dead end given the low demand for scrap and the low prices?
Recycling is an essential part of the shipping industry. We experienced an unprecedented drop in demolition during the last five years. Accordingly, the life span of vessels extended by far the industry standards. Demolition becomes essential again, not only as a factor absorbing excess tonnage but on a practical basis as a means to recycle a big number of unwanted ships.
Cash-rich ship owners are already contemplating moving ahead with new acquisitions. Do you think that they will emerge victorious from this crisi?
Like with stocks, you can still make money if you buy around the bottom and not on it. The question is where is the bottom. Time will prove.
Going forward, what's your estimate about the future of the market? How long can the world trade be kept at a halt?
This is a matter of time. However with a huge supply of new buildings coming into the market, demand for cargoes is the key factor. Unless, demand substantially increases from today's levels we cannot expect, I am afraid, a robust and sustained recovery on the market.
Nikos Roussanoglou, Hellenic Shipping News Worldwide