ECONOMY

Shipping threatened by major difficulties

The shipping community faces the risk of a prolonged crisis on account of the gradual contraction of total turnover due to the international financial turmoil. Already the decline in demand on a global level has led to a sharp drop in chartering rates, which has had a number of consequences. The most important of these are the decrease in the value of ships, the freezing of trading in secondhand vessels, cuts in the funding of shipping firms by banks and a wave of canceled orders for newbuildings, even though this entails the loss of deposits totaling several million dollars. At the same time, however, the crisis is giving rise to a number of new opportunities in shipping. Banking sources suggest that significant developments are expected in the next five to six months that may alter the business landscape and change the order in global shipping. Banks appear particularly exposed to shipping. According to Petrofin Bank Research’s annual report, loans of international banks to Greek shipping reached the sum of $66.9 billion at end-2007. Greek banks had extended loans of $15.8 billion to local shipping firms.