Zhejiang Shipping Group went into debt crisis, caused by the depreciation of the dry bulk shipping market and record low freight rates. The company announced that two of its subsidiaries have overdue financial leasing repayments. The subsidiaries Wenzhou Shipping and Taizhou Shipping have total debts of 5.66 million USD, as well as problems with repayment of another financial leasing loan at total worth of 3.15 million USD, which will be due at the end of April. The record low freight rates and the depreciation of the bulk shipping market are the main reasons for the debt problems of the companies, as in February 2016 the dry bulk index collapsed to its historical lowest value.
The two troubled companies Wenzhou Shipping and Taizhou Shipping are currently in negotiations with creditors in effort to solve the debt issue and to avoid bankruptcy and liquidation. However, in case of negotiations failure the companies will follow the destiny of another subsidiary of Zhejiang Shipping Group – Wuzhou Shipyard, which was liquidated in December 2015 after huge debt burden, being the first bankrupted state-run shipyard.
Zhejiang Shipping Group is one of the largest state-run shipping grounds in China, which has subsidiaries in ocean shipping, shipbuilding and trade, engaged with operations in whole China and Eastern Asia.