Shipowners refloat Norasia line
A group of German shipowners have come to the rescue of financially-troubled, Compania Sud-Americana Vapores (CSAV) and its Hong Kong-headquartered East/West liner arm CSAV Norasia
Through a three-stage investment programme, the shipowners agreed to provide the financial backing to rescue CSAV from its beleaguered predicament with capital investments amounting in total to US$710 million.
The first stage of the investment programme is already underway for $130 million, and that move should be completed in June. Following this, there will be a second capital investment of $220 million from the Hamburg-based shipowners, who have also guaranteed a third capital injection of another $360 million.
The $710 million investment bailout falls $40 million short of the initial figure branded in the market when shipowner investment was first discussed, indicating some shipowners could have either cut back on their financial pledge to CSAV, or even pulled out of the programme altogether.
On a positive side, however, it now looks certain that Latin America's largest shipping line will not fade into oblivion as a result of the global market downturn and will reemerge financially stronger to retain its position in both the North/South and East/West routes.
CSAV chief executive Juan Antonio Alvarez, however, was in no doubt of the size of the challenge ahead, but remained confident.
"It has been a challenging task during the present economic environment to put in place the programme, particularly considering the multiple parties and interests involved,'' he said.
"It is often said that severe difficulties either kill you or strengthen you, CSAV has experienced difficulties and after this process will no doubt be in the latter case," he added.
News of the rescue plan coincided with the strengthening of Norasia's position as an operator on the Far East/Indian sub-continent/Middle East trade with 6,500 TEU vessels in the process of being phased in to replace ships of around 4,500 TEU capacity.
However, the future of CSAV Norasia on another of its Asia routes - the West Asia/the Indian sub-continent/Europe trade - remains uncertain. CSAV Norasia remains the only operator on this trade to run a service without a partner or slot purchaser, and misses one in every seven sailings with its fleet of 2,700 TEU vessels.
Recently, "K'' Line, Yang Ming, MISC and Zim all pulled out of offering a direct service on this trade, and Mediterranean Shipping Co (MSC), has upped its trade stake by doubling capacity in the last two months through increased vessel size and the opening of a new service with the Shipping Corporation of India.
Industry analysts said with the new investment in CSAV, some serious questions will be asked about remaining in a loss-making trade.
Through a three-stage investment programme, the shipowners agreed to provide the financial backing to rescue CSAV from its beleaguered predicament with capital investments amounting in total to US$710 million.
The first stage of the investment programme is already underway for $130 million, and that move should be completed in June. Following this, there will be a second capital investment of $220 million from the Hamburg-based shipowners, who have also guaranteed a third capital injection of another $360 million.
The $710 million investment bailout falls $40 million short of the initial figure branded in the market when shipowner investment was first discussed, indicating some shipowners could have either cut back on their financial pledge to CSAV, or even pulled out of the programme altogether.
On a positive side, however, it now looks certain that Latin America's largest shipping line will not fade into oblivion as a result of the global market downturn and will reemerge financially stronger to retain its position in both the North/South and East/West routes.
CSAV chief executive Juan Antonio Alvarez, however, was in no doubt of the size of the challenge ahead, but remained confident.
"It has been a challenging task during the present economic environment to put in place the programme, particularly considering the multiple parties and interests involved,'' he said.
"It is often said that severe difficulties either kill you or strengthen you, CSAV has experienced difficulties and after this process will no doubt be in the latter case," he added.
News of the rescue plan coincided with the strengthening of Norasia's position as an operator on the Far East/Indian sub-continent/Middle East trade with 6,500 TEU vessels in the process of being phased in to replace ships of around 4,500 TEU capacity.
However, the future of CSAV Norasia on another of its Asia routes - the West Asia/the Indian sub-continent/Europe trade - remains uncertain. CSAV Norasia remains the only operator on this trade to run a service without a partner or slot purchaser, and misses one in every seven sailings with its fleet of 2,700 TEU vessels.
Recently, "K'' Line, Yang Ming, MISC and Zim all pulled out of offering a direct service on this trade, and Mediterranean Shipping Co (MSC), has upped its trade stake by doubling capacity in the last two months through increased vessel size and the opening of a new service with the Shipping Corporation of India.
Industry analysts said with the new investment in CSAV, some serious questions will be asked about remaining in a loss-making trade.