Founded at the end of the Golden Age of Piracy, Britain’s oldest shipping company survived two World Wars and weathered the Great Depression before finally sinking under the weight of a global trade slump.
Stephenson Clarke Shipping Ltd., in operation since 1730, sold its last vessel in July and slipped into liquidation last week. The company said it could no longer hold out against a massive downturn in the movement of dry goods such as iron ore and coal – commodities that once propelled the shipper through Britain’s industrial revolution.
“It is with great regret that the company has had to cease trading,” read a company statement in a news release issued by Tait Walker, the appointed liquidator. “Whilst previous economic downturns have been weathered, the current market is one of the worst experienced for many years.”
The sinking of Stevie Clark, as the company is known to many, represents one of the last links to the once-proud seafaring past of Newcastle upon Tyne, a city on the northeast coast of England. But it also highlights how difficult it has been for the shipping industry to stay afloat since the commodities market plunged in 2008.
Just last month, Deiulemar Shipping, a major Italian dry freight group, announced plans to liquidate to avoid formal bankruptcy proceedings.
Simon Bennett, the director of external relations for the International Chamber of Shipping, said the effects of the slump, which started in 2008 followed the banking crisis, have been severe.
“This is probably the worst shipping market internationally in recent memory,” he said.
“Because shipping, of course, is a servant of world trade, the demand for shipping is directly linked to activity in the global economy,” Mr. Bennett added.
The blow to the industry was compounded by a boom in shipping, just before the global meltdown, which had many companies ordering new vessels. “It was literally record-breaking money that shipping companies were making,” Mr. Bennett said. “Many of them – in hindsight, rather foolishly – invested huge amounts of money in ordering new ships.”
The surge in orders for new ships at the commodity market’s peak in 2008 led to a flood of cargo capacity since 2010. Because it takes a few years for big freighters to be built, those orders are continuing to float out of dry docks toward drastically reduced returns for bulk shipments.
The Baltic Dry index – which tracks global freight prices for shipping dry bulk commodities such as coal, grains and iron ore – plunged in 2008 and is now mired in its lowest trading range in more than 25 years. Gains in June and early July have been shrugged off and the index has plunged steadily downward for the past month.
Mr. Bennett said many shipping companies around the world have been in financial trouble since the downtown started, but added that banks have been reluctant to foreclose on shipping companies.
“All they’ll be left with is a load of assets that they can’t operate,” he said. “The banks have been much slower on punishing shipping companies than was perhaps anticipated when the crisis started three to four years ago.”
Stephenson Clarke, which was founded more than a century before the invention of the telephone, could not be reached for comment on Thursday – its number is no longer in service.
In the years leading up to its liquidation, the company was involved in short sea shipping – transportation through inland waterways and seas, to the exclusion of oceans. It boasted a modern fleet of single-deck bulk carriers that shipped aggregates, alumina, grain, coal, fertilizers and steel.
It had recently employed just nine people and gradually sold off its fleet over the past few years.
Mary Brooks, a shipping expert and the William A. Black chair of commerce at Dalhousie University, said the selloff was “not unusual.”
“By the end of 2008, there were actually companies that were carrying cargo for almost no money just to keep customers,” Ms. Brooks said. “You can’t do that for very long and stay in business.”