Naples, FL: Maritime CEO is in Florida today speaking with one of the best-known names in ship finance, Paul Slater whose prognosis for the industry is decidedly sobering.
Ship finance for 2014 will continue to be “very stressful”, he warns, as most of the traditional commercial banks have withdrawn from shipping and alternative debt is very expensive.
“I expect more companies to go bankrupt or be broken up as the chronic overordering of new ships in container, dry bulk and tankers continues to depress freight markets,” he predicts.
Ship finance veteran Slater founded First International in Bermuda in 1985 as a ship finance and leasing company following a similar previous company Oceanic Finance Corp that he had had established in 1976 and sold out of in 1981. Oceanic continues to trade today as Tufton Oceanic.
Today First International, based in Naples, Florida, provides consultancy and advisory services to shipowners and investors in both the shipping and energy industries.
“Our goals for 2014 are to stimulate activity in the ship leasing sector focusing on long-term contractual employment of ships as opposed to the highly risky short-term focus of the last 10 years,” Slater says.
Feeling generous ahead of the Chinese New Year, Maritime CEO gives Slater a metaphorical $200m to invest in shipping. He’s quick to find a way of spending this generous ‘Lai See’ packet.
“If I was given $200m in equity to spend on shipping I would add a further $800m of long-term tradeable debt and acquire ships to be chartered long-term to high quality end-users or cargo owners,” he says.
On the great story of ship finance for the last 18 months, namely private equity, Slater reckons this cash tap is coming to an end.
“I see private equity losing interest in shipping as they fail to achieve their projected yields in the short-term and are not there for the long-term,” he reckons, pointing out: Second-hand ship prices will not return to the levels of the last decade and the lack of shipping experience in most private equity firms will diminish their chances of success.”
All things considered, this ship finance expert has plenty of cautious advice for shipowners who reckon good times are finally coming. [30/01/14]