Global Shipping Firms Cite Credit Crunch As Leading Challenge Facing Industry
The international credit crunch that has continued since the start of the recession is plaguing shipping companies the world over and threatens to exacerbate supply chain hurdles as well.
According to a report released this week by law firm Norton Rose, 42 percent of shipping services cite a lack of available financing opportunities as the greatest threat to their business. Slightly fewer - 40 percent - say the cost of borrowing is their primary concern.
"The past three years has seen a notable decline in the availability of bank lending to the shipping sector and this has had a considerable impact on many shipping businesses," said Harry Theochari, global head of transport at Norton Rose. "Shipping companies are now … readying their businesses to weather further economic uncertainty over the next 12 months."
Despite a dearth of credit, 43 percent of respondents maintained that bank lending will remain their primary source of funding over the next two years.
Analysts added that shipping executives with solid business models and manageable debt levels are likely to remain safe as the credit crunch continues, especially as repossessions, enforcements and insolvencies increase through 2012, HedgeWeek reports.
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