‘Everybody in a bad place right now’ as Copenship buckles

Distress in the dry cargo market bubbled to the surface this week with the collapse of Danish operator Copenship, which threatens to affect at least two well-known shipowners, while rumours are circulating about others.

Copenship and subsidiary Copenship Bulkers filed for bankruptcy on Tuesday, with the Baltic Dry Index (BDI) just 23 points above the historic lows seen in 1986 and market rumours of up to 200 supramax and ultramax vessels for sale and no willing buyers.

Operations at Copenship ceased after its filing with the Maritime and Commercial Court in Copenhagen, Denmark, with the company blaming an extremely poor market, counterparty defaults and unsettled claims.

Details relating to the activity of the privately held company are in short supply, meaning very little information is available on Copenship’s counterparties before they are declared to the court, and chief executive Michael Fenger could not be reached to shed further light on the situation.

Wisdom Marine Lines, Taiwan’s biggest shipowner, is one of those with exposure to Copenship.

Wisdom business director Mike Chao confirms to TradeWinds that his company has two 61,000-dwt bulkers on period time charters to Copenship but prefers not to reveal the names.

However, one of the ships seems likely to be Wisdom’s 61,000-dwt Copenship Wisdom (built 2013) and TradeWinds understands the other is the 61,400-dwt Amis Wisdom VI (built 2011).

The two went on charter for 54 to 60 months in March 2013 to Copenship Bulker AS and December 2012 to Copenship Broker AS, respectively. The two ultramax charters were done a couple of years ago, Chao says.

“Up to today, one of the ships has been paying okay,” said Chao.

“The other one is behind, so we are consulting with legal counsel to recover what we are owed.”

But he acknowledges that the Copenship bankruptcy filing will complicate such efforts. He characterises the amount that is currently due as being more than $1m. Prospective damages from future loss of hire on the lives of the charters are not included.

“We probably don’t know more than you know about it,” said Chao.

TradeWinds has also confirmed that Turkey’s Ciner Shipping has two 63,500-dwt ultramax bulkers chartered to Copenship.

However, it is believed that the Yangzhou Dayang-built Samsun and Konya (both built 2013) are fixed to Copenship’s Singapore operation, which has not declared bankruptcy.

“Numerous outstanding hire payments are pending,” said a source close to the Istanbul-based company.

Western Bulk was mentioned as another outfit with exposure to Copenship but TradeWinds is told its position is “limited” and “short term”.

Copenship is the first dry cargo casualty in the latest slump and the jury is out as to whether further failures will soon follow.

“Lots of companies struggling in 2009 through 2013 are not left with a lot of fat on their backs. Everybody is in a bad place right now,” said one major bulker executive.

On its website, Copenship says it operates more than 50 vessels at any one time. After its exit from the panamax market last year and the dire rates on offer right now, sources suggest it may have 10 or fewer ships left to hand back.

While some fear more collapses may follow, others say this is unlikely given the size of the remaining fleet.

It appears Copenship intends to continue in the multipurpose (MPP) business, run via its Copenship MPP A/S brand, which was not mentioned in the bankruptcy document. Sources suggest a positions list was circulated by the company on Wednesday.

Copenship filed for bankruptcy on a day when the BDI sat at 577 points. It declined further to 569 points on Wednesday, just above the record low of 554 points of 31 July 1986, according to data from Bloomberg.

With rates so low, TradeWinds is told that up to 200 ultramax and supramax bulker resales are available in the market, with one executive placing the buying interest at zero.

“The buyers are the prudent ones,” the executive said.

Despite the distress in the market, sources say major counterparties have yet to make the call for leniency on charter contracts. Phones could start ringing in the next few months, it is suggested.