There are no cash flows, ship asset values are low, the charter market is weak and players in the marker are filing.

These are the key points in the analysis of the current dry bulk market as offered by Robert Bugbee, president and director of Scorpio Bulkers. The carrier's business plan means that the carrier, in addition to running a regular shipping business, also buys newbuilding contracts and sells them on already before the ships are delivered. A business model that in the first three quarters of 2015 has contributed to a deficit of USD 209 million dollars.

Try a free 40-day trial subscription to ShippingWatch

One of the challenges for Scorpio Bulkers has been raising capital for the many newbuildings. In the past fiscal quarter, Scorpio Bulkers has managed to find financing for 59 of the 60 vessels in its fleet, which includes the comprehensive newbuilding program, and the carrier allegedly has a financing offer on the table for the last vessel, currently being processed. A factor that gives the management team a breather to consider its next move.

"We have done the hard work on the financing, from both the debt and equity side, and now we can do whatever we need to do in measured steps," said Robert Bugbee on a teleconference following publication of the carrier's third quarter interim report.

Cannot continue indefinitely

Asked whether the strategy now is to lean back and see where the market goes, or whether to buy more ships, Bugbee stresses that Scorpio Bulkers does not have to do anything right now, as the recently secured credit facilities give the carrier a "luxury" that enables it to manage the situation without panicking.

"We can be proactive rather than reactive," he says, adding:

"We can watch the market, but one cannot run indefinitely in a market that is this bad. It is still pretty uncertain when the market will recover, and we will do what we have to do as management to ensure as best one can that we fulfill our commitments and get the company through to the end of the tunnel, however long that tunnel is."

Try a free 40-day trial subscription to ShippingWatch

Robert Bugbee notes that many of Scorpio Bulkers' competitors have relied on the market continuing to strengthen, and that they are now being hounded by their banks.

"So we should be thankful for what we've received from the lenders and their support," he says.

Not a time to fix charters

Scorpio Bulkers has so far taken delivery of 26 vessels out of 60 in the carrier's newbuilding program. The combined construction price for the remaining 34 ships is USD 1.164 billion, of which around half must be paid in the first quarter 2016.

For the 26 ships in the water, some of them are covered for the fourth quarter 2015. The carrier's nine Kamsarmax vessels are covered 55 percent of the ships days at rates of USD 7,900 per day, the 12 Ultramaxes are covered 56 percent, similarly for USD 7,900, and the carrier's five Capsize vessels are covered 81 percent of the ship days for USD 11,900.

The coverage degree is a result of market conditions, explains Scorpio Bulkers founder and CEO Emanuele A. Lauro.

"We are always evaluating opportunities and we are not adverse to fixing longer term charters, but the market is weak and we do not feel that this is the time to fix contracts," he said at the teleconference.

Scorpio Bulkers finished the third quarter 2015 with a deficit of USD 18.1 million. The carrier sold 11 newbuilding contracts in the quarter.

Scorpio Bulkers' 2015 losses cross USD 200 million

Robert Bugbee has few simple business rules

Struggling Scorpio Bulkers seeks USD 200 million on NYSE

Scorpio Bulkers divests another five newbuildings

Scorpio Bulkers in USD 52.1 million net loss for Q1