Light at the end of the tunnel

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Where there is hope there are brokers, and despite the ambiguous market situation as shipping still sees itself stuck fast in one of the world’s worst economic crises in living memory, the charter market is still on the move, writes Amy Kilpin from Oslo.

According to Denis Petropoulos, Joint Managing Director of top London broker Braemar Seascope Ltd, the recession is not over, “but there is light at the end of the tunnel. Market rates may be low but there are still a significant number of transactions.

Addressing delegates attending the 4th International Ship Management summit in Oslo, Mr Petropoulos said: “As the world gets its confidence back, the price of oil is going up. The lights are not going to go out – we might be doing less, but oil and its products will always need to be carried by sea and there will definitely be growth in the future,” he revealed.

However, while there is optimism that shipping certainly hasn’t met its watery grave and that future market regrowth is simply a matter of time and confidence, it is still prudent to tread carefully until the other side of the downturn is safely reached.

Mr Petropoulos added: “There is still an enormous amount of ships coming, little credit available, undervalued assets and little market return. Many will suffer consequences if things aren’t done correctly and efficiently.

“Efficiency is a direct cost saving, but the cost of inefficiencies becomes pronounced when returns are low. The importance of operational efficiency is paramount, and errors can prove fatal.”

Mr Petropoulos warned that vigilance is critical, and post fixture claims can be a considerable challenge for owners and operators with the potential for them to be left out of pocket for months or even years.

“Charterers who withhold payments, whether through their suppliers or receivers, are themselves contributing to the increase in risk if owners are forced to compromise on any part of the transportation process.

“The experience levels that exist in operations should come from experience within the industry, and unfortunately we see people with little experience who, inadvertently, cause loss of earnings for their principals,” he added.