Dr Roar Adland, shipping chair professor at Norwegian School of Economics, muses how soon until ship finance digitises and we can all chip in online to own a cape.
Ships are big-ticket items, reserved for the few that are lucky enough to have a few million dollars to spare – and a good bank relationship manager. Maybe, however, this is not for much longer.
Technology is changing the world even when it comes to ship finance, enabling fractional ownership and the secure and seamless transfer of titles to ‘micro shares’ through blockchain technology. Pretty much anything can be ‘digitised’ – houses, driverless cars, racing horses, intellectual property and, indeed, your oil cargo or capesize bulker. Once it is, micro shares of any such ‘digitized’ assets could in theory be bought and sold on online exchanges, continuously and by anyone.
At this stage, the observant reader would point out that we already have this capability in ship investment – it’s called publicly listed shipping companies. And anyway, charterers and insurance companies would not want to deal with the fluid ownership and large number of owners that comes with this concept, so most of the old structures (i.e. single-ship companies and third-party commercial and technical managers) would have to remain.
Still, the prospects of cutting out some middlemen (think project finance houses, S&P brokers and investment banks) and having relatively easy access to a deep pool of retail investors may convince someone to create an open-ended ship fund with the help of fintech sooner rather than later. I would not be surprised if this particular innovation is realised in China first – ‘Tencent Cape Fund I’, anyone?