Shipping must prepare for a return to the 1970s and 1980s in terms of mentality, argued one of North America’s best known names in shipping at today’s Marine Money Ship Finance Forum in Singapore. Graham Porter, chairman of Tiger Group Investments and a founder of Seaspan, said he sees a “full rotation” to the 1970s and 1980s with nation states carrying their own cargoes. Japan, South Korea and latterly China are all pursuing this policy, he said.
Porter said ship finance going forward would not be a problem, largely thanks to the growth of Chinese financiers.
On making future ship investments, Porter warned that the fact the world was likely to be in a deflationary state for as much as the next 10 years should moderate any potential vessel acquisition. Moreover, for bulk carriers in particular, returns have changed forever, he said.
Porter told delegates to forget 15% returns on bulk carriers and to accept as low as 2% going forward. “The days of 15% IRR model calcualtions are gone,” Porter said.
Porter also touched upon the hugely altered banking scene claiming that there were just five banks globally that will lend to non-corporate clients for secondhand ship acquisitions.
Turning to container shipping, Porter compared 20,000 teu vessels to Airbus A380 airplanes, for use on limited dedicated tradelanes. He described 20,000 teu ships as illiquid assets, favouring instead vessels of 9,000 to 10,000 teu in capacity. Moreover, the drop in bunker prices from $850 a ton to $250 a ton has changed the size debate in the sector, he said.
Finally, Porter saved his darkest predictions for last, warning that asset prices for offshore vessels could plummet much further.