ALPHALINER is warning that the risk
of another major shipping line going bankruptcy has heightened amid the deteriorating global
economic outlook.
It explained that the
unprecedented amount of capacity withdrawn in April and May, a result of a
collapse in demand, "will hurt carriers' operating cash flows and further
weaken their fragile balance sheets".
Picking up on the ocean liner Altman Z-scores, as at the end of December last year, for the 11
largest carriers that publish results - excluding Japanese merged carrier ONE -
the consultant painted a gloomy picture of the financial health of the liner
industry.
Altman Z-scores are a measure of the
likelihood of insolvency for a container shipping line, and range from lower
than 1.8 as "very high", to 3.0 or higher as "unlikely".
Four
carriers - Hapag-Lloyd, Maersk Line, OOCL and Wan Hai Lines- had Z-scores of
1.72 to 1.92 points, with a score of 1.8 to 2.7 regarded as a "high
risk", according to the index. And, worryingly, the other seven carriers
had scores of less than 1.3.
"Carriers
with track records of negative earnings are also particularly at risk, with
three carriers' Z-scores HMM, Yang Ming and Zim ?lowered due to their negative
retained earnings," said
Alphaliner.
Since the end of March, credit
rating agency Moody's has changed the credit outlook for Hapag-Lloyd, Maersk,
MOL and NYK from 'stable to "negative" and placed CMA CGM's credit
rating "under review" for potential downgrades.
It said Moody's had highlighted
the high dependency of carriers on world trade and industrial and consumer
demand, which would all be negatively impacted by covid-19 restrictions.
Source : HKSG.
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