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Perseveranza di Navigazione: Dry bulk glass half-full?

Even when the Baltic Dry Index is sinking down day by day it’s possible to see the glass as hulf-full somehow. That’s the view of Angelo D’Amato, ceo of Perseveranza di Navigazione of Italy.

“I do not agree with the provisions I have heard recently by many analysts saying that the industry seems structurally compromised. Dry bulk is a cyclical business and good freights will return,” emphasises the head of the Naples-based shipping company. “What I note these days is that finally the industry has started to use massively the only tools available to rebalance the supply and the demand: accelerate scrapping even for less than 20 years tonnage and layup vessels.”

D’Amato reckons between 600 to 700 ships will disappear from the supply side in the coming couple of quarters.

Recent statistics released by Bimco show some 30m dwt of dry bulk tonnage was scrapped last year and a further 4.6m dwt were also dismissed in January this year.

Looking at the national merchant fleet, D’Amato underlines that layup will only marginally affect the Italian dry bulk industry since the average age of Italian-owned bulk carriers is just around five years.

While it is nigh on impossible to predict when the markets will rebound the Perseveranza ceo is keen to delve into the global orderbook statistics.

“A big question mark is also how many of the newbuildings on order will effectively see the water. Many are ordered into lower rating Chinese shipyards and clearly any lender will try to escape from the drawdown. These are all signs which may predict that many vessels will remain idle in the yards for months or, better, will never see the water. I hope our industry has finally understood that present market conditions do not allow for any further newbuildings.”

Perseverenza di Navigazione is today more a tanker company rather than a dry bulk one, as the company’s fleet is made up by one LR1, three handysize tankers and three bulk carriers (one handysize, one panamax and one post-panamax). The company is very close to finalising its agreement with banks for a debt restructuring, a common situation for many of the nation’s hard pressed owners at the moment.

D’Amato, who is also financial manager of the family company headed together with his brother Umberto and his father Peppino, has plenty of firm views on the new sources of capital entering shipping.

“Intelligent equity and/or turnaround funds are not a threat but an opportunity. We see some hedge funds trying to buy loans, also on the Italian market.

Some are quite ignorant of the Italian corporate law, which can be very protective for the debtor. This can drive to a wrong pricing and would push companies which can be able to overcome the present crisis without any procedure into court protection procedures.”

His advice in conclusion: “The key to avoid destroying value is to involve the debtor in whatever discussion and not only the original lender.”

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