15 February 2023 (Lloyd's List) - SHIPPING needs a variety of funding sources to invest in fleets that will lower emissions, a webinar hosted by the European Community Shipowners’ Associations was told.
While sizeable companies may have access to traditional bank funding, small- and medium-sized enterprises, which make up the bulk of shipping, also require a hand, with private lenders open to those with sound business models.
In the European Union, public money could also be made available to bridge the funding gap and the European Council is reviewing proposals to include shipping in a specialised funding scheme, with a decision expected later this year.
Governments could also step in with export credit such as with the green corridors schemes, was one suggestion.
Massive investment is needed in newbuildings as well as retrofits, and financiers need to take a long-term view, said Roxana Lesovici, cabinet member in the transport office of the European Commission.
As the EU banking sector has reduced its exposure to shipping at a time when needs are high, new sources of finance were needed, according to Gust Biesbroeck from Prow Capital, based in the Netherlands. The company's Green Shipping Fund has raised about $400m since launching more than a year ago, with a third already deployed. It provides debt financing for zero-emission projects and retrofits, mainly for SMEs, who have been particularly hard-hit by funding issues.
Yves Kallina from Hamburg Commercial Bank agreed that SMEs were the backbone of the industry. “Banks should have the courage to stay in ship finance,” he said, adding that bi-lateral funding such as co-operation between commercial banks and export credit or mezzanine financing could be an option.
Erwin Derlagen from shipowner Enesel Dry said the company was making modifications to its fleet this year and next at a cost of $10m per vessel as a short-term solution to cutting emissions, which they have been able to finance themselves.
With new fuels, it was not so much about whether those such as ammonia or methanol could be used; his main concern was the safety of the crew, as actual tests had not been carried out yet.
