Published October 22, 2009

More delivery reschedules for Cosco (S)

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THE waiting game continues with Cosco Corp (Singapore) announcing another series of vessel delivery reschedulings for five 92,500 dwt bulkers from a European ship owner.

The latest rescheduling, part of a huge US$1.3 billion order in October 2007, is the fifth time in the past three months that Cosco has either deferred deliveries or payments and is starting to emerge as a preferred means to help shipowners meet the problems of either credit woes or oversupply in their fleets.

Just earlier this month, Cosco's Cosco (Nantong) Shipyard agreed to defer instalment payments of around US$99 million for a hull unit to a lump sum payment on final completion. And at the end of September, an agreement was made to defer deliveries of another five bulkers.

Cosco's Cosco (Dalian) Shipyard unit agreed, following a request from the shipowner, to reschedule the delivery dates to between 15 and 23 months after their original delivery dates, the last of which will now take place by December 2012 instead of September 2011.

The reschedulings are not expected to have any material impact on Cosco's net tangible assets and earnings per share for the year ending Dec 31, 2009, Cosco said.

Although the benchmark Baltic Dry Index is at a two-month high, this is still less than a fifth of the highs seen last year. The dry bulk sector is being weighed down by a double whammy of weak consumption of raw materials and a huge potential overhang of new ships being delivered. Owners, those that still have access to credit to pay for the ships they have ordered, are trying to delay deliveries as long as possible to avoid adding more supply to an already saturated market.

Meanwhile, Cosco also announced that its Cosco (Zhoushan) Shipyard subsidiary on Tuesday delivered a 57,000 dwt bulk carrier, the MV Zhou Shan Hai, to its buyer, a unit of China Cosco Holdings.