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Unprecedented uncertainty sparks new ship finance conundrum

I’ve been in this wonderful shipping business for more decades than most and I can state categorically that I’ve never sensed greater uncertainty among shipowners than in the first few months of this decade.

Respect for the shipowner who has to make the big decisions these days on fleet development. Whether it’s hard to read the markets, the regulatory intransigence or fuel conundrums there is just so much that is up in the air when committing to a newbuild that will be on your books for potentially 25 years.

Shipping historians will look back on the global sulphur cap as a storm in a teacup, a non-event similar to the Y2K threat 20 years ago, especially when taken in context of the challenges that have ensured IMO 2020 has faded smoothly from the headlines.

Personally, I find the rapid narrowing of prices between low and high sulphur fuel wonderful news, and yet there are owners out there still installing scrubbers. We all ought to have used clean fuels from the beginning with no loopholes, but this is a shipping, an industry that has made its billions over the years from exploiting holes in the international regulatory framework.

A black swan does not do justice to the size or magnitude of the coronavirus on shipping. As one-off demand killers go, Covid-19 is unprecedented in modern shipping history and will ensure red ink is awash at interim results for most shipping companies this year.

And then came the second black swan, the oil price war between Russia and Saudi-Arabia – that should be good for the tanker owners and if lasting more than a year, also good for the world economy.

This year we expect to see reduced global economic growth. People are afraid, share prices are falling and falling. The Fed has had to step in, gold is back in vogue again — all sure fire signs we’re in for a very tough period. Goldman Sachs warned on Friday that US GDP could slump more than 20% in Q2, that is mind boggling.

Shipowners are not investing much thanks to long-term technology concerns and short-term coronavirus fears. Newbuild orders in the first 10 weeks of 2020 were down 64% year-on-year, and bear in mind 2019 was also a below average year for ship orders.

The irony of all this uncertainty and hesitancy is that it comes at a time when financing and liquidity for shipping is finally back on the table. Private equity and banks are back, albeit financing more sensibly, having learnt harsh lessons before.

Welcome to the not boring 2020s, a far cry from the roaring 1920s.

This article first appeared in Maritime CEO magazine, published this month. Splash readers can access the full magazine for free by clicking here.

Dagfinn Lunde

Dagfinn Lunde, previously head of DnB New York (90-95), Head of INTERTANKO (95-00), and on the board of DVB responsible for the shipping and offshore division from 2000 until the end of 2013. He is now a board member of Maxi Shipping and co-founder of DagMar Navigation Ltd and SFG Ship Finance Global Ltd trading under the name


  1. Nassim Nicholas Taleb who popularised the term Black Swan in his 2007 book tweeted yesterday that “Except that a pandemic is NOT a Black Swan.”
    A Black Swan event has to be unpredictable and funnily enough he predicted a global pandemic in that very book. We had the SARS epidemic in 2003 which had a huge impact on shipping. We’ve also had extreme volatility in the price of oil many times in the recent past with drops to $10 in the late 1990s so a collapse in the price of oil is not a Black Swan either.

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