Zacks_Analysts' Blog : Excel Maritime Improves TC Contract - Analyst Blog

Excel Maritime Carriers Ltd. (EXM), a leading worldwide seaborne transporter for dry bulk cargoes, recently improved and consolidated the time charter contracts for its fleets. The company announced that it has entered into three new time charter agreements, one for its Capesize vessel and the remaining two for its Kamsarmax vessels. The capsize vessel is fixed for 12-18 months at a gross daily rate of $17,000. However, the first Kamsarmax vessel is fixed for 22-24 months at gross daily rate of $12,750 and the second one is fixed for 22-25 months at gross daily rate of $12,000.

With these three new time charter agreements, Excel Maritime now secures under time charter employment of 43% of its operating days for 2012 for all the vessels in its fleet and 90% of all its capesize  vessels are also under period charter agreement for 2012. Reduction of large spot exposure will undoubtedly help Excel Maritime to consolidate its financial results going forward.

The drybilk shipping sector is facing serious challenges since the spot vessel rates collapsed significantly. We believe the sole reason for this dismal condition is the sheer increase of newbuild ships under operation that resulted in intense price competition. The spot rates of drybulk vessels have fallen to such a low level that even surging commodity prices in the Asian markets failed to offset the loss of the vessel owners.

Excel Maritime operates under highly competitive drybulk shipping industry. Its main competitors are Diana Shipping Inc. (DSX), Genco Shipping & Trading Ltd. (GNK), and DryShips Inc. (DRYS).The company took a severe hit on its time charter equivalent rate in the last quarter.In the third quarter of 2011, the realized average daily time charter equivalent rate of Excel Maritime came in at $16,864, a stiff reduction of nearly 26.2% year over year.