Bangkok: Time is precious, rarely more so than in shipping, an industry that is more often than not a precursor to what’s about to happen to the world economy.
When it comes to getting timing just right in our industry Thailand’s appropriately enough named Precious Shipping would appear to be riding the waves of the current up and down cycles with the aplomb of a Swiss watchmaker.
Precious sold all its older ships – average age at sale around 26/27 years – during the good times with 35 ships sold starting in 2007 and ending in Q1 2010 at a capital gain of $80m and shrank the fleet from 54 to 19 vessels.
“The biggest risks that shipowners carry are older and expensive ships on their balance sheet,” Khalid Hashim, Precious Shipping’s managing director tells Maritime CEO.
The second biggest risk that shipowners carry is the amount of leverage that they have on their balance sheets, he adds.
“We waited patiently till we felt the time was right and then started to grow the fleet in right earnest by increasing our leverage,” Hashim says. Since the last quarter of 2011 Precious has accelerated that process and have 39 ships in the water at the moment with one supramax resale expected to deliver this month. Precious also has four cement ships on order with delivery expected roughly one a quarter during 2014 and these are pre-committed to 15-year time charters at $15,000 per day per ship. Precious also has another two bulkers under construction that will deliver during 2014.
“We have plans to take our fleet to an eventual size of between 60 and 65 ships,” Hashim reveals.
The shipping line has extended various credit facilities that it has held since 2008, without drawing down on them, and the company has refrained from buying second hand ships during the boom years till prices came down sufficiently by the end of 2011 to make them attractive propositions once again.
However, this fleet build up is not to say that the downturn is over. Far from it, says Hashim.
“We think that the downturn will run right through 2013 and the bulk of 2014,” he says, explaining: “This is because the oversupply created during 2009 to 2012 will finally be absorbed by the end of 2014.”
Precious has no plans to order more ships at the moment, Hashim says, before adding: “We are always on the lookout for attractive propositions whether they be in the form of distressed second hand ships or brand new resales or yards offering attractive prices and terms on future newbuildings.”
Nevertheless, as Precious looks to nearly double its fleet size expect this Thai company to be very active in the coming months. [11/07/13]
NEED TO KNOW: Precious Shipping
Founded in 1989 and listed in 1993 Thailand’s Precious Shipping is one of Southeast Asia’s top names in the dry bulk sector. Current fleet stands at 39 ships, with plans to own up to 65 vessels soon.
