Updated: Feb 8
While international shipowners seem to face a dwindling set of shipping finance options these days, Jones Act shipowners in the U.S. enjoy much brighter prospects
Shipping assets, from barges to supertankers, are capital intensive pieces of machinery, and successful shipowners do not only have to employ the best commercial assets available, but also to apply sufficient, yet prudent financial leverage, in order to be efficient.
The international shipping finance market is still dragging anchor from the massive over-leverage provided in the last decade, and many shipping banks, lessors and private equity investors still nurse massive losses; coupled with higher baking regulation and also lack of a catalyst that would drive the shipping freight market higher, competitive shipping finance in the international, open-registry vessels is limited to a handful of big shipping companies or a few highly bankable individual shipowners. It's not an exaggeration to say that financing ships in the international market is a trade in crisis.
On the other hand, for vessels flying the American flag and qualify under the Merchant Marine Act of 1920 (broadly known as the "Jones Act"), shipping finance options seem much brighter as American banks, lessors, commercial asset financiers and private equity investors, even equipment manufacturers, are flush with cash and actively looking to finance marine projects and marine assets, as long as they are by U.S.-domiciled companies and fly the American flag.
In the July issue of the Workboat Magazine, a well-respected shipping trade publication, Basil M Karatzas, CEO of Karatzas Marine Advisors & Co., discussed with Ms Dale DuPont the prospects and current developments of shipping and equipment finance in the Jones Act market. An interesting reading, we think.
The full article can be reached by clicking on the link here; (article is Workboat copyrighted material).
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