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INTERVIEW-UPDATE 2-Excel CEO says credit crunch hurting shipping
Fri Sep 26, 2008 3:06pm EDT

* Goods stranded on docks
* System in "a state of chaos"
* Ships on order may not be built
* Underlying trade fundamentals strong thanks to Asia

By Nick Carey

CHICAGO (Reuters) - The credit crunch is sucking liquidity out of global trade and the shipping business, leaving cargoes stranded on docks and threatening to bring down shipyards and ship owners alike, the top executive of Excel Maritime Carriers Ltd (EXM.N: Quote, Profile, Research, Stock Buzz) said on Friday.

"The banks have ceased lending and a lack of liquidity affects trade," Stamatis Molaris told Reuters in a telephone interview. "The demand for goods is there; there is just not enough liquidity to move those goods around."

"If the credit crunch lasts beyond the short term, then shipyards -- especially the newer ones -- are going to fall like a house of cards," he added.

Molaris said that throughout the industry and in numerous markets, some cargoes have been left on the dock because it is hard to find banks willing to fund the movement of the goods.

"It has happened to us and it is happening everywhere to everyone," he said. "The whole system has come to a state of chaos."

The Baltic Exchange's chief sea freight index .BADI for global raw materials has fallen nearly 70 percent since hitting a lifetime high in May, when it was buoyed by booming demand for natural resources in China and India.

Now, however, the index is weighed down by troubled financial markets, weaker commodity prices, and concerns over Asian demand. It fell 10 percent on Friday to reach a two-year low.

Molaris said the index has fallen despite a fundamentally strong bulk shipping market, with massive infrastructure projects underway in developing Asian markets.

"The need for those raw materials has not changed," he said.

More than 90 percent of the world's traded goods by volume is carried by sea.

Excel has a fleet of 47 ships that haul raw materials -- iron ore, coal, grain, cement and such -- in bulk. The company is somewhat insulated from falling daily freight rates for dry bulk ships, as most of its fleet is on long-term charters at fixed rates. Sixty percent of its fleet is on such charters, and 50 percent is on fixed rates through 2010.

"If the crisis is over within two and a half years, then we are in a good position," said Molaris, whose company bought Quintana Maritime Ltd for $2.45 billion earlier this year.

He said tight credit may force smaller companies to try to sell off new ships for which they cannot obtain funding. But even firms like Excel with strong balance sheets may find it hard to raise funds for new acquisitions in the current environment, he said.

"Get me funding and I'll look at a ship," he said. "I cannot stress this enough: The banks are not lending any money."

Excel shares were down $3.24, or more than 16 percent, at $16.49 in afternoon trade on the New York Stock Exchange. Earlier in the day they hit a new 12-month low of $16.33, down nearly 80 percent from a 12-month high of $81.99 on Oct. 23, 2007.

(Reporting by Nick Carey, editing by John Wallace)

http://www.reuters.com/article/companyNews/idUKN2640620020080926?symbol=EXM.N&sp=true