Transporting dry commodities like coal, timber and steel are not so profitable since the 2008 financial crisis forcing many dry bulk shipping firms to bankruptcy. Besides, as an extension of the crisis, many ships were scrapped. Danish shipping company Torm on Wednesday announced that it would also withdraw from the dry bulk shipping market after selling two vessels and handing back another leased bulker at the beginning of October. Torm will continue as a refined products tanker company.
Until a few years ago, Torm was one of the largest tanker shipping companies in the world and had ambitions of a takeover of D/S Norden, another dry bulk shipping company. But, Torm due to the recession, suffered a long debt restructuring process giving up 62 percent of Torm’s shares to Oaktree Capital Management. As that takeover failed, Torm was left with debts and redundant ships when the 2008 crisis took its toll. The company has now 68 owned and four chartered product tanker vessels that carry gasoline, diesel oil and jet fuel. At the end of June, its debt was $1.34 billion, overshadowing the book value of its fleet.
By contrast, D/S Norden has managed the crisis much better and had at the end of June, cash and securities of $340 million and undrawn credit facilities of $420 million. The spot rates of largest vessels fell from $200,000 a day before the crisis to around $9,000 a day forcing companies like Torm to quit the sector.
Source: Reuters
