Trends in Traditional Financing

Before addressing the subject directly, I need to build a little history and reflect a little on the industry itself which gives rise to the need for the provision of financial services. This is an industry which needs to be treated with huge respect given the size of the capital investments involved, the cyclicality of the markets, and the penchant of shipbuilders, ship owners and ship financiers to oversupply the market when times are good. There has been many a valuable lesson learnt, many a text written, and many a dollar earnt and then lost in this glamour industry, which in reality is not really about wealthy ship owners and their toys, but about the hard business decisions which have to be made continually to keep afloat literally and financially.

Some History

The shipping finance markets have developed over many years from their roots in Europe where the majority of business continues to be transacted. The history of modern day international shipping in Asia and Hong Kong is quite young compared to Europe. In 1960, Hong Kong owners barely owned 1m dwt of ships and only since then did the regional owners acquire ocean going tonnage for international trade. In the 13th Century, Marco Polo’s ship which returned him to Venice was financed by non other than the Mongolian Emperor, Genghis Khan. In the early 15th Centur y, The Emperor of the Ming Dynasty financed the construction of the “Bao Chuan” or the Treasure Ship which was 138metres long and displayed the might of China to its southern neighbours.

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