ER Capital chairman Erck Rickmers is disenchanted with shipping, and he has put his money elsewhere.
“Our main business today is real-estate development and private equity investment. Shipping is now in a small third place in the ER Capital portfolio,” he said at the Sea Asia Global Forum held in Singapore today.
“The risk/return ratio of shipping is not in our favour right now. We see better risk/return ratios outside of shipping.”
ER Capital has traditionally been a large tonnage provider, but Rickmers claims that the prospects of that business model have deteriorated as ships have been commoditised.
“Ships today are all the same and it is hard for an owner to build a unique vessel to attract charterers.”
In addition, he claims that too much liquidity in the market, combined with low interest rates, has led to investors who are willing to accept returns on investments that are priced too low.
Rickmers added vessel overcapacity, looming trade wars, a potential reduction in world trade and the threat of a world economic downturn to his list of factors that have led to his grim view of shipping’s future.
ER Capital began scaling back its shipping investments in February 2018, when it sold its shipmanagement and shipbroking divisions to the Bremen-based Zeaborn Group.
At the time the company owned a fleet of 25 containerships and nine bulkers.
Since then ER Capital has been scaling back on shipowning by selling off several ships. The process hit a hiccup last week when a deal to sell four capsize bulkers to Star Bulk Carriers was called off by both parties.
Rickmers told Sea Asia delegates that while he remains disenchanted with the prospects of the shipping industry, ER Capital had no plans to stage a complete exit.
“We still have a significant presence, and will continue to have a presence. However, we have identified other areas where we can get better returns.”
“For some shipowners, their reason for staying in shipping is psychological. They like to hear champagne bottles smashing on bows,” he cautioned.
ER Capital, he said, would not remain in shipping purely for sentimental reasons.
