Cosco Facing Threats of Ship Seizures by Greek Shipowner

Cosco, China’s biggest shipping company, has halted payments on high-priced charter contracts resulting in one of Greece’s most prominent ship-owners, George Economou, threatening to seize their ships.

Cosco has previously said that it is withholding some payments under a cost-reduction program to maximize shareholders’ value. They are also trying to reassure investors that these negotiations over unpaid bills will be resolved and business will remain strong.

Economou has already had one Cosco vessel put under court control and prevented it from leaving the Louisiana Port where it is docked. He feels that he has had the industry’s greatest exposure to Cosco’s tactics with 17 to 18 ships on charter to the group. He has put the estimated value of his deals with Cosco at $500 million, but will not say how much has been withheld.

Typical rates for the largest Capesize vessels in 2008 were $80,000 per day for five years. This week, they were only $18,000 per day in the short-term spot market after the dry bulk market has been plummeting. Cosco is still paying the 2008 price.