The sharp fall in oil prices in 2014 has had major ripple effects in the maritime industry. We see this primarily through reduced oil and gas activity in Norway and internationally. Shipping companies’ access to capital is greatly affected by this.
Shipowners’ access to capital has been weakened significantly since 2015. The proportion viewing access to capital as good has, since 2015, been around 15 to 25 per cent. Correspondingly, the proportion experiencing access to capital as tight has been around 40 to 60 per cent.
In 2021, only two out of ten shipowners experience good access to capital, and as many as six out of ten experience tight capital access. Only one per cent of members experience very good access to capital. Access to capital is now about as demanding as it was during the most challenging period of the offshore crisis.
Variations between the segments are significant when assessing access to capital. The offshore segments are experiencing the most demanding situation. As many as 91 per cent of rig companies experience access to capital as tight or very tight. No rig companies report good or very good access to capital.
Offshore service shipping companies also experience demanding access to capital, and close to three out of four shipping companies report tight or very tight access to capital. Only eight per cent of shipping companies state that they have good access to capital, and none report very good access to capital.
The demanding access to capital in offshore has persisted since the fall in oil prices in 2014, and has led to restructuring and significant refinancing among shipping companies. The fact that demanding capital access will persist into 2021 presents further challenges for this segment.
Within the transport segments, companies are significantly better off in terms of access to capital. Among deep sea shipowners, almost 40 per cent state that they have good or very good access to capital. At the same time, one in four state that access to capital is tight or very tight. Half of the companies in the short sea transport segment consider capital access to be good or very good. At the same time, one in four state that access to capital is tight or very tight. More than one out of ten in this segment experience access to capital as very tight.
Passenger shipping companies report very demanding access to capital. Half state that access to capital is tight, and one in four characterize assess as very tight. None of these believe access to be good or very good. There is good reason to assume that weak capital access is closely linked to the significant fall in turnover and profitability in this segment.
Further worsening of capital access
Regarding expectations for access to capital in 2021, there is a clear distinction between the transport segment (deep sea and short sea) and the offshore segment (offshore service and rig companies).
In deep sea, expectations of an improvement in capital access exceed fears of austerity. One in four shipowners expect better access to capital in 2021 than in 2020. About 17 per cent expect weakened access to capital. In the short sea segment, expectations are somewhat lower for 2021. In this segment, about twice as many shipping companies expect poorer capital access than those expecting improvement. Every fourth shipping company expects weaker capital access in 2021 than in 2020. Only one in eight shipowners are optimistic about access to capital.
Offshore service and rig companies are clearly the most pessimistic about the development of capital access in 2021. One reason for this may be that the offshore industry will continue to be characterized by further restructuring and refinancing.
More than half of offshore service companies expect a further tightening of capital access. This is particularly noteworthy, as this is one of the segments where access to capital is already perceived as tight. Only one in seven companies in this segment expect access to capital to improve in 2021.
Rig companies also have low expectations for 2021. Nearly half expect access to capital to tighten further in the coming year. No rig companies expect improvement in access to capital.