Leading banker Carsten Wiebers says the German fleet has continued to shrink because it is too fragmented.
But the problem could be stemmed if shipowners bound together in larger corporate structures that enable them to weather downturns and obtain financing, he argues.
It is not the first time Wiebers has made the case for bigger corporate structures, although a previous call dating back to 2013 fell on deaf ears.
Since then, the German fleet has been in perennial decline, with no apparent end in sight.
And Wiebers, who in January returned to head the mobility department at Frankfurt-based lender KfW IPEX-Bank, believes his argument has been vindicated.
Why, he asked during the Marine Money Hamburg conference on 15 February, has the German merchant fleet shrunk by 40% in the last 10 years, while the fleets of other countries have grown substantially?
“If you look at the last 10 years, that line is linear, so if you extrapolate that, there doesn’t seem to be an end to the shrinking of the German merchant fleet.”
On the same day, new figures emerged confirming a further decline in the size of the German merchant fleet.
The number of ships under German shipping registers dropped by 1,839 at the end of 2022, down from 1,917 ships in the previous year, according to figures from the German Shipowners’ Association. Combined gt fell by 1.3m to 44.8m.
Bankable
In Wiebers’ view, that decline is correlated to the fragmentation and lack of corporatisation of shipping assets.
“We still have a very fragmented shipowning industry here. Around 65% of the shipowners in Germany have less than five ships. That’s about half of the fleet, which represents many, many small shipowners.”
He questioned whether it might be possible to form a consolidated company into a holding company for the tanker, bulker and container ship sectors.
The current vessel owners would become shareholders of a corporatised, asset-owning company, which would be better able to attract finance.
We still have a very fragmented shipowning industry here. Around 65% of the shipowners in Germany have less than five ships. That’s about half of the fleet, which represents many, many small shipowners
— Carsten Wiebers
Such a model is not new to the German market, which is used to single-ship owning companies with several shareholders, he said. That model simply has to be applied to a larger fleet of 100 to 150 vessels.
“You create an entity which is financeable, bankable at excellent terms,” Wiebers said.
Wiebers argued that linking the shipowning and operating side of the business with the cargo ownership would enable the German merchant fleet to grow again.
Currently, there were only two German companies of any size — liner giant Hapag-Lloyd and bulker operator Oldendorff Carriers — that are cargo owners.
But the corporatised model that includes freight ownership had been the key to the success of the shipowners in Greece as well as lessors in aviation.
These have access to finance on several fronts, such as the bond markets, private placements with family offices, export credit agencies and senior lenders such as KfW IPEX. That is how shipping companies in other countries have been able to grow.
Problematic
The corporatisation of German shipping assets seems unlikely to be achieved any time soon.
The concept would probably have been easier to form in 2016, when Wiebers departed the maritime division of KfW IPEX to take on a new role at the bank’s aviation and rail divisions.
Back then, most German owners had very little if any equity, only debt.
Today, the prospect of getting 50 or so owners to create a single consolidated, corporatised asset pool with equity shares is deemed more difficult.
Implementing his solution would likely be problematic as most small German owners are keen to retain operational management of the assets.
That stance could compound the problem that smaller German owners face in finding finance. Some have interpreted Wiebers’ remarks as meaning KfW IPEX will not finance smaller shipowners going forward.
Wiebers said the bank plans to grow its maritime portfolio, which currently stands at around €14bn ($14.86bn). “We want to grow in the mobility sector including shipping,” he said.
This is necessary both to improve the economic performance of the bank and to accompany the shipping industry on its path to zero emissions, he added.
