When a booming sector unexpectedly falls into the red, like what happened to the dry bulk shipping industry from September onwards, differences between the stakeholders aren’t difficult to emerge.
‘Especially, at a time when every cent actually counts, no one is prepared to step back and compromise, from banks and charterers, to ship owners and shipyards. As a result, the market’s downturn has brought serious problems on the surface, such as a flurry of lawsuits and law disputes, which appeared mainly because of charter contracts breaching. Miners, charterers and ship owners are virtually on the verge of war, after a series of previous agreements were breached. Norwegian Handymax specialist Western Bulk Carriers is claiming a total of USD 5.4 million from Arcelor Mittal after it allegedly breached agreements to charter ships for four, 40,000 tonne iron ore cargoes. Similarly, London based Zodiac Maritime Agencies is also suing ArcelorMittal for USD 101 million, according to a November 24th 2008 filing. Earlier this month ArcelorMittal settled claims from SwissMarine Services and commodities trader Louis Dreyfus over failed iron ore shipments. The filing was made on December 8th 2008 in the New York Southern District Court. It’s more than obvious that the rates crisis has triggered a cascading series of claims over alleged contract defaults and early deliveries, as well as failure to pay forward freight agreement contracts. As a result even major dry bulk charterers are listed as defendants, underscoring claims by owners that even safe or blue chip companies are refusing to pay for ships they have hired since the mid September collapse in shipping rates.