Restructuring: The Perfect Storm Finally Passes

In words of American writer John McPhee, author of the ubiquitous tale about U.S. merchant mariners Looking for a Ship, “there is always someone, somewhere getting it.”

So it also goes with restructuring in the shipping industry; no matter how superb the market conditions may appear, there are always a group of companies paying mightily – generally for sins committed in an earlier time. This year, the blood in the water belonged to, among others, Stolt Nielsen, Stolt Offshore, Oglebay Norton, Northern Offshore, Ocean Rig, Trico Marine, Royal Olympic Cruise Lines, and American Commercial Lines.

And as we always see in a sharply rising freight market, the companies that get caught short get squeezed. It used to be through timecharters, being long cargo at predetermined rates but short the ships to carry it, but with the increasing acceptance of freight forward agreements, the number of companies driven into financial distress through paper has also grown. Take for example China Aviation Oil, which lost $550 million by being caught short oil in a market that kept on rising.

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