Maritime firms to struggle with credit squeeze

Sun Sep 25, 2011 10:56pm EDT
 
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By Randy Fabi and Harry Suhartono

SINGAPORE (Reuters) - With fears of a recession rising, the maritime industry will find it increasingly difficult to obtain financing for expansion over the next year, with the exception of the offshore-energy sector, industry experts said.

The economic gloom in Europe and the United States has amplified the pain for shipping companies, already struggling with rock-bottom freight rates and a glut of new vessels that were ordered when times were good.

The International Monetary Fund last week warned that the West could slip back into recession next year unless they quickly tackled economic problems that could infect the rest of the world.

"Given the underlying economics of oversupply and current day (freight) rates, the banks are far more cautious," said Gervais Green, head of Asia shipping with law firm Norton Rose.

"If they are going to put money into a project, it is on very particular terms."

Executives from the world's top banks in shipping finance, including DnB NOR DNBNOR.OL, HSH Nordbank HSH.UL and Deutsche Bank (DBKGn.DE: Quote), will gather with the maritime community in Singapore on September 27 and 28 to discuss survival, recovery and opportunities in this gloomy economic environment.

CREDIT WOES

The depressed freight market has forced shipping companies to use more of their reserves to buy vessels and expand their operations as banks tighten their credit lines.   Continued...

 
<p>Trucks unload shipping containers from a cargo ship at Qingdao port in Qingdao, Shandong province September 2, 2011. REUTERS/Stringer</p>