SUBSIDY AND CREDIT: SPECULATORS STAY AWAY FROM NEW BUILDINGS

Fears that the present boom in most sectors of the shipping market will again attract speculative ordering of new tonnage by non-marine groups can be discounted. These business elements were heavily involved in shipping before the slump began in 1973. Indeed, they--along with owners who should have known better--were one of the prime causes for the vast amount of over-ordering in the early 1970s. At the present time a superficial look at investment in shipping makes this sector appear attractive. World-wide inflation levels are rising to worrying heights. The OECD rate, for instance, is already over 13%. This surge in inflation is bringing with it a natural tightening of monetary policy, especially in the developed world. For example, even the best industrial customers of the banks in Britain will be paying 16.5% for their overdrafts, while the big companies in America are finding that their interest rates are not all that short of those in the UK. But an owner wishing to order new tonnage can take his pick from a variety of subsidy aid loan packages with interest rates going down to 6%. Even more favourable terms can be obtained in certain countries. If his capital asset (the ship) is subsidised by Governments/shipbuilders it is a hedge against inflation provided it keeps its value over a certain period and, during this time, finds profitable work. New OECD ship export credit guidelines took effect from December 1st following the October meeting of the Organisation for Economic Co-operation and Development. The new terms include a lengthening of the repayment period to eight years from seven, and a reduction in the downpayment to 20% from 30%; the interest rate remains at 8%. No doubt, as before, various countries will get round the guidelines. The following survey of subsidy and credit facilities brings into sharp focus the true position in the world. The survey covers the European Countries, Japan and the Developing Countries.

  • Availability:
  • Corporate Authors:

    Lloyd's of London Press Limited

    Sheepen Road
    Colchester, Essex CO3 3LP,   England 
  • Publication Date: 1979-12

Media Info

  • Pagination: p. 11-13
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00308425
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Feb 27 1980 12:00AM