SHIPPING TRENDS
That said, the finance landscape has changed massively for MPV operators over the past few years. “Five years ago, the income side was very bad; 2017 was the low point,” Hollaender said.
Since then, MPV indexes have been climbing to the point today where rates are something to celebrate, not drown sorrows in. “What has happened now has not been seen before. The indexes
FINANCE FRAGILITIES WITHOUT PRECEDENT
Investors in shipping today face risks and fragilities without precedent in the last 75 years, according to Tharman Shanmugaratnam, senior minister and chairman of the Monetary Authority of Singapore. Speaking at the IMASBloomberg Investment Conference, Shanmugaratnam described the current market as a “perfect long storm,” shaped by the confluence of several forces. Tharman Shanmugaratnam He noted five fragilities curMonetary Authority of rently shaping Singapore investment: • The war in Ukraine. • The real risk of stagflation in many parts of the advanced and developing world. • The increasingly urgent climate crisis. • Pandemic insecurity. • Enhanced fragility coming out of divergences in growth and wellbeing, both within societies and across the world. “These are each major risks and sources of fragility. Together they define a perfect long storm. I say long storm, because this is not just a perfect storm in the traditional sense where you have a confluence of oneoff, conjunctural factors. These are structural shifts. They’re not cyclical or random shocks. They’re structural shifts, interacting with each other, that are going to be with us for some time. “ The war in Ukraine will, he said, not leave any major country better
off than before. “It is only a question of how bad the outcomes will be,” he said. “The situation will likely get worse before it can get better, but none of the trajectories is going to lead the world to a better place.” Macroeconomic risk, meanwhile, takes the shape of higher-for-longer inflation which is now a “near certainty.” The third fragility of the climate crisis means that it is no longer possible to make the adjustments needed to tackle the climate crisis without ensuring energy security. Shanmugaratnam said that we “can’t be purist about this, because if sharply higher energy prices or disruptions threaten social and political stability, the world is not going to be able to address its longer-term challenge, which is our foremost challenge, of tackling climate change.” Global health security, the fourth challenge, is a live issue, despite the “Covid-fatigue” sweeping the globe. “It’s already baked into the system – in fact, the risks have been accentuated by global warming, the loss of biodiversity, deforestation, and increased human incursions into the natural world. The rate of zoonotic spillovers, spillovers of pathogens from the animal world into human life, has increased and they are out there. No one knows exactly when the pandemics will come, but they will come. They are happening more frequently and can be as severe or more severe than Covid-19.” Lastly, Shanmugaratnam warned of less inclusive growth, both within and across nations, that could lead to a reversal of gains made in the developing and emerging world over the past 20-30 years – and will call for sweeping investment shifts, changing finance priorities and a new era of collaboration.
www.breakbulk.com
PORTRAIT CREDIT: ROBIN, WIKIMEDIA, CC BY 2.0
CEO of Oslo, Norway-based Maritime & Merchant Bank ASA, a niche private bank offering first-priority mortgages to the shipping and offshore services industry exclusively, said that environmental, social, governance, or ESG, is on everyone’s agenda. While it hasn’t drastically influenced the bank’s terms yet, over a period of time “it definitely will.” That applies to everyone, he added. “My recommendation is for operators to stick to the green stuff and ESG. A commitment to environmentally friendly solutions will open finance options.” Some banks already include a premium and more attractive financing terms if you are pioneering environmentally friendly solutions. “We have not done this yet, but we will look at it and there is definitely a clear focus on this moving forwards in Norway.” Hannes Hollaender, managing director at Hamburg-based ship broker Toepfer Transport, agreed that ESG is a “big topic” when it comes to financing terms. “For the majority of projects, Hannes you cannot Hollaender secure finance for a newbuildToepfer Transport ing which is not environmentally friendly, which is not optimized, which has no new angle on the propulsion side and so on.” However, he said it is not difficult to comply with these requests: “The technical part is a given on ESG as everybody is working on this path. Ships are not like they were 15 years ago.” The difficulty comes with the specificity of the MPV sector, compared with other shipping sectors vying for the same pot of cash. “You have various investors out there, especially funds, and MPVs are a little bit different to other shipping businesses. The sector is very diversified with many small players and is very fragmented,” Hollaender said.
BREAKBULK MAGAZINE 23
