The maritime industry is heavily reliant on finance to fuel its operations and developments. This sector, which encompasses various segments such as shipping, newbuilding, and recycling, has encountered repeated challenges in accessing favourable finance. These hurdles are influenced by numerous determinant factors that significantly impact the availability, structure, and terms of finance in the maritime industry.
When seeking financing, the identity and track record of the shipping company, as well as the market segments in which it operates, are crucial considerations. Diversification may not always be advantageous in an industry where niche players wield agility and superior knowledge to their advantage.
Global competition and access to alternative finance markets outside one’s domestic sphere also play a role. An emphasis on corporate-based strategies, rather than relying solely on the asset class, may help unlock finance in such circumstances.
The value of the asset, as well as the historical performance of the company, heavily influence the availability and pricing of finance. Size matters in the maritime industry, with the scale of operations being a driving factor in determining the terms of finance.
Different types of financial instruments, such as mortgage-backed loans, finance leases, and equity investments, create a diverse market with varying strengths and weaknesses. The risk associated with the asset is a significant concern for both owners and lenders, with the presence of appropriate insurance being a key consideration in any finance transaction.
Company and sector reputation are increasingly influential in lending decisions, with environmental concerns and issues related to money laundering and sanctions gaining prominence. Geopolitics, sanctions, and the risk of operational disruption are factors that have a significant impact on finance arrangements in the maritime industry.
Innovation, particularly in environmentally friendly technology, has the potential to improve industry reputation but also carries inherent risks. The conservative nature of financiers and the influence of regulations on the acceptance of innovative technologies further impact finance availability in the maritime industry.
These factors are addressed by Beatrice Russ, a partner at Wikborg Rein, whose practice focuses on the finance and development of projects in the shipping, offshore, travel, and aviation sectors. Her expertise involves taking projects from the planning and construction phase through to full operation.
As the maritime industry continues to navigate the complexities of securing finance, it is essential for stakeholders to consider and adapt to the various key factors that influence finance availability. Understanding these determinants and their impact on finance arrangements is crucial for sustainable growth and development within the maritime sector.
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