A Perfect Storm

As the BDI dropped below 1,000 for the first time in 6 years on Tuesday, the shares of Britannia Bulk also collapsed with the news of both operational and financial difficulties. Caught in the unexpected downdraft of a market collapse at warp speed, Britannia’s flexible chartering-in strategy could not be unwound in time creating huge losses. As of June 30th, the number of chartered-in vessels was 59 and, according to the news release, the company increased its chartered-in capacity during the 3rd quarter. It was during this same period that demand for dry bulk capacity decreased significantly with a commensurate decline in charter rates. Consequently, the rates achieved during the quarter were far less than those paid to secure the vessels, creating a negative spread. As worrisome as the chartered-in

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