Tight access to capital for offshore
The sharp fall in oil prices in 2014 has had major ripple effects in the maritime industry. In addition, the instability created by the pandemic has greatly affected shipowners’ access to capital, especially in the passenger ship segment.
Shipowners’ access to capital has been weak since 2015. The proportion assessing access to capital as good has been around 15 to 25 percent. Correspondingly, the proportion experiencing tight capital access has been around 40 to 60 percent.
In 2022, we see signs of improved capital access. Three out of ten shipowners state that they experience good access to capital, with four out of ten experiencing tight access. All segments are experiencing an improvement in access to capital compared with last year. There is a significant improvement in capital access for deep sea and short sea. The offshore segments and the passenger ship segment state that access is still demanding, but with a slight improvement from 2021.
The segments vary greatly in their assessment of access to capital. The most demanding situation is for the offshore segments. As many as 64 percent of rig companies experience access to capital as tight or very tight. No rig companies can report good or very good capital access. Offshore service shipping companies also experience demanding access to capital, and close to six out of ten report tight or very tight access to capital. Only 16 percent state that they have good access to capital, and only three percent state that they have 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 efforts in shipping companies. The fact that access to capital remains demanding in this segment shows that the challenging market in which the segment has operated will continue into 2022.
Within the transport segments, companies are significantly better off in terms of access to capital. Among deep sea shipowners, almost 70 percent state that they have good or very good access to capital. At the same time, only four percent state that access to capital is tight. Over 60 percent of companies in short sea consider capital access to be good. At the same time, 13 percent state that access to capital is tight. The good access to capital in the transport segments reflects their strong market situation. Good access to capital in these segments is an important prerequisite for being able to make the necessary investments in new technology and environmentally friendly solutions to take the next steps towards the green shift in shipping.
Passenger shipowners report demanding access to capital. Half of shipowners consider access to capital to be tight, while none consider capital access to be good. There is good reason to assume that the weak inflow of capital is closely linked to the significant fall in turnover and profitability in this segment.
Anticipated improvement in access to capital
Expectations for access to capital in 2022 are uplifting, with three out of ten shipping companies anticipating better access to capital. Fifteen percent expect weaker access to capital, and just over half expect access to capital similar to that today. Here, too, 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, there is an expectation of further improvement in capital access. Thirty-six percent of companies expect better access to capital in 2022 than in 2021. Only four percent expect weaker capital access. In the short sea segment, there are high expectations for better access to capital in 2022. In this segment, about six out of ten expect access to capital to improve in 2022, while none anticipate weaker capital access. This is good news for the ability to realise fleet renewal in this segment, and thus also positive news for the potential to develop and implement new and more climate-friendly solutions in shipping.
Among the passenger shipowners, about one in three state expectations of better access to capital, with as many expecting somewhat poorer access to capital.
Offshore service and rig companies are clearly most pessimistic about the development in capital access for 2022, but there is still significant improvement from last year. About two out of ten offshore service companies expect a further tightening in the supply of capital. Last year, more than half stated the same. More than two out of ten shipping companies in this segment expect that access to capital will improve in 2022. These are positive signals that may indicate that the capital markets are also beginning to see bright spots in offshore.
Rig companies have low expectations for 2022, but here too we see a slight improvement from last year. About three out of ten rig companies expect access to capital to be more difficult in the coming year. Last year, more than four out of ten stated the same. This year, 15 percent of rig companies state that they expect an improvement in capital access. This is a significant improvement from last year, when none expected an improvement in capital access in the coming year.