Banks, Welcome Aboard to Invest in Shipping – that has linked continents and globalised vide trade – upon overland spice routes getting blocked – handing over the baton to IT led digitalisation.
 
They learnt intricacies-tricks and developed the acumen to handle: bare boat with demise risk funding, asset play, Charters: Time, Period, Trip, Voyage, Part, Slot et al. For, without them no LCs too!  
 
Not a beeline though. Yes, instant digitalised info helps. Marine adventure risks have been covered well over centuries with design, equipment, construction, operation, management and crewing. Insurance for fortuitous filling gaps aided by actuarial analysis, mutual self-insurance and the like.
 
Forward cover in exchange rates, bunkers, commodity prices, etc adding lustre to lure. Transparent pricing, real time trading, reduced margins, trade promotions by developing countries to balance payments, etc, have been promotive.
 
With AI, ML, DL, IOT, Blockchain, Algorithms too in bits and pieces, scheming to jettison sailors to overcome human error, autonomous just over the horizons.
 
Logistics -from manufacturers to consumers- morphing from warehouse to warehouse and farm to fork JIT, with global intermediaries at cheap rates and timely deliveries -willing to replace, accept returns, refund -3Rs- have rung doom for middlemen. No need queue up for post-season sales discounts; click to order-pay-receive.
 
Heard Amazon is going to deliver cars direct from Hyundai? Why not second hand, pre-used and reconditioned ones? Poor ole un-new dealer talking up price glibly: dreams shattered! Could happen to all in firing line as facilitators!
 
Right time, right thinking may concur for banks to invest directly or as PE -Private Equity, their MoA-AoA mandate permitting; also rules bound by registration, location and regulatory compliance requirements.
 
True, ability of govts & its authorities to manage funds have been found to be wanting, what with gargantuan funds moving around in seconds with touch of button or voice commands in flooded liquidities. Leasing is old game: soft govt funding promoting shipyards topped up by lessors. Containers leased amount to twice the TEU of ships. GE Capital of GE was big in box leasing before turning into Retail as Synchrony Bank.
 
Call really is when money is cheap. Better-informed read signals-lips: bond market in tipsy, stock markets one step ahead of lay, analysts/pundits as MFs aggregate SIPs swarming bourses. Hedge funds too tiddly. Morgan Stanley was in Dry Freight Charter biz in 2007, in Ships in’09 and dumped 5% Frontline stakes recently.
 
Hot money aside, timing is critical, if not perfect. Buy low, sell high is simple, cost: interim funding! Instead of funding customers/risk takers/punters, banks play -not be bookies!
 
Caveat emptor! Whilst inflation is -money cheapening through- deflation, stagflation, recession etc can turn terror-some. Contracts get cancelled. Demand dips-falls precipitously -like mist, dew, drizzle, rain et al. Didn’t whole world and IT get Covid impacted?!
 
Be bold-brave, ready to face commercial storms as sailors do time and again. Market projections are like Weather forecasts! Direct route is through lending with options, like startups, with known names and contrarian players who can smell chances before others wake up.
 
High dividends from box-ship liner managers had rung bells, though cyclical it is. Others -tramp trades in Oil, Gas and Bulk also in tandem but not synchronised: good risk-spread!
Stocks of two major Greek LPG firms Dorian LPG and Stealth Gas listed in NYSE, have risen markedly, even as this is being penned.
 
Congested Panama Canal due to drought is bad enough, but good omen to many as freight rates boom while trading is growing. Hear NYSE bells?
 
Has post pandemic boom attracted bankers with heavy suitcases? Could be. Caution but. Shipping is like that only: Boom and Bust following each other like groom and bride, with shorter rallies and longer downturns.
 
Citibank, Morgan Stanley etc have moved their pawns. Stanchart had to abandon to meet Basel iii requirements. Perhaps old consolidations: P&O, APL, NOL, ONE partners had enticed. Dutch NIAC, Christina, ABN Amro, DNB, HCOB (old HSH Nordbank) are in the fray. Fewer the merrier, as markets can be managed better even in pure competition.
 
Banks are part of Capital Market, preferred over listing scrips. They too have to raise funds, Syndicate and PLR linked to SOFR (Secured Overnight Financing Rate) replacing LIBOR. They are pure-passive, accidental-per force on loan defaults, opportunistic, timely lenders with Venture Capitalists, Bond and Derivative holders, arbitrageurs, free floating capitals etc with Coupon Rates supporting. Nonetheless, to client-borrowers, they are god-sent allies in bad times defining-reinforcing creditworthiness.  
 
UBS never big on shipping, now has 10B$ portfolio; did Credit Suisse and Silicon Valley Bank impact? Berenberg has got into the act, drawn by Deutsche Schiffsbank of Commerzbank. BNP Paribas heads some sectors. Societe Generale, DNB, CITI etc: 11 majors with 100B$ committed to greener shipping: Poseidon Principles calling!
 
Is Bharat a la India listening? GIFT City gets over `sovereign risks’ stigma as Indian banks need borrow overseas to lend. Timing is most crucial for shipping. Grab when market is weak, when one has regular cargo parcels round the year or seasonal. Not to miss opportunities, where and when it evolves/strikes.
 
Ship building? Nay! 65% of it is imported; rest is welding and assembly. Port led development? A misnomer. Trade: cargoes and ships seek intermodally well-connected terminals-berths. Not Ports! Avoid monopoly and oligopoly. Consumers pay for all hidden costs, impacting inflation all-many ways. Take care.    
Marex Media