Second Chinese Shipper Withholds Charter Payments

Latest withholding marks the second high-profile dispute between ship owners and Chinese shippers this year.

Grand China Logistics Holding Co., a unit of Chinese transportation operator HNA Group stopped making payments to Norway’s Spar Shipping AS for three vessel charters early this summer and discontinued payments for one vessel contract to Greek ship-owner, Vafias group.

Industry experts say that Spar Shipping and Vafias Group are just two among a long list of companies in conflict with Grand China over payments. Norwegian dry-bulk shipper Golden Ocean says they too are not receiving charter payments from Grand China, and announced a 46 percent decline in third-quarter operating profit. On Friday the company announced a dividend cut on fears that ship values might further fall. Prior to Friday’s announcement, Golden Ocean had paid dividends in six consecutive quarters. Minerva Marine, based in Athens, has also reported difficulty recovering payments from Grand China.

Vafias Group says they have not received payment for five 15-day periods, and last month filed an injunction against Grand China, freezing some of their UK based assets.
Earlier this year China Cosco Holdings Ltd. Temporarily halted charter payments to force renegotiations of high priced agreements that had been signed during the height of the shipping boom.

This latest dispute differs dramatically in that Grand China signed their contracts with Spar and Vafias in 2010 when prices were far below those at the height of 2008.
The world has seen falling commodity prices and an oversupply of vessels – casing the bulk shipping sector to suffer.

This latest withholding of payments further strains the relationship between Chinese charterers and the global maritime industry.