Seatrade conference in UAE explores major shipping threat
The Middle East shipping industry needs to urgently reasses how it secures liquidity
A decline in traditional ship finance and lack of provision from regional banks threatens Middle East shipping according to reports verified by Reuters.
According to the reports, the substantial decline in finance from European banks, compounded by a lack of shipping finance provisions from regional banks, has caused liquidity in the shipping industry to tighten, forcing marine operators to seek alternative finance in order to continue operations.
This situation will be discussed in-depth at Seatrade Offshore Marine & Workboats Middle East (SOMWME), taking place in Abu Dhabi from 25 – 27 September 2017 at the Abu Dhabi National Exhibition Centre (ADNEC).
The discussion will be tackled during the SOMWME Finance Update, in a session titled “Taking stock – how to make the most of your company assets,” which concludes the first day of the conference programme.
The session will analyse the viable financial options and trends shaping the offshore marine and workboat industries. The panel features renowned industry experts such as David Manuel, senior marine specialist – Petrodata, IHS Markit; Knut Mathiassen, managing partner, NorthCape DMCC; Bora Bariman, head of energy & marine, Corporate & Institutional Banking Group, National Bank of Fujairah and Tien Tai, partner, HFW.
Calling for the Middle East shipping industry to urgently reassess how it secures liquidity, Tien Tai commented: “The traditional European banks with ship finance desks are no longer lending the historic amounts they once did and this is compounded by a number of European banks retreating from the ship finance sector altogether.
“In the Middle East, we see some new lenders coming into the shipping industry but this does not replace the capital shortfall left by the exiting banks. There has been an ascendancy of alternative capital providers in the last 18 months, offering liquidity at a higher pricing, although these are more suited to one or two ship projects and not a substantial refinancing.”
The industry has weathered many storms since the global credit crunch impacted operations in 2009, however, there is hope on the horizon.
Islamic finance is widely regarded as a positive means by which to generate equity and maintain health in the sector, although growth is hampered currently by muted enthusiasm from major local banks to operate active shipping desks.
Recognising that liquidity was tightening, earlier this year Dubai Maritime City Authority was examining the possibility of creating a US$1 billion shipping fund to support the emirate’s maritime sector during this time. According to ship valuation company VesselsValue, the UAE’s shipping fleet is estimated to be worth up to $10 billion.
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