Should a charterer do business with a shipowner in financial trouble?

There are a number of shipowners / shipoperators around with less than healthy financial positions. Some of them are quite well known, the banks and creditors are onto them and they are treading a fine line hoping to stay afloat until market conditions change.

So the question is "should a charterer fix with a shipowner who is in some financial trouble".

Well theat depends.

First thing is this. The charterer is the one who pays the shipowner, so this is a prefered position to be in. You are the the one who owes the shipowner not the other way around. So yes i think from a starting point fixing your cargo to a fincially insecure shipowner is ok. What you don't want to be doing is fixing your ship to this same owner (to cover one of their cargoes) because they then need to pay you.......and this will be problematic. Especially if they are in survival mode.

Secondly for voyage cargoes, a financially strapped shipowner will more than likely be super aggressive which is great as the charterer gets a super cheap rate. The reason a financially strapped shipowner craves voyage cargoes is because of cashflow. If he fixes a voyage cargo he get 95% or 100 % cash upfront. If on the other hand the cash strapped shipowners opts for time charters he gets drip fed cashflow every 10 or 15 days.....which is not great for him.

So there is an opportunity for a win / win in this case. Cheaper rates for voyage charterer, cahsflow for owner on the skids.

The biggest problem you can have is if the ship carrying your cargo gets arrested. Then your cargo could be stuck onboard causing immense pain for months to come.
Never fix a long term contract with a shipowner unless they are financially sound.


Dont comma rockin if the repo man comes a knockin...(that makes no sense but run with it...)

VS