Standard Chartered has published a handbook for the shipping finance industry, entitled ‘Insight into Shipping Finance 2012’. The handbook contains articles contributed by 31 business heads and directors across the bank and 18 external writers from relevant partners. Its content covers a comprehensive range of issues including the impact of the current world economy and global trade on the shipping industry, major industry trends with a focus on Asia, Africa and the Middle East, operational challenges to monitor and manage, and the expected future trends.
The handbook is designed with the bank’s clients in mind, to help them take stock of the current situation, guide them through the uncertainty and help them build a strong platform for sustainable growth.
The shipping industry, a bellwether of world trade and economic activity, is being directly impacted by the current global economic uncertainties. This presents challenges to carefully navigate as well as opportunities to be seized in the global shipping finance industry. In order for the shipping industry and shipping finance institutions to continue sustaining long-term business growth, they need to successfully ride out seasonal market conditions. More importantly, they can benefit from sound financial advice that will help them address the fundamentals of the business for sustained long-term growth.
Impact of Global Economic Uncertainty
- While local banks in Asia have continued to step up their financing effort, this year will present financing challenges for ship owners and shipping companies.
- The various industry segments in the shipping industry will continue to face stress over rates/price and capacity/supply issues.
- European banks’ departure has created a financing gap and the high price of bunker fuel has resulted in a cash-drained situation for many operators.
Asia and Emerging Markets are Bright Spots
- Intra-Asian and intra-emerging market traffic will continue to stay strong.
- Offshore and gas (LNG and LPG) markets continue to do well due to high crude price and high level of exploration and production activities.
Opportunities to be Seized
- Shipping companies can consider hedging to help reduce uncertainty in expenses, thereby improving their overall balance sheet.
- Those with access to liquidity can consider turning to alternatives such as fuel-efficient engines and designs.
- Ship owners with the cash power can consider investing and locking in capacity at cyclical low rates.
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