Ship financing faces competition
Updated: 2014-08-18 11:16
By Alfred Romann(China Daily)
|
|||||||||
China Cosco Holdings, for example, reported a narrow profit in 2013 after two years of losses. Cosco is the largest shipping company in the Chinese mainland. The country's second-largest shipping company, China Shipping Container Lines, reported a 2.65 billion yuan ($430 million) loss in 2013.
Overcapacity means that shipping companies can eke out a profit in the good years but may have to deal with significant losses when demand drops, as it did during and after the global financial crisis.
Drops in demand and excess capacity led to huge falls in profit through 2008 and 2009. Demand has stabilized in the past couple of years but the industry is once again piling up capacity and prices are suffering and so are the bottom lines of shipping companies.
Low shipping prices and far too many boats on the water are making it hard for shipping companies in Asia and else-where to turn a profit. The low profitability is likely to continue even as more centers across Asia compete for business and more money becomes available for more ships in the largest ship finance locations like Hong Kong, Singapore and, increasingly, Shanghai.
The Baltic Dry Index, which tracks the price of shipping raw materials by ship, fell as low as 723 last month according to Bloomberg, having hit 2,337 last December.
Part of the problem is that even as shipping fees drop, companies continue to buy new and bigger ships, encouraged in part by the greater availability of finance.
No single place is responsible for this newfound willingness of banks to finance ship acquisitions. The reality is that no bank can survive in that business by focusing on any one location. Rather, banks focus on the sec-tor and take a regional view. For them, there is little difference between financing a ship in Hong Kong or Singapore.
"There is not sufficient business for a bank to operate in shipping finance in one city," says Cheng. "Ship finance is a very cash-intensive business. You need banks to do this business."
|
|
Nation on course to become world's largest cruise market | 2M alliance charts ships' new course |
- China to supply cranes for Liverpool port project
- Sunrise sees a bright future in offshore drilling
- COSCO ramps up shipping services in Latin America
- Terminal opens doors for Chinese company
- China approves NE China pilot zone
- Shippers may face rough waters, but it's smooth sailing for ports
- Hong Kong, Shanghai world's top shipping hubs
- California Chinese open pockets for quake relief
- Brazil-China a 'model' to copy
- Unique relation needs further tightening
- Trade shows help firms to gain a foothold in Brazil
- First lady tours museum with wives of foreign leaders
- Passenger transport starts on Tibet's new railway
- China to help upgrade US transport network
- Youth Olympic Games kick off in Nanjing
Most Viewed
Editor's Picks
Leading leaden lives |
Former security chief under probe |
China helps fight international war on drugs |
Crackdown on terrorist attacks |
My China Story: Meeting the master |
Tongues tied around tatu-bola |
Today's Top News
190,000 people in HK turn up for anti-Occupy march
Ebola outbreak interrupts Chinese companies in Liberia
Macao's Chui unveils political platform for chief executive election
Gov declares emergency, imposes curfew in Ferguson
APEC sets ball rolling for free trade
China's holdings of US securities take a slight dip
China seeks to conduct dialogue with Vatican
China opposes Japan PM's offering to Yasukuni Shrine
US Weekly
Geared to go |
The place to be |