TALK may be cheap, but this could be precisely what the industry needs if it is going to collectively dig itself out of the financial hole in which it has found itself. It is perhaps the only solution it can afford.
While the precise status of many cancellations appears increasingly elusive, and in some cases shrouded in speculative misinformation, we are now seeing the first positive signs that flexibility and pragmatism have returned to the market.
If both owners and yards follow the influx of newbuilding contracts to the letter and stick to the existing schedules, it seems clear that problems will follow. We have already seen defaults, but without a degree of flexibility there will be far more blood spilt on the boardroom floor before this downturn is over.
Cancellations are never going to be popular, but deals are possible. Just this week, Cosco Dalian Shipyard accepted a buyer’s request to cancel two vessels and delay the delivery of another. The pay-off, that the buyer will pay 80% of the total contract price of three other ships by the end of this year, far earlier than the original due date, is an encouraging indication that compromises are possible.
Less dramatic deals are being struck every day as owners seek to revise stage payments and even postpone delivery. To an extent these are merely stop-gap solutions to provide breathing space, but they are no less important for that.
It will help neither the financially weak or strong players in this delicate equation if either side digs their heels in too deep.
