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Lack of Funding Threatens Shipping Industry

Lack of Funding Threatens Shipping Industry

A recent survey conducted by an international law firm found that 42 percent of responding shipping companies said a lack of finance was the greatest obstacle facing their business, Reuters reports.

 

"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," Harry Theochari, global head of transport for the law firm, Norton Rose, said in a statement.

According to the survey, nearly one-third of respondents said they expected private equity to be their main source of funding over the next two years, with another 43 percent anticipating financing from bank debt.

Theochari added that shipping companies have been forced to seek alternative means of financing amid global economic uncertainty.

The survey comes after Fitch Ratings reported the drop in the Baltic Dry Index (BDI) is not a good sign for the global shipping industry, which has struggled with overcapacity and weak cash generation.

In a release, Fitch noted the BDI - which measures commodity shipping costs - fell below 1,000 for the first time since January 2009.

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