Cargill to Close London Shipping Unit as Sector Crisis Worsens

 

Financial markets have been in turmoil since the start of the year due to worries over the health of the world economy, China's finances and the fallout from low oil prices.

 

The dry bulk sector -- which transports commodities such as coal and grain -- has been particularly hurt by slower Chinese business at a time when the sector is struggling with huge overcapacity.

 

Cargill, a leading shipping player, said the move to shut the London office of its ocean transport business was because the dry freight market, "is in its most distressed position since the mid-1980s, a situation that looks likely to continue for the foreseeable future".

 

It added that the market rout forced Cargill "to adjust its organisation to be as efficient as possible".

 

"This has been a difficult decision, given the track record of our London office, which has played a very important role over the years, particularly in developing our relationship with the ship-owning community in the London market," said Roger Janson, head of Cargill's ocean transportation business.

 

The Baltic Exchange's main sea freight index, which tracks rates for ships carrying industrial commodities, stretched its run of record lows to the 13th straight session on Thursday.

 

Cargill said it had begun consultations with its 10 staff members in London and would consolidate freight activities from Geneva.

 

The privately held group announced earlier this month a drop in profits for the quarter ending end November. It is in the midst of a restructuring aimed at making the company more responsive to commodities market swings.

 

Separately, Danish dry bulk shipping company D/S Norden warned on Thursday it expected to report a loss for 2015 because of low freight rates and sluggish demand.