Ship financing, which has historically been robust in Germany, functioned extremely well for many years under the so-called KG model of limited partnership. This has drastically changed in the wake of the shipping crisis that began in late 2008. In many cases, the capital costs of existing financings could not be earned owing to low freight and charter rates, which often only barely covered costs. On top of that, the capital requirements for ship-financing banks have become much stricter in recent years, in part due to more stringent supervisory regulations, which has made the once highly appealing business segment of ship financing in Germany mostly unattractive to commercial banks.
In the meantime, the three most important financiers of the German fleet – Commerzbank, the former HSH Nordbank (now Hamburg Commercial Bank) and Nord/LB – have withdrawn from this sector either largely or completely; the latter two companies alone were involved in approximately 2,600 shipping loans. This figure is alarming, as every ship that goes abroad and is no longer managed from Germany is equivalent to having a smaller company leave the country.
The withdrawal of a large number of German financial institutions and private equity investors from ship financing has led to a sharp decline in financing opportunities for the shipping industry as a whole and for smaller and medium-sized shipping companies in particular. The knock-on effects are profound, as it puts Germany at risk of losing maritime expertise. The banks, which have been the most important partners or providers of external capital for the modernization of the fleet, are disappearing from the scene. Regions in northern Germany that have traditionally been home to significant maritime activities – such as Emsland, East Frisia and Altes Land – are changing. And this, in turn, is having an impact on the entire maritime industry throughout Germany.
At the same time, there are also new, positive developments, including recent ones driven by the significant recovery of some shipping markets. These days, private investors are more and more willing to make long-term investments in partnership with shipowners. International private equity capital is also beginning to rediscover shipping. Some shipping companies are taking the pioneering step of going public. Indeed, the market is experiencing a period of radical change.
Fresh ideas and solutions are needed to ensure the necessary modernisation of the fleet while also taking ambitious environment- and climate-protection goals into account – and to thereby guarantee the viable financing of one of the key sectors of the Germany economy. In this context, a key term is “capital market viability”. A high degree of transparency is required to gain access to international financial markets and institutional investors. Together with other maritime-industry associations, the VDR is actively working to ensure that ship financing regains greater importance in Germany in addition to highlighting to political actors at both the national and European levels the need to arrive at sustainable, viable solutions in this sector.