Peter T. Leach | May 11, 2009 9:56AM EDT
Singapore-based Pacific Shipping Trust expects to maintain revenue in its second quarter as it is not planning to buy any ships, but it may face lowered charter rates for two of its vessels.
The company, one of three containership owners that has listed its stock on the Singapore Stock Exchange in recent years, said it is not planning to buy any more ships in the next six to 12 months, but will consider buying ships if bank lending recovers, vessel prices begin to stabilize and charterers are willing to negotiate at reasonable rates, its CEO told Reuters.
''Without any additional vessel coming in, the level of revenue is going to be maintained, unless there's some shortfall in charter payments, which we do not expect at this point,'' Alvin Cheng, CEO of Pacific Shipping Trust Management, said in an interview.
The trust's first quarter revenue rose 72 percent to $15.2 million from a year ago on the back of four new vessels delivered in 2008.
Pacific Shipping has a fleet of 12 vessels, 10 of which are leased to its sponsor Pacific International Lines. Cheng said he was very confident there would be no defaults from PIL and there were no signs of renegotiation of charter rates.
Shipping firms have been hammered by weakening global demand for goods as well as falling commodity prices, leading to corporate losses, job layoffs and increased counterparty risk.
Pacific Shipping's other vessels, which account for 30 percent of revenue, are leased to Chilean carrier CSAV. Cheng said they were in discussions with the troubled line over a possible 30 percent reduction in charter rates for these ships.
But Cheng said despite the potential cut in revenue, the impact on the trust's operating cash flow will be limited.
''Unless we determine that such assistance to the charterer is definitely required, we will not agree to any reduction,'' he said. ''If we were to reduce by 30 percent, it will only affect about 12.5 to 13 percent of our operating cash flow,'' he added.
Pacific Shipping and the other two Singapore-listed shipping trusts, Rickmers Maritime and First Ship Lease Trust, generally offer higher yields than Singapore-listed real estate investment trusts because ships typically have a lifespan of 25-30 years.
Contact Peter T. Leach at pleach@joc.com .