Almost every day we’re being fed reports about ever larger container ships being ordered from Korean and Chinese shipyards, expensive dredging projects, and the purchase of giant RTGs and STS cranes for U.S. container ports.
If you’ve been hiding under a rock and haven’t heard, these urgent steps are being taken by maritime officials because of the expansion of the Panama Canal and the enormous amounts of foreign made goods that will be carried through that canal by those new giant container ships for ultimate delivery to demanding U.S. consumers.
[If you happen to think this isn’t a scam, well listen. We have a nice bridge in Brooklyn we can let you have at a bargain price.]
The U.S. media has been covering up the truth, but here’s what Korea’s Kyunghee Park’s recent report revealed about the difficulties being faced by container carriers. “Korean Shipping Lines Face Cash Crunch After Expansion”, is how he began.
“South Korea’s three biggest shipping companies face a cash crunch as 3 trillion won ($ 2.8 billion) of bonds are due for payment in the next two years amid mounting losses from a global slump in rates to carry cargo.
“Hanjin Shipping Cp., Hyundai Merchant Marine Co. and STX Pan Ocean Co. are all forecast to post losses in 2013 for a third consecutive year, further denting the combined 1.3 trillion won of cash and near cash items they had as of the end of September. The companies need to repay 1.4 trillion won of bonds next year and 1.6 trillion won the year after.
“A debt-fueled expansion after the 2008 Lehman Brothers Holdings Inc. Bankruptcy filing pushed the carriers into losses so deep they may need financial assistance to repay loans taken to buy new vessels, said Kim Ik Sang, a credit analyst at HI Investment & Securities Co. As China’s economy cools and weak consumer spending persists in the U.S. and Europe, the companies are unlikely to turn around to improve their ability to repay loans, said Um Kyung A, an analyst at Shinyoung Securities Co.
“‘It’s pretty much out of their control,’ said Seoul-based Um. ‘Cash is depleting quite fast while the shipping industry isn’t showing any signs of recovery. I don’t think we can completely forego the possibility of things turning worse next year.'” –
That’s the real skinny. Straight from the horse’s mouth. But don’t let the taxpayers in on this, otherwise how would our upstanding port officials get those billions of dollars they want to spend on unneeded port expansion, dredging projects and outlandish RTG and STS purchases?
As P.T. Barnum said, “There’s a sucker born every minute.”