The shipping industry has been hammered.
The 250-year old Baltic Dry Index, a measure of global dry bulk shipping rates, dropped 94% to 663 points in the six-month period following May 2008 when it hit an all-time high of 11,793 points. Shippers far and wide saw charter rates, and by extension ship values, drop precipitously. This was the case at Singapore-based shipping trust Rickmers Maritime.
Even though our vessels are on long-term fixed-rate charters with reliable, consistent and stable cash flows going out for a few years, banks only recognise charter-free market valuations in loan-to-value covenants, said Quah Ban Huat, chief financial officer of the trust. From late 2008 onwards, container volumes...
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