More than 230 senior executives in Istanbul
Critical legal issues – notably the risk of corporate manslaughter charges – also came under the spot light, but the potential for boom rather than gloom dominated other sessions focusing on new market opportunities, money-making IT applications and the Interferry/IMO joint initiative to boost ferry safety in developing nations.
The knock-on effects of the global credit crisis will make it especially tough for ferry companies to fund new tonnage because they rarely rank as core clients, said Richard Jansen, global head for cruise and ferry at US-based ship finance leader DVB Bank.
With existing borrowing already struggling, he noted: ‘The shipping industry’s newbuilding orderbook is worth US $700bn over the next three years and owners are desperate to renegotiate their loans. If you’re really lucky, your yard goes bankrupt before you do.’
A third of the world ferry fleet was at least 30 years old, said Mr. Jansen, so safety and regulatory issues underlined the need for investment. The problem was that ship finance volumes had dropped significantly, matched by a rise in the cost of financing. Shipping was now rated at BB or less in credit ratings and capital markets had been affected because investors did not understand the industry.
‘Quite frankly we don’t know where you’re going to get equity financing for shipping,’ he went on. ‘As for the banks, we’re basically closed for business. Shipping represents only one or two per cent of the portfolio for most banks and the big ones can live without it. They will concentrate on core clients and sectors – and the ferry sector is not usually considered core.’
Mr. Jansen suggested that export credit finance was ‘absolutely number one’ among alternative solutions, followed by bond markets and sale/leaseback deals.
In a ferry operator’s perspective of the changing business climate, Stena Line’s North Sea director Pim de Lange described the difficulties of balancing supply and demand in a highly competitive market.
He recalled that in late 2006 his company had responded to freight demand by ordering the world’s two largest ro-pax vessels for delivery in 2010 – but after a decade in which the market grew by an average of 3% per year, freight volumes had fallen by 17% since last year’s economic collapse and there was now too much capacity.
‘Looking back, I can tell you that we very much regret ordering the ships then because if we did so now they would be much cheaper,’ said Mr. de Lange.
