Current freight rates are cash negative and all major carriers are making losses at the EBITDA level (Earnings before Interest, Tax, Depreciation and Amortization).
Cash reserves have been eroded as the carriers’ battered balance sheets have come under considerable strain. The situation has led almost all the major carriers to seek additional capital using whatever means available including share placements, rights issues, debt-to-equity conversion and asset sales.
Even the largest, A.P. Møller-Mærsk, was forced to succumb to the pressure with the announcement last week that it has sought new capital through a share placement that raised $1.58 billion for the company. This followed the successful rights issue by NOL that raised $985 million in July.