Two ships of the Crnogorska plovidba (CP) company have been sailing for a long time at daily charter prices that are several times lower than market prices, which is why the state-owned maritime company is losing huge amounts of money, well-informed sources from part of the company's new management claim for "Vijesti".
According to the rough calculations of the "Vijesti" source, the company lost about 2,7 million dollars in six months of this year by renting out time boats (time charter) at a price that is almost twice lower than the market price.
The government recently appointed a new Board of Directors of CP, which includes representatives of the parties that make up the current ruling majority, but the executive director is still Slobodan Pajović (DPS). Pajović and the former Board of Directors with Borislav Kašćelan (DPS) at the head, in September and December of last year, made new contracts on the time charter of the ships "Kotor" and 21. Maj" with the lessee, the company "Sea Pioneer" from London, according to which the boats were contracted for a daily rent of 7.600 dollars each. The contracts were concluded for a period of six plus six months, with the option that the current hirer can extend them before the end of that period. With that, the company's management practically "tied their hands" for a long time, and what's worse, at a time when, in September of last year, it was clear sensed a large increase in freight rates on the world market of shipping space, "nailed" the ships to low freight rates that are slightly above the daily operating costs of those vessels.
"In order to be with ships for transporting bulk cargo (hand size bulkers) such as "Kotor" and "21. May" were at positive zero, that is, just to cover the costs of the ship and the crew, you need a daily freight rate of at least 5.500 to 6.000 dollars. In September last year, the former management concluded a six-plus-six-month contract at a price of $7.600 per day, although freight rates for the transportation of bulk cargo were significantly higher at that time and by the end of last year they had reached the amount of about $15.000 per day. Not counting the money that was thus lost in the last three months of last year, on the basis of such a contract, it follows that the two CP ships lost about 2,7 million dollars together in six months of this year, their profits escaped them because the freight rates on the market were on average almost twice as high of those by which "Sera Pioneer" was concluded with our ships. This is devastating from the point of view of the state of Montenegro, as the owner of the company, which until now has on several occasions had to use citizens' money from the state budget to pay the company's obligations to the Chinese Exim Bank, whose loan was used to build two ships in Shanghai in 2012," he told "Vijesta" well. informed a source close to the new Board of Directors who did not want to be named in the media.
Connections with the Turkish owner
On this occasion, "Vijesti" asked Pajović for an explanation, but the answer did not arrive even after several days.
Since putting two ships into commercial use in 2012, the company has been cooperating exclusively with the company "Sea Pioneer" as a ship charterer. Behind that company is the Turkish businessman Cemil Tumkaya, who started the business arrangement with the state-owned company when Captain Miodrag Kršanac from Herceg Novi was the head of the board of directors, who was then also the head of the Maritime Directorate in the Ministry of Transport and Maritime Affairs, which was run by personnel. of a single SDP. Not long after that, when in 2014 two new merchant ships were built with a credit arrangement in China, the company "Barska plovidba" also got them, and "Sea Pioneer" took those two ships on time charter under similar conditions as CP's vessels. Meanwhile, Kršanac has retired from the state administration and, as "Vijesti" has unofficially learned, he has his own business interests in the company "Sea Pioneer Montenegro", which is behind Tumkaya, and which was founded in Herceg Novi to deal with maritime pilotage in Boka. .
Even after Kršanč's departure from the management of CP, "Sea Pioneer" continued, as an exclusive charterer, to take ships of two Montenegrin maritime companies on time lease. The nature of these contracts (lease of a ship with crew) is that the shipowner (in this case CP) leases his ship for a certain period to the charterer (in this case "Sea Pioneer") who then commercially exploits that ship in his own name and on his own account . In practice, this means that "Sea Pioneer" makes money with the CP ship on the world market on the difference between the money it pays to the state company for its lease and the price at which "Sea Pioneer" then transports the cargo of other shippers with that ship. At the same time, "Sea Pioneer" as a charterer, does not care at all about the navigational and technical management of the chartered ship because that is the obligation of CP as the owner, but only about its commercial exploitation.
Who benefits from the "time charter" contract
These types of contracts (time charter) in the maritime sector are precise, standardized contracts where the mutual rights and obligations of the charterer, ie the owner (or manager) of the ship are clearly defined. According to them, everything related to equipping the ship with a crew and bearing all costs related to the ship's crew is the responsibility of the owner (manager) of the ship, who also bears all the costs of maintaining the ship. The hirer bears the costs of fuel, port and other taxes, and costs of loading or unloading cargo. In other words, "time charter" contracts are used as a means of engaging one's own fleet by companies that, like CP, do not have good business contacts and their own commercial service capable of finding cargo for ships themselves and concluding them in much more profitable and expensive travel contracts" (voyage charter).
"The former CP management concluded an American, ie NYPE 93 form of "time charter" contract with "Sea Pioneer", not the European BAL TIME 1939 contract. Compared to BAL TIME, NYPE contracts are, as a rule, much more favorable for the charterer than for the ship owner, and this is now an additional problem for us, especially because CP has "tied its hands" with the current contracts and depends on the will of "Sea Pioneer". "Will he, after the expiration of the current ones, "release" our ships, that is, not extend the period of their lease", says the "Vijesti" source, adding that the current contract for the ship "21. May" expires on August 5 with the agreed period of "plus/minus one month" for the return of the ship to the owner, while the contract for "Kotor" expires in September with the same clause
"Our ships will certainly continue to sail in the next two to three months at a price of only 7.600 dollars per day, although the freight rates are still at the highest level in the last 15 years, with forecasts that they will remain there," the interlocutor points out. "News".
He added that it should be investigated whether in this commercial management of CP and its business relations with "Sea Pioneer" in recent years, "all this is a product of ignorance and incompetence, or something else."
Data from the market show how much money Crnogorska plovidba is losing
Data from agencies specialized in monitoring the state of the world market for shipping space clearly show how much Crnogorska plovidba is losing money every day due to the contract with "Sea Pioneer".
On the website of the "Baltic Exange" stock exchange, which is one of the leaders in contracting business in the maritime sector, it states for the Atlantic market, an illustrative example of the Greek ship "Navios Lyra", which concluded a contract for a time lease of 120 to 160 days with the tenant "Seacape" for 24.000 dollars a day. In the Far East market in China, a similar contract was concluded for a period of nine to 11 months for $17.000 per day.
As for the voyage contracts that CP does not operate at all, the Integrity Daido is contracted for a $21.500 per day steel voyage, while the Ocean Honesty is for a $30.000 daily steel voyage.
Data from the Libra agency indicate that ships like "Kotor" and "21. maja" are currently on time charter for a period of up to six months, depending on the market, at a daily freight rate of 22 to 26.500 dollars. For contracts for one year, the freight rate is slightly lower and amounts to 20 to 21.000 dollars per day, while for contracts for a period of two years it is even lower and amounts to 14.500 to 15.000 dollars per day. And that is almost double what is currently being earned from the contract with "Sea Pioneer". Analysts of the world shipping market emphasize that the current conditions are the best recorded in the past 15 years, but that they will not reach the "golden age" of the early 2000s.
Bearing in mind the current trends in the world economy, the available tonnage of ships and the number of new vessels ordered in shipyards, analysts expect that stable and quite high freight rates on the dry and bulk cargo market will be maintained for at least another two years, and it would be especially successful, considering to diversify the cargo with which it operates, it should be a "handysize" segment of the global bulker fleet to which CP and Barska plovidba ships also belong.
"Opportunities on the dry and bulk cargo transport market exceeded even the best expectations in the first half of this year and the market has now firmly stabilized. The owners of bulk carriers, regardless of the size of the ships, currently earn an average of about 24 thousand dollars per ship per day. It is good, although not yet as much as was earned in the early 2000s", stated Peter Sands, chief analyst of the world's largest shipping association BIMCO.
An average of $6.000 per ship per day for management success
The report on the operations of Crnogorska plovidba for 2020 showed that the company had a loss of 89.962 euros, while the total accumulated losses from previous years reached 16,53 million. The company also has EUR 13,52 million in long-term liabilities, primarily loan installments to the Chinese for shipbuilding.
The ship "Kotor" entered 2020 with a valid contract with "Sea Pioneer" at a daily freight rate of 8.000 dollars, but with the annex from February, the freight rate was reduced to 5.250 dollars per day. As of September 15, the ship sails for a daily rent of $7.600, which is still in effect. In total, "Kotor" earned $2.337.150 from rent last year.
"21. maj" only sailed for five days last year with a rent of 8.000 dollars per day, but with the annex of the contract with "Sea Piuoneer" in January 2020, it was reduced to 6.050 dollars per day valid until the middle of August last year. But, with the same low rent, the ship continued to sail until December 16 last year when "Sea Pioneer" agreed to raise the daily freight rate to $7.600. "21. May" earned a total of $2.480.936 last year.
Last year, both ships made ten voyages each, and the average freight rate (including the agency commission of 3,75 percent that CP pays to "Sea Pioneer") was $6.059 for "Kotor" and $6.428 for "21. May". Although this is extremely low compared to market conditions, in the report for 2020, the management of CP assessed that "summarizing the current year from a commercial aspect, the daily rentals, i.e. the earnings of our ships in the current conditions, can be considered successful, because in the larger part of the year was at the level of market values".
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