One topic dominated the thinking of worried-looking shipping executives in Athens last week for the Financial Times' World Shipping Congress. On the conference fringes, all were examining the implications of a sudden breakdown of key networks of trust and mutual confidence that normally underpin the industry's activity.
Tales abounded of charterers abandoning long-term contracts with owners or using routine problems such as port delays to break contracts.
This comes on top of a partial seizing-up of short-term dry bulk markets because of banks' increasing reluctance to issue normally routine finance to cover the gap between a shippers' loading cargo on to a ship and buyers receiving it.
Both issues are part of a clutch of severe finance-related problems facing the sector as the excesses of an unprecedented seven-year boom are unwound.
Ted Petropoulos, a shipping finance consultant, expects an 18-month downturn for the sector. In contrast, Paul Slater, another maritime industry veteran, expects it to last four years.
"The trouble is that there are no limits to the levels to which prices [for chartering] and values [of ships] can sink," Mr Slater says.
The immediate trade finance problem, while causing the pain, is the one expected to be resolved the fastest. "I hope and expect that this will have to be stopped sooner or later," says Michael Bodouroglou, who owns a small fleet of privately held vessels. "World trade cannot stop."
Other symptoms of waning confidence may create longer-term problems. There were widespread rumours at the congress of defaults on long-term charters with owners. Many owners will have been depending on normally watertight arrangements to service the debt associated with the vessel.
Polys Hajioannou, chief executive of Safe Bulkers, a New York-listed dry bulk operator, says such defaults could become common for owners who chartered vessels to speculative operators that hoped to charter the vessels on slightly higher rates. Large, publicly listed shipowners tended to avoid such charterers but small, privately held companies could suffer.
"The market knows who the [defaulting charterers] are," says Mr Hajioannou. "They have done it in the past - run away from their obligations - and the market should not be supportive to these charterers."
In bulk shipping, such problems are largely confined to the dry bulk segment - oil tanker charterers have little history of defaulting and oil tanker rates are holding up well because of a relative shortage of ships.
However, reduced activity by increasingly risk-averse oil traders could affect owners of tankers that carry refined petroleum products.
Oil traders have accounted for around half the voyages undertaken by such product tankers.
Yet the key to the post-crisis shipping industry may be the expected falling-through of funding for many of the approximately $550bn of ships on order.
Shipyard collapses could damage owners who may lose deposits paid for vessels on order. But the problems are already spurring hope that the shake-out could strengthen the sector. Past crises have provided the best-run owners with opportunities to develop their fleets through buying others.
Source: Robert Wright, The Financial Times.