Sea

Trip: the Lithuanian Shipping Company’s vessel “Deltuva” has become a problematic vessel since spring. Its six crew members are waiting for the American trial on alleged infringements.
© Photo by Arunas Bruzas

Spausdinti   Supplement to article

Both the private shipping companies and state enterprises are slipping into a financial quagmire in the eastern Baltic countries.

Latvian and Lithuanian Analogies

Latvian Shipping Company is facing bankruptcy. This has been expressed to the Latvian business publication “Dienas Bizness” by “Vitol Group” representative Mark Vera, the shareholder of “Ventspils Nafta” – the company that manages the Latvian Shipping Company (AO Latvijas Kuģniecība).

He accused the Latvian government of ruining investments. The Latvian Shipping Administration took its share of criticism as well. It is accused of spending money like water and entering into transactions that are contrary to the interests of shareholders.

Swiss-registered “Vitol Group” Representative M. Vera said that he had appealed Latvia to the European Commission and the International Monetary Fund. The country does not adhere to the agreements on the protection of foreign investments.

Lithuania faces some shipping problems as well, but not as severe as Latvia does.

The company “Lithuanian Shipping Company” had also got into debt before. Its three-quarter losses amounted to 34.7 million litas, which was even 2.2 times higher than last year.

This year, the Lithuanian maritime shipping demonstrates a gleam of hope. After constantly slipping into debt over the past few years, the company earned 2.8 million litas of net profit in the third quarter.

Losses on Foreign Exchange

The reasons which led to the reasons why the eastern Baltic fleets have become bogged down in debt are associated with the economic crisis, during which vessel freights had plunged so low that it had been cheaper to anchor ships to the external roadsteads than cargo transportation.

During the economic crisis, Lithuanian Shipping Company did not keep its ships at quays, but tried to “fish” a few cargoes in the market, the transportation of which would only cover fuel and crew maintenance costs.

Freight markets are currently reviving, but they are not fully recovered yet.

Lithuanian and Latvian Shipping Companies that had old ships and started changing them before the crisis had hit, were dragged down by the bank loans. Having already mortgaged nine vessels, the Lithuanian Shipping Company is going to mortgage the remaining two to cover earlier commitments.

Shipping Companies’ losses also increased because of the significant rise in marine fuel prices.

In addition to the straitened circumstances of the Latvian and Lithuanian shipping companies’, there also exists the so-called “paper” loss. The growth of the U.S. dollar and decline in euro exchange brought the shipping companies millions of losses.

The income of the Lithuanian Shipping Company also reduced due to the fact that in April the U.S. Coast Guard officials seized the ship “Deltuva” in the port of San Juan in Puerto Rico. During the inspection, officials found the open door in strictly controlled premises, which had to be closed. The ship’s “oily” water purification equipment had been broken, which raised suspicions on the water being pumped overboard. The vessel was later released, but its six sailors were arrested; they are now waiting the American court’s decision.

Private shipping companies in Lithuania were also detrimental. Nine months ago, “Limarkas Shipping Company” suffered 19.2 million litas of net loss. It is even 9 times higher than last year during the same period.