The UK Chamber of Shipping is taking a fresh look at the thorny issue of shipping finance, asking if there are alternative sources of funding that shipping can capitalise upon?
Global ship finance from banks, although severely constrained from previous times, has remained steady in the last year at close to $400 billion, similar to the previous year.
However, during the same period, the global fleet rose by 1.76%, from 89,676 to 91,526 vessels. Growth therefore must have been achieved through alternative finance sources.
Not only this, but it is acknowledged throughout the sector that finance is difficult to obtain.
In order to examine this fundamental change, the UK Chamber of Shipping is bringing together three experts in the field to give crucial insight into this on the 20th September this year in London.
An Alternative Bank
Mark Clintworth is the Head of Shipping for the European Investment Bank (EIB).
Having now been active in the shipping sector for a number of years, the EIB takes a pragmatic approach.
It is a source of funding the shipping industry would be short sighted not to take more advantage of.
As well as offering loans for a broad range of tangible and intangible investments within the shipping sector, the EIB also provide guarantees to incentivise commercial bank lenders to take on projects with a perceived increased risk of default.
With the withdrawal shipping loans there is “a desperate need for alternative funding sources,” Clintworth said earlier this year.
Interestingly, whilst there has to be significant European benefit, funding is not limited to EU based companies.
An Alternative Finance Approach
Dr Bryan Zhang, Director at the Cambridge Centre for Alternative Finance (CCAF), is to bring a further fresh perspective to examining financing opportunities for the maritime sector.
His work centers on forging a cutting-edge, multidisciplinary and collaborative research agenda in alternative finance including financial instruments and channels that have emerged outside of the traditional financial system.
Zheng, a key author of the annual UK Alternative Finance Report, is an expert in the £3.2billion alternative finance market, the complexity of which is growing each year.
Currently the largest type of lending in this market is the peer-to-peer business lending, but there is also equity based crowd funding, invoice trading and pension-led funding to name just a few.
With this type of finance a growing trend in other industries, the maritime sector must take an open minded examination of what potential there might lie there for themselves.
Traditional Source with Fresh Perspective
Matt Smith is Head of Shipping at UK based Clydesdale Bank and at a time when many banks are contracting their shipping portfolio, Clydesdale is actively expanding.
A dedicated team was established in 2015 and in a different approach to many traditional lenders, the bank will allow marine operators to use the equity held in their entire fleet if Clydesdale are the sole finance providers.
The bank is seeing excellent growth providing loans between £500,000 and £50m with operators able to access up to 70% of the value of their whole fleet
So, whilst the majority of bank financing for shipping may be a struggling, there are still those breathing fresh life in to it!
Bring Together The Knowledge
These three unique financial experts are being brought together at the UK Chamber of Shipping’s flagship UK Shipping Summit on 20th September in London.
With each bringing something entirely unique, the discussion will center around how the different models can work together to provide the shipping industry with much needed financial capital.
To be part of the discussion and put forward your perspective, join the debate and register here.
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