A senior banking official has told conference delegates in Abu Dhabi that the next few years will be a case of survival of the fittest in the shipping industry.
Speaking at the Middle East Work Boats conference, Geir Sjurseth, managing director and global head of offshore for shipping specialists DVB Bank said that while the region can afford to be more upbeat than other areas the immediate future is going to be tough.
“The majority of Middle East companies will see a satisfactory 2009 but 2010 is far more uncertain. The well-established players that survive will have a fantastic future,” Sjurseth said.
“The strong companies, and there are many in the Middle East, will preserve capital, cut costs and the smartest guys are planning how to benefit in the longer term.”
“When the dust finally settles, the outlook is favourable but before that we will likely see defaults and consolidation among highly leveraged, recent entrants in the market,” he added.
The Germany-based DVB Bank has US$22 billion worth of shipping loans on its book and more than 500 clients active in the transport sector worldwide.
“The end of this year and into 2010 is expected to see record shipping losses hit banks,” Sjurseth said.
“The offshore support vessel market in the Middle East has been less impacted and probably has the best outlook of all shipping sectors.”
“It nevertheless suffers from valuation distress and financing shortage, predominantly affecting new entrants through yard delays, cost overruns, undervalued volatile assets and lack of bank financing,” he added.
