For the last twelve years shipping companies have been struggling to recover from pre-2008 market highs. The outlook for profit improved significantly this year as market factors like uncertainty about future bunker fuels have limited new building while the rate of older vessels being scrapped has increased. Then came COVID19. Along with nearly every other stock in the market, shipping company stock tumbled in March of this year.
“This year seafarers have endured a great deal due to COVID19.” said Gary Vogel, CEO of Eagle Bulk, in a conference call this morning with shareholders. “The government imposed travel restrictions made it almost impossible to crewchange seafarers. Thankfully some of those restrictions have eased but it’s estimated that more than 300,000 seafarers are still waiting to go home. This is simply not acceptable.”
But rather than using words to express frustration and demand government action, Eagle Bulk CEO Gary Vogel, took action and got his crewmembers home. As of November, the vast majority of Eagle Bulk crewmembers who were overdue for relief have been changed over, with just 26 seafarers (out of ~1000) beyond their contractual working period. “We are now fully focused on those 26.” said Vogel.
While Vogel did not discuss specific tactics the company used to solve the problem, we do know that repatriating mariners has cost the company countless man-hours. Additionally, the Company incurred $0.7 million in costs relating to COVID-19 for procurement of personal protective equipment, test kits, and crew changes. Crew change costs alone have increased 50% due to the virus.
In addition to direct costs, Vogel committed the two biggest sins for any shipowner: diversion and off-hire costs “To solve this problem we had to divert ships and put ships off-hire.” said Vogel. “During the last quarter, we incurred 40 off-hire days. This increased our OPEX significantly.”
Now we know that changing crew is possible, the question remains, how many other shipowners are willing to pay the price that Vogel and his team have?
In the light of recent increases in incident rates globally and the importance of seafarer mental health and welfare to the bottom line… the better question is how many ship-owners can afford NOT to follow Eagle’s lead and solve the crisis “Acta Non Verba“… with actions (including cash) not words.
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February 17, 2021
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