Global ship finance grew in 2021, the first time since 2010, as demand surged across all shipping sectors apart from tankers.
As 2021 developed and Covid-19 restrictions waned, the global economy’s GDP recovered from -3.1% to +5.9% year-on-year, seaborne trade from -3.5% to +4% year-on-year, whilst the shipping fleet’s growth was limited to a 2.9% increase.
Further, Athens-based Petrofin Research in its annual review of Global Ship Finance reports the Petrofin Index for Global Ship Finance which commenced at 100 in 2008 is up by one point, from 62 in 2021 to 63, showing a rise for the first time in 11 years.
At the same time, the lending by the top 40 banks’ backing shipping in 2021 was higher at $290.12bn up from $286.9bn in 2020. This 1.12% growth year-on-year may appear small but it does represent the first rise since 2011.
Petrofin Research says the turnaround was assisted by continuing central banks’ monetary easing, low interest rates and a resurgence of demand for goods and commodities leading to increased congestion and fleet inefficiency.
As a result of these developments, charter rates across most sectors (except for tankers) shot up, by 50% for LNGs, up to 185% for dry bulk and multi-fold for containers according to Clarkson’s statistics.
Vessel values followed suit, whilst scrapping decelerated. All in all, a remarkable turnaround, says Ted Petropoulos, head of Petrofin Research.
“Banks, under these favourable conditions and prospects, faced increased demand for loans, as well as competition from other non-banking lenders,” says Petroloulos.
Within the top 40, twenty-one banks are based in Europe, 16 are Asian/Australia based, and three North American based.
Asian and Australian banks (APAC) show the only growth from $100.85bn to $114.75bn APAC increased their share of the global portfolios from 35% to 39.5%. European banks’ share declined further by $9.78bn 5.8% year-on-year.
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