Now that many analysts have given their word in about the emerging economic crisis, thanks to Europe and United States, almost every industrial sector will have to face the blow at some point of time just like the maritime industry. Euro Zone has still not become able to pull itself out of the vicious loom of the critical debt crisis. U.S, on the other hand, is faced by high unemployment and a fall in consumer spending. As West’s economic condition steeps down, a global recession might erupt soon. And these conditions are having grave effect on maritime community with the industry depending only on its reserves
Companies are getting a tough time by the banks in order to apply for credit for the financial institutions have risen up the down payment percentage from twenty percent of vessel’s value to almost fifty percent. This has had a negative effect on competition as only large companies, market leaders being more specific, like A.P Moller Maersk and Mediterranean Shipping Company can get hold of loans now. As capital issues prevail, it is a pain for many medium and small sized companies to expand and even prestigious shippers, Korea Line, The Containership Company and Omega Navigation Enterprises for starters, have gone bankrupt. Gervais Green from Norton Rose says that given the underlying economics of oversupply and current day freight rates, the banks are far more cautious and if they are going to put money into a project, is on very particular terms.
In such depressing times, the offshore energy sector remains lucky as experts believe the oil prices are not coming down in near future, encouraging banks to take up financing of this sector’s projects. As Green explains that in the offshore sector there are some very large deals still being done and they are working on several at present, with an appetite to do more. To devise solutions for the deteriorating maritime industry, officials from globally leading banks, DnB NOR, HSH Nordbank and Deutsche, will be meeting the maritime community on September 27th and 28th in Singapore.
