- The shipbuilding industry currently sees the Chinese financing phasing out the western one.
- Smaller ship owners opt for alternative financial schemes with shipping companies requiring state support for introduction of green fuels.
- Meanwhile, the world trade centre is gradually shifting from China to other Asian countries.
- Ship owners look for ways towards autonomous shipping.
- Those issues have been discussed by the market experts at the German Maritime Forum and SMM Digital.
A recent news article published in the Port News deals with the German experts discussing on the maritime outlook. We thank the experts Vitaly Chernov, Safir Khakis and Yuliya Vinogradova for their valuable inputs.
An outlook of German shipbuilding industry
Germany has the 4th largest merchant fleet; is the 3rd largest exporter (50% by sea).
German shipping banks finance 13% of the world’s shipping bank debt.
German ship owner account for 2% of the global orderbook only.
Only 24 ships run on alternative fuels (#11 in the world).
Participants of the Annual German Maritime Forum and the SMM Digital discussed the current market situation and the key trends.
Financial tunes
Among the trends in shipbuilding, financing is the growing share of Chinese banks.
There is a shift of smaller ship owners to alternative ways of raising funds, such as high yield bonds, convertible debts, capital and operating leases.
Highlights
Traditional banks involved in financing shipping sector have exited the sector due to the financial crises after 2008.
Shipowners are increasingly interested in considering structures as high yield bonds, convertible debts, capital and operating leases.
Asian accent
Asian shift is observed not only in the financial sphere but also in logistics with the “center of balance” moving from China to other fast growing economies such as India, Indonesia and Vietnam.
That should be attributed to the growing standard of living in China and, consequently, to production cost increase there.
Highlights
A new trend towards India, besides Vietnam and Indonesia.
Some companies start focusing also on India. Not 90% China but 60% China and 20% India.
There has been quite a shift to Vietnam because the standard of living has gone up in China, the cost of production has gone up.
Decarbonization
Among the trends of global shipping is the focus on reduction of emissions from ships through transition to green fuels.
That means an additional financial load on ship owners and also requires additional time for testing of new technologies.
Highlights
Volume, quantity of cargo increased by 20% between 2008 and 2018 and the emission increased by 10%.
EU ships are better than the previous ships with our companies having reduced carbon emissions by 25%.
Autonomous ship design
One more trend is the development of autonomous and unmanned shipping which is also a great challenge.
Highlights
Autonomy does not necessarily mean unmanned but at the same time there will be manned vessels with a certain amount of autonomy.
Around one third of the vessels have an economical driver to make them unmanned.
One example is an Artificial Chief Engineer on a vessel.
Another aspect is a remote service as an enabler of getting into this remote activity.
Another example is equipment health monitoring and we have a running prototype already.
Cost makes the difference
Ultimately, all these are economic issues.
Introduction of alternative fuels is certainly expensive and therefore it requires state subsidies.
Autonomous shipping will come at a price at least at the phase of technology development although it will later allow for cost and risk reduction.
Therefore, availability of financing is an acute issue. As of today, financial institutions of China win the race supported by the entire economic strength of the country interested in attraction of customers for loading of their own production facilities.
Meanwhile, China is gradually approaching the middle income trap while losing the momentum in Asia.
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Source: Port News
