Gearbulk is close to striking a deal with more than a dozen Japanese shipowners and their banks on renegotiated terms for long-term charters involving more than 30 bulkers.
The Norwegian operator's negotiations over the payment terms for 33 handysize, ultramax and panamax vessels have been continuing since the summer.
The details of each vessel differ and have not been confirmed. But TradeWinds understands that in general, almost all the proposed settlements involve extending the charter period under a lower daily hire rate.
Gearbulk’s long-term charters with Japanese owners mainly involve periods of between 10 and 15 years. However, under the proposed settlement, the deals would be extended to 20 years at a reduced rate.
The idea is that the Japanese owners and financiers will be able to recover the shortfall in revenue from lower charter hire over the extended period.
The parties involved are hoping to conclude the renegotiated deals by the middle of November.
Gearbulk has declined to comment while the negotiations are ongoing.
The company first announced it was seeking to negotiate lower charter rates in April this year. It said it was facing critical losses in the moribund trading market and wanted to come to a new agreement on rates with tonnage providers by the year’s end.
Since July, it has opened talks on reducing rates with owners including Chiba Shipping, Doun Kisen, Marubeni and Misuga Shipping.
Its other tonnage providers are smaller and lesser-known outfits including Funada Kaiun, Chofuku Kisen and Shichifuku Gumi.
Ready to accept terms
TradeWinds understands most owners are ready to accept new terms. There are still some vessels where negotiations have proved difficult because of financing terms, and talks continue.
One Japanese owner told TradeWinds that a reduced rate for a longer period offered fixed income and more certainty rather than the alternative. Another proposal on the table was to agree a fluctuating rate based on the vessel’s performance.
Japanese owners would also have found it difficult to retake redelivery and operate or sell the vessels because of the highly specialised nature of most of the ships under negotiation.
Most of the vessels being negotiated are open-hatch and equipped with gantry cranes and were specifically designed for carrying forest products, such as pulp and paper, and packaged and industrial cargoes.
Highly specialised
Gearbulk operates in the highly-specialised trade with partner Grieg Star Group in the G2 Ocean open-hatch bulker pool.
While negotiations have been taking place, Gearbulk has been paying hire to Japanese owners based on the market performance of the vessels.
Gearbulk is not alone in seeking lower chartering costs from Japanese owners. Singapore’s Pacific Carriers Ltd has also been locked in talks with its tonnage providers on reducing rates.
Japan's Mitsui OSK Lines is a major shareholder in Gearbulk.
