Safe Bulkers CEO: Oversupply Not Coming Back

The shipping industry has to face the music when it comes to becoming compliant with the new environmental regulations, such as the Ballast Water Management Convention (BWMC) and the IMO’s 2020 Sulfur Cap, as highlighted by Polys Hajioannou, Chairman & CEO of Safe Bulkers in an interview provided by Capital Link.

Namely, shipowners have to install the necessary BWM equipment during the next drydocking of their ships, while ships older than 20 years will most likely head for scrapping as making them compliant is not cost effective.

Hajioannou said that Safe Bulkers plans to start installing the equipment on its ships as of early 2018.

This, in turn, will result in removing of older tonnage from the fleet providing some breathing space for owners in the oversupplied market.

Speaking on the sulfur emissions cap Hajioannou said that owners have to wait and see what the industry will offer in terms of technological solutions to become compliant with the new regulations before they decide how to cope with the new regulations.

As explained, the use of scrubbers is not economically viable and shipowners cannot shoulder the costs on their own, adding that the whole industry has to contribute to a certain extent.

“Other solutions have to be found. Either financing for the necessary equipment or by concentrating on how the industry will provide the necessary fuel quality required,” he added.

Hajioannou further explained that these are the main reasons why he is optimistic that the oversupply in the market “will not come back in the foreseeable future.”

Namely, the current market situation is keeping orders at bay, having in mind that even the shipbuilding yards have not yet embedded the new regulations in their designs as these still comply only with Tier II NOx emission standards.

“We have to wait for the new technology to come out and ships compliant with Tier III emission regulations to come on offer before we consider ordering,” he said.

As it is still early days, Hajioannou stressed that many changes are expected to occur with respect to adoption of the new regulations and their implementation.

In addition, financial constraints and lack of available financing for shipowners is another factor preventing speculative ordering.

As disclosed, there are only 20 banks left from the previous 42 that have remained in the sector in Europe, prompting owners to seek more expensive financing in China.

Monaco-based dry bulk shipping specialist Safe Bulkers managed to return to profitability in the third quarter of 2017, after seeing losses for an extended period.

In the three months ended September 30, the company’s net income reached USD 6.7 million as compared to net loss of USD 24.5 million reported during the same period in 2016.

The positive result was influenced by net revenues, which increased by 38% to USD 37.3 million for the third quarter of 2017, compared to USD 27.1 million for the same period in 2016, driven by improved charter rates and a rise in the average number of vessels.

The company’s 38 vessels were earning a time charter equivalent (TCE) rate of USD 10,419, up from a TCE rate of USD 7,637 during the same period in 2016.

As of October 25, 2017, the company had contracted to acquire its last drybulk newbuild vessel, a Japanese Kamsarmax class vessel, scheduled for delivery in 2018.

World Maritime News Staff