In a move which aims to fill funding gaps created by German ship financiers shortly after the 2008 financial crisis, german bank Joh. Berenberg Gossler & Co. KG has signed a Memorandum of Understanding with an international investment firm to secure US$500 million in private equity for ship loans, according to Bloomberg.
It is understood that the loans are to be granted to around 400 shipping clients of Berenberg.
Philipp Wuenschmann, Head of Shipping at Berenberg, said: “Many private equity firms have burned their fingers in recent years. It’s time to position shipping in a different way.
“Second-hand vessels are sold near scrap value, so the chances of a further retreat of asset prices are very small and we are seeing the opportunity-risk profile improving.”
Following the financial crisis, prices to transport commodities and containers, as well as the prices to charter vessels, declined.
The market has since been affected by rising overcapacity and low freight rates, with carriers forming alliances in order to consolidate resources and lower slot costs.
Drewry recently argued that carriers’ profit margins will be influenced by the movement of both prices and costs.
In 2016, if the market continues at the current rate, carriers could be set to lose between $6-10 billion.
There is also the issue of rising port overcapacity as a result of a series of competitive port concessions. This could be set to worsen by 2050 if planned port capacity outpaces global demand.