This year will all be about survival for many shipping companies, a leading shipowner has warned. Tim Huxley, chief executive of Wah Kwong Maritime Transport, said poorly performing shipping markets could result in further bank foreclosures on ship finance loans and charterers returning vessels to owners. Several operators had already disappeared since the downturn in the shipping sector started in 2008 and others would follow. "Sadly, we are still to lose some of the companies who have soldiered on, often being the victims of charterers who have returned the ships their owners thought were on secure charters but who have now simply got to the stage of running out of cash." His views were supported by other shipping experts. Ravi Korivi, group managing director of Bernhard Schulte Shipmanagement, said: "If one looks at the container vessel market, there is large overcapacity. This is going to make it difficult for small operators." Captain Firoze Mirza, managing director of Bernhard Schulte Shipmanagement in Hong Kong, added that present average daily charter rates for massive supertankers were around US$5,000, while actual operating costs were almost three times that amount. The dry-bulk sector also suffers from an influx of new tonnage, which depresses charter rates and operating revenues. Peter Sand, chief shipping analyst at shipping lobby group Bimco, said: "It will be some time before the fundamental [vessel] supply and [cargo] demand ratio are balanced. The fleet expansion during 2012 has not improved the situation, as the dry-bulk fleet grew by 70 million dwt [deadweight tonnes] and the containership fleet by 1.1 million teu [20-foot equivalent units]." The dry-bulk fleet topped 679.2 million dwt on January 1 this year, according to British shipbroking house Clarkson, which forecast a further 20.1 per cent increase until around 2016. Commenting about 2012, Huxley said the dry-cargo market "endured its worst year for a quarter of a century", adding that this year was unlikely to be much better. "For many, this year will be about survival," he told about 80 maritime industry representatives at an Institute of Chartered Shipbrokers Hong Kong meeting late last week. Huxley said keeping charterers and bankers was important but not easy. He said that "almost without exception", charterers were paying owners "more than they are earning or what they could charter in a similar ship for". Turning to banks, Huxley said servicing existing loans was possibly more of a problem for shipowners. "With charter rates barely covering operating costs, there is little or no money left to pay the mortgage. Restructuring existing loans has taken over from trying to place new business for many bankers, in some cases a period of interest-only payments until the market recovers is the only option," he said. Huxley added: "Most banks have got loans on their books that are technically in default on loan-to-value covenants [which require the value of the ship is 100 to 120 per cent of the existing debt], but the banks are very reluctant to call on owners to stump up cash they don't have." The banking crisis in Europe had led to some of the major ship finance lenders to signal their intention to get out of shipping. As a result, "the outlook is bleak, based on the traditional ship finance model", he said. But he added: "The fact that we have a banking crisis on a grander scale than the shipping market downturn may in a weird way help shipping recover. "The lack of finance available means that even with new building prices at half what they were just a few years ago, it is very difficult for an owner who may be tempted to order a ship to do so." This lack of orders, while affecting shipyards in China, South Korea and Japan, would help balance the supply and demand. Shipping commentators have mixed views about when the industry will start to recover, with opinions varying between the end of this year to 2014 or later. Bimco's Sand said that with gross domestic product and world trade forecast to grow 3.6 per cent and 4.5 per cent respectively this year, this might bring some relief to the industry. Huxley avoided giving forecasts, but said that with the industry in recession, it meant it provided an opportunity. "An opportunity not just for shipowners who have got access to cash to buy cheap assets, but for the next generation to make an impression," he said.