Ship financiers should grant shipping companies more time and flexibility to repay loans during the Covid-19 pandemic, the Union of Greek Shipowners (UGS) said in its annual report.
Measures to boost liquidity should be “urgently adopted and speedily implemented” to help the industry go through that crisis, the UGS said.
According to the report published on Monday, such measures should include “the granting of a deferral on amortisation and suspension of payment of scheduled instalments of shipping loans for a determinable time frame”.
It proposed deferrals lasting an 18-month period.
The UGS also called for “suspension of the contractual function of the legal consequences of the default clauses of shipping finance agreements and the incorporated loan-to-value clauses”.
The Theodore Veniamis-led UGS represents the biggest shipping community in the world that controls about a fifth of the global commercial fleet tonnage. Some of its members are large, well-established, traditional shipping players that already saw their banks accommodating them in rolling over debt to help them whether the crisis.
The UGS, however, also represents smaller firms with more precarious access to finance that carry less weight in negotiations with lenders. As a result, some Greek companies saw their fleets dwindle in sell-offs likely caused by the global downturn in the wake of the coronavirus pandemic.
“As the crisis unfolds, operations of shipping companies and related industries, such as terminals, ports, freight forwarders etc., have severely been affected,” the UGS said.
“The ensuing financial problems have placed several shipping companies under great strain.”
Controlling more than half of the European Union-registered fleet in terms of tonnage, the UGS said that access to “adequate and attractive financing in Europe” was essential for the continent’s shipping players.
In the same document, the UGS criticised ongoing EU moves to tighten European banks’ capital requirements, saying such moves would be particularly harmful to shipping.
“Introducing further restrictive measures and increased capital requirements in an already limited ship financing system, especially if these are stricter than the ones applicable in other parts of the world, would render traditional lenders even more reluctant given the shipping sector’s inherent risks,” the group said in the report.
No to EU emissions trading scheme
The UGS also reiterated its opposition to EU plans to extend the bloc’s existing emissions trading scheme (ETS) to shipping.
“The ETS is not appropriate for shipping and would lead to a host of unintended consequences, including market distortion, carbon leakage and a modal shift from sea to road,” the UGS said.
For shipping to truly decarbonise, innovation in new, alternative fuels is needed, said the UGS, reiterating its call for an International Maritime Research Fund to be financed by shipping companies across the world with a total $5bn over a 10-year period.
The proposal for such a fund “is more timely than ever,” said the report. “Shipping will have to undergo a paradigm shift similar to the move from sail to steam in the late 19th century”.
