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The Bankruptcy Of The World’s Oldest Shipper Signals Rough Waters Ahead For The Battered Industry
Stephenson Clarke, the British shipping company, has been around since 1730 when George II was king.
Sadly, they are now in liquidation and shutting down for good.
Here’s part of their statement via Reuters:
“While previous economic downturns have been weathered, the current market is one of the worst experienced for many years with no upturn forecast for at least 12 to 18 months,”
Prior to the financial crisis, shippers placed huge orders for ships, which have lengthy lead times. The Chinese shipping yards also brought an immense number of ships on line.
Once the economy soured, all of the excess capacity was left idling and shipping rates collapsed. Shippers went deep into the red.
In recent years as the economy began to stabilize, the shipping industry rejiggered their finances and operations in an effort to navigate the bumpy economy.
However, even the most prudent strategic corporate maneuvers couldn’t have saved Stephenson from an an economy that’s rapidly deteriorating again.
“The economy is growing slower than expected,” said Dagfinn Lunde to Business Insider.
Lunde, who many recognize as the most powerful shipping banker in the world, thinks that Stephenson’s forecast for a shipping industry upturn in 12 to 18 months is likely too optimistic. He sees more shippers going down.
However, he pointed to some bright spots in shipping including offshore energy, liquefied natural gas (LNG), and cruises.
Even Lunde was surprise at how quickly the cruising industry recovered from the Costa Concordia disaster.
Ultimately, the problems of the shipping industry are largely supply issues, or issues within the shipping industry.
Regarding the economy as a whole, it’s still growing.
“There is no recession on the demand side,” said Lunde.