LOGISTICS PERSPECTIVE
$HIFTING FUNDING FI€LD BY PAUL SCOTT ABBOTT
Financing for Breakbulk Vessels Advancing its Own New Normal
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s a pandemic-stressed world advances fresh approaches to virtually all activities, the financing landscape for breakbulk ships continues to expand beyond time-honored bank models, looking to benefit from economic rebound, from rising demand and even from stricter environmental mandates. While the playing field is undoubtedly shifting, several longtime industry players told Breakbulk they see opportunities as breakbulk vessel financing moves forward with its own new normal. “The breakbulk sector may stand to benefit the most from the recovery, when one takes into consideration the new mindset that has prevailed with the Covid pandemic,” said Basil Karatzas, CEO of New York-based Karatzas Marine Advisors & Co. for the past 10 years. Karatzas, who has more than two decades of experience in maritime financing, said lower interest rates should spark investing desire, while mounting worldwide emphasis on a cleaner environment is likely to be a stimulus for still more breakbulk cargo, including ecofriendly wind turbines, and thus a potential driver of investments.
INVESTOR POOL DIVERSIFICATION
An increasingly broad array of financiers should facilitate better matching of investments with opportunities, according to George Cambanis, managing director of marine finance at New York-based alternative investment platform Yieldstreet.
industry, so long as interests are aligned between market participants. Nonetheless, as some observers note, the largest chunk of capital supporting the breakbulk sector still comes from the combination of international commercial banks, export credit agencies in Asia and Chinese leasing companies. And it is true that these sources of funds primarily target the largest shipowners.
George Cambanis
Hannes Hollaender
Yieldstreet
Toepfer Transport
“The financing environment for the maritime industry, as a whole, has in recent years shifted away from the traditional model of banks providing the majority of debt capital to owners and operators, by becoming instead more reliant upon a more diverse, decentralized pool of financiers, made up of alternative finance providers, such as Yieldstreet; leasing companies; private equity firms; purpose-built family offices and so on,” Cambanis said. “This more fragmented setting has allowed for the maritime industry’s capital requirements to be met by a more balanced mix of institutions, creating a tiered and targeted approach in terms of matching investment appetites to respective projects, whether in terms of specific assets, types of counterparty and/or individual project structures,” said South African-born Cambanis, who in 2002 established Deloitte’s global shipping and ports business group. Today’s proliferation of varied avenues for financing, Cambanis said, should benefit all sectors of the maritime
LEASING MODEL EVOLVES
Among current trends is an acceleration of the leasing model, including shipyards financing newbuildings through the lease of the vessels to operators, according to Yorck Niclas Prehm, head of research for Hamburg, Germany-headquartered shipbroker Toepfer Transport, which also has offices in Singapore and Shanghai. In addition, more big private equity companies are becoming engaged as asset users, Prehm said, with some shipowners improving liquidity by chartering vessels to operators with a purchase option at the end of the lease term. Hannes Hollaender, Toepfer’s managing partner and co-owner, who has been with the company 20 years, said many financing banks have disappeared from shipping after having lost money at a time of overabundance of vessels in the global fleet. Now, Hollaender said, with diverse financing and equity available, shipyards are getting busy building again, but, rather than focusing upon multipurpose vessels to serve the breakbulk market, it seems most are preferring to churn out containerships and tankers, which, he said, are simpler and more profitable to build. www.breakbulk.com BREAKBULK MAGAZINE 33
