KC Maritime on expansion course
With a crash in ship prices, the company wants to beef up its fleet of cargo vessels through new orders and on the second-hand market
Hong Kong shipowner KC Maritime is aiming to expand its fleet of dry bulk ships to take advantage of a crash in new and second-hand ship prices, which have fallen between 20 and 30 per cent since 2010.
Chief executive Captain Vikrant Bhatia said the firm was looking at different types of dry cargo ships, from 55,000 dwt (deadweight tonne) Supramax vessels up to 170,000 dwt Capesize ships.
Bhatia said all options were being considered, including ordering vessels from shipbuilders, buying modern second-hand ships or acquiring resales - vessels which are put up for sale by shipyards that the original owner ordered but cannot pay for.
KC Maritime was expected to make its first acquisition "within this year", Bhatia said.
He was speaking after the firm named and took delivery of the Darya Radhe, the first of two 82,000 dwt Kamsarmax ships built at Daewoo Mangalia Heavy Industries in Romania. The second ship, Darya Devi, was named at the same ceremony although the vessel is still being built and is due to be delivered in January.
The ships cost less than US$40 million each and are registered in Hong Kong. They were also 10 to 15 per cent cheaper to build at Daewoo's Romanian shipyard compared to its facilities in South Korea, Bhatia said, adding the quality was as good as or better than Korean-built ships. "KC Maritime was the first Far Eastern owner to order at Daewoo Mangalia. The ship has exceeded our expectations," he said.
Sham Chellaram, the firm's chairman, said he was confident that with the growth plans, the company "can develop its relationship with Daewoo Mangalia with new business".
Darya Radhe has been chartered to commodities giant Cargill for two years and is on its maiden voyage carrying grain from Ukraine to the Middle East. The ships are being financed by Deutsche Bank, which wants to expand its presence in Asia, despite economic problems in Europe.
Felix Ulbricht, the bank's head of shipping in Asia, said it had lent about US$1.6 billion to shipowners in Asia but was keen to grow this volume. He gave no target amount.
"We want to increase our share in Asia," Ulbricht said, adding that with the prices of new and second-hand ships at current low levels, there were still lending opportunities despite a downturn in the shipping sector.
He said shipping remained attractive to investors compared to other sectors such as property, bonds or shares. "The money is there."
KC Maritime is among several Hong Kong shipowners planning to grow their merchant fleets in the expectation that freight rates may climb again in two to three years. This is despite the current severe downturn as a glut in tonnage and slowing cargo demand depress charter rates.
Pointing to the outlook for the dry bulk market, Sinotrans Shipping deputy general manager Li Hua said: "The gap between supply and demand is narrowing."
The supply of tonnage is set to grow 13.7 per cent this year, while dry bulk seaborne trade will rise 4.9 per cent, based on figures from maritime consultant Drewry. Tonnage growth is forecast to slow to 7.9 per cent in 2014, while trade growth will rise 6.4 per cent.
Li said the supply of tonnage and the growth in cargo volumes would slowly "reach equilibrium".
Jack Hsu, managing director of Oak Maritime (Hong Kong), confirmed the company had recently ordered two 82,000 dwt Kamsarmax dry bulk carriers from Shanghai Waigaoqiao Shipbuilding for delivery in 2014.
The deal includes options for two similar vessels. The ships cost about US$28 million each.
Executives from shipowner Tai Chong Cheng Steamship recently visited shipbuilders in South Korea and Japan to discuss possible contracts for two 115,000 dwt Aframax oil tankers. The contracts could be awarded this year, with delivery scheduled for 2014.