In our exploration of maritime shipping finance...
...we are currently looking at what happened in the maritime shipping industry from 1950 to 2002. Now what was particularly important during this period of time was the rise of standardization by means of containerization.
Constant change was so prevalent...
...from 1950 onwards that Dr. Martin Stopford, Managing Director of Clarkson Research, divided the period up into 5 distinct periods. In an October 2002 forum, he explained that the period since 1950 can best be understood by the following phases, namely Cash (1950-1956), Charterback (1956-1970), Bubble (1970-1979), Distress (1979-1988), and Convalescence (1988-2002).
If you can remember, last time we talked about the "Bubble" period (1970-1979)...
Now today we are going to look at the period directly following that. The period I am referring to was called the "Distress" period (1979-1988). Shipowners came into a position of being unable to make repayments.
Their relationships with banks worsened
By the early 1980's, the bubble had burst. The rest of the decade saw a string of defaults ($10 billion from 1983 to 1987), write-offs ($4 billion) and foreclosures. Many banks decided to stop all business involving the shipping industry. In one extreme example of this period, three Japanese banks wrote off $700 million of debt of a particular shipping company.
