EMEA News
Small Shipping Firms to "Bid Farewell to the Market"
PricewaterhouseCoopers (PwC) predicts that the number of ship owners in Germany is likely to shrink as smaller firms have difficulty putting more fuel-efficient vessels into service to get strong charter prices, Bloomberg reports.
"Smaller shipping companies will bid farewell to the market, because they don't have access to financing sources," said PwC shipping analyst Claus Brandt.
"Only companies of a certain size will get foreign capital."
With European banks staying away from shipping and U.S. and Asian financers focusing on large companies, small shippers will not be able to get funding unless they form alliances or mergers, Brandt said.
Firms in Germany's shipping industry hold an average of nine vessels, but 51 percent of them have joined some type of alliance for vessel management or chartering, up from 41 percent a year ago.
While private equity firms and Chinese state-owned banks have stepped in to provide financing in some parts of the shipping industry, the European banks that tend to support small German shippers are facing pressure from the European Central Bank to tighten up their lending.
"Banks in some cases have given leeway to creditors during the six crisis years, but now we are seeing a clear tendency that banks seek bigger entities," Brandt said.
"Creditors have had enough and push for vessel sales."
Hans Christian Kjelsrud, head of shipping for Nordic bank Nordea, a major shipping lender, said this spring that the structure of today's financing deals is now "generally a bit more conservative than it has been."
