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Friday, 06 July 18
HOW FLEET SIZE, CORPORATE PROFILE AND STRATEGY ARE DECIDING FACTORS IN SELECTING AN APPROPRIATE FINANCING STRATEGY - PWC
 KNOWLEDGE TO ELEVATE
The challenges that shipping companies are facing when selecting an appropriate financing strategy during the current period of volatile global markets, renewed fears of protectionism and trade wars and the possibility of new technologies disrupting traditional industries, such as shipping, were some of the issues discussed with shipowners and shipping finance experts during the Shipping Industry Briefing organised recently by PwC at the Yacht Club of Greece, entitled ‘Navigating through new challenges in the global markets’.
While interest in accessing the US capital markets remains high for a number of private shipping companies, the ability to do so is becoming increasingly difficult for companies with smaller sized fleets. “During 2018, the US capital markets started out strong and have maintained momentum despite the volatility in the market. IPO themes continue to be strong – top line growth, differentiation, dependable cash flow and predictable revenue. More specifically, shipping companies that are interested in accessing the US markets will need to focus on segment, volume and differentiation”, says Santos Equitz, Director responsible for Capital Markets at PwC Greece.
To be on US capital markets radar requires the combination of a large market capitalisation and a strong prospect of recovery in the shipping markets, which may be a difficult combination to meet for private shipping companies. The limited access to the US markets and the decline in traditional bank lending, has led to alternative sources of finance to emerge to fill the gap. Leasing finance and Nordic Bonds have proven to be viable alternatives to fill the debt gap left from the traditional shipping banks reducing their exposure to the sector. Additionally, when it comes to raising equity, the Norwegian market has been effective, utilising the unregulated over-the-counter market (N-OTC) and Merkur Market for smaller companies or the regulated stock exchanges Oslo Axess and Oslo Stock Exchange for larger companies.
Socrates Leptos-Bourgi, Global Shipping & Ports Leader at PwC, opened the floor to a panel of experts to discuss these alternative sources of finance, mentioning that to go public in the US capital markets is a significant transformation for any company and more so for smaller, family owned companies. As discussed on the panel, some alternatives are available in the Norwegian markets, which have recently provided companies with the ability to raise finance through either equity issuance or high yield bonds. Andreas Aamodt Kilde, Partner at Pareto Securities, explained: “With the traditional shipping banks continuing to reduce their exposure to the global shipping industry, shipowners have to explore other alternatives to finance their vessels. Fortunately, the options are many and the opportunity in today’s market lies in taking advantage of the attractive non-bank financing solutions available. With every fleet, employment profile and capital structure being unique, my best advice to shipowners is to explore the alternatives out there in a structured and competitive process – financing is available, but one needs to know where to look”.
Although some interest had been shown by private equity funds in the past, this is not a trend that seems to continue and investors are looking for ways to exit. Nevertheless, this activity has positively influenced the interest in M&As, said Anthony Argyropoulos, Managing Director at Seaborne Capital. Although the scope for further M&As does not seem to be prevalent due to the lack of synergies in shipping, Argyropoulos believes we should expect a few more, possibly with public-private partnerships as the driving force behind them.
Chinese lease finance is also growing. With 12 out of 25 largest and active financing institutions coming from China, there’s a large appetite for investment, however the size and reputation of shipping companies are still major contributors to the final decision, explained Nick Daskalakis on the panel, Director at Smarine Advisors Limited. “Leasing finance has matured, providing flexibility on ship age, type, origin of built, employment, tenor, pre-delivery, day to day operational requirements, competitive terms and fast execution and drawdown timeframes. It is ideal for capital intensive projects, boosts liquidity and strategically diversifies lending risk for shipping groups, offering synergy opportunities with Chinese yards and charterers. Large holding structure groups with excellent reputation, transparency and strong cashflow are the prime candidates albeit competition is cascading interest towards mid-size groups nowadays”, he continues.
The role of China in global trade and the shipping industry was further analysed by Mr Feng Li, Commercial Counsellor of the Chinese Embassy in Greece. The Commercial Counsellor explained how China’s economic growth and shipping are linked and the wellbeing of the shipping sector is dependent on ensuring an open market and competitive free trade. He also added that the Cosco developments at Piraeus port are a commitment to develop the largest container port in Europe for the establishment of new channels to global trade. China and Greece have complementary strengths when it comes to shipbuilding, and the relationship between the two has been growing stronger over the past decade.
When it comes to the overall prospects of the main shipping markets, Henriette Brent-Petersen, Managing Director of Shipping and Offshore Research at DVB Bank SE, commented that “Despite the continuing ‘deleveraging’ process both in the Chinese and Korean shipbuilding industry, we do not expect the significant idle yard capacity to completely disappear in the short term”. “The data show a decrease in the nominal yard capacity, but do they reflect the truth? We are living in a world with new disruptive technologies that change the way we used to do business, and the same applies for the traditional shipbuilding industry. By leveraging on innovative automation technologies such as the use of robots, sensor systems and artificial intelligence, shipbuilders will be able to achieve a higher productivity and low-cost construction, high-quality products and on-time delivery. As a consequence, the conventional ship construction process could be transformed into what we call a ‘smart yard system”, she explains. The overall impact on shipping will likely be shorter cycles and hire rates to be volatile within a much narrower range.
Digitisation in the shipping sector is one of the most disruptive developments since the industrial revolution, and should not be ignored by any stakeholder – not just ship owners, but also ports and logistics service providers- which will ultimately lead to optimized operations in the whole maritime logistics chain. Referring to digital strategies in the industry, Burkhard D. Sommer, Deputy Head of the Maritime Competence Centre of PwC Germany, comments: “Digitisation is unavoidable; it will cause disruptive changes to the current business models. Digital strategies and implementation of technologies and processes shall be based on a holistic approach to improve the current way of working as well as ensure the success of any company in the future. Digitisation is importantly about using data from various sources to optimise operations. “It is not an option – in a quick changing world it is a necessity to be successful in the future but most of the players in the maritime industry still have a long way to go. It is time to move”, he said.
Shipping has been increasingly operating in a challenging economic environment, posing challenges as well as opportunities to operate and innovate for sustainable business operations. Although tradition has been a driving force in the industry’s success in the past, this is the time for ship owners to move away from traditional operating models and start thinking of alternative ways to grow their businesses.
Source: PwC
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Wednesday, 03 October 18
SHIPPING MARKET INSIGHT - KATERINA RESTIS
The bunker fuel supply and availability landscape is close to its transformation with the enforcement of the IMO’s global 0.5% fuel Sulphur c ...
Tuesday, 02 October 18
PANAMAX: A FURTHER RISE ACROSS ALL MAIN ROUTES THIS WEEK - ALLIED
Capesize
Finally an upward recovery was in sight in the spot market the past few days, after the prolonged negative pressure noted the weeks pr ...
Tuesday, 02 October 18
THE PRICE OF OIL CONTINUES ITS CLIMB AMIDST A SERIES OF CONCERNS REGARDING SUPPLY CONSTRAINTS - GEORGE LAZARIDIS
It has been a busy week for oil traders as the price of oil continues its climb amidst a series of concerns regarding supply constraints.
...
Tuesday, 02 October 18
INDONESIA GETS READY TO MEET INCREASED COAL DEMAND FROM CHINA, FREIGHT TO RESPOND - MIKAL BOE
Indonesian coal suppliers have increased their domestic coal production target by 4.5 percent from a previous 485 million tonnes to a massive 507 m ...
Monday, 01 October 18
SUPRAMAX: A 56,000 DWT FIXED DELIVERY FOR A SURABAYA TRIP WITH REDELIVERY TO WEST COAST INDIA AT $13,500 - THE BALTIC BRIEFING
Capesize
A stop-start market for the big ships with many expectations and few fulfilled. Holidays curtailed trading early in the week, but the ...
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- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mercator Lines Limited - India
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Aboitiz Power Corporation - Philippines
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- The University of Queensland
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- GVK Power & Infra Limited - India
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining Corp, Philippines
- Baramulti Group, Indonesia
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Malabar Cements Ltd - India
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- International Coal Ventures Pvt Ltd - India
- GMR Energy Limited - India
- Cigading International Bulk Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
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