TBS reports bigger loss as rates fall

TBS reports bigger loss as rates fall    TBS International said it had a net loss of $245 million in 2010, compared to a loss of $67 million in 2009.
   The operator of bulkers and tweendeck ships said $217 million of the loss came in the fourth quarter. It reported revenue of $412 million in 2010 compared to $303 million in 2009.
   The fourth quarter results “reflect the ongoing downward pressure on dry cargo freight rates that have continued into the first quarter of 2011, as evidenced by the Baltic Dry Indices,” said Joseph E. Royce, chairman, chief executive officer and president.
   He noted the Baltic Dry Index, which is based on a freight rates for a mix of ships of various sizes, operating on a variety of routes and carrying a mix of cargo, has fallen from 2,446 on Sept. 30, 2010 to 1,559 on March 14.
   “A number of factors have contributed to this circumstance. Of most importance is the continued drumbeat of the delivery of new-built vessels in all four of the major vessel sizes — Capesize, Panamax, Supramax and Handysize,” Royce said.
   He cautioned that, “while cargo demand generally increased during most of 2010, numerous events over the last several months have interrupted the availability of cargo contributing to both the supply/demand imbalance and the Asia/Americas imbalance. There has been severe flooding in Australia that has interrupted shipments of coal, iron ore and wheat, along with government-imposed reductions of the export of coal from Indonesia and iron ore from India, thereby causing the deviation of vessels that traditionally carried these cargoes from that region into the Atlantic.
   “As a consequence, TBS is operating at freight and charter rates that would cause us to fail to comply with certain financial covenants in our credit facilities, even as recently modified, as soon as June 30,” Royce said.
   TBS said its program to construct six 34,000-deadweight-ton multipurpose tweendecker vessels proceeded with the delivery of five vessels since September. It now has 51 vessels with an aggregate of 1.55 million dwt, comprising 29 tweendeckers and 22 handymax-handysize bulk carriers. It expects to take delivery of the sixth tweendeckers in the second quarter.