Analysis of quantitative and qualitative data

Due to the limited importance of banking investment in the capital structure of modern shipping companies, possible changes can be observed in the lending environment as part of the global shipping industry. As a result, most of the participants, i.e. 73% consider alternative capital sources as compared to the bank loan would be the vital sources of finance for the shipping companies in the future periods of operation.

Q4: What do you think is the most effective source of finance for the shipping companies?

Since the declining emphasis on the banking investment or huge credit arrangements obtained from the commercial financial institutions, the managers and key executives associated with the shipping companies are relying on some other relevant types of financial sources. While 48% of them is favouring equity as one of the most effective sources of financial sources, other 30% and 22% signify junior debts and senior debts as the possible sources respectively for fulfilling the capital requirements.

Q5: Based on your experience, which source of alternative financing do you expect most in the shipping industry?

Given the inclining importance on the use of alternative financial sources for fulfilling huge capital requirements of the shipping operations, the key personnel from the finance department highly prioritise private equity (with 30%) as the most reasonable source for these companies. Besides, export credit agencies (29%) are playing a pivotal role nowadays in funding and maintaining the operational flow of the global shipping companies. Additionally, Initial Public Offerings (23%), Loan-to-Value Covenants (10%) and Bonds (8%) also play their influential roles as part of the alternative sources of finance available to these companies.

Q6: Do you expect growth in alternative capital sources in the shipping industries?

With the ongoing disputes at the banking level, reduced lending capacity and increasing instabilities in the global financial environment, a large number of managers and key executives (79%) of the shipping companies believe the expected growth of alternative capital sources in future. As compared to the over-dependence on the bank loans and reinvestments, alternative financial sources are expected to play growing influence in the global shipping industries.

Q7: Do you think that the alternative financial source defined above will be mainstream and available for at least 20-25% of all the short-term (less than five years) transactions in the shipping industry?

Most of the managers and key personnel (87%) from the financial departments across the shipping industries believe that at least 20 to 25% of the mainstream shipping transactions comprise of the alternative financial sources. It signifies the importance of such sources in the modern shipping activities and operations to control the growth and sustainable progress.

Q8: What is the major factor preventing shipping companies from using an alternative source of finance?

With the modern shipping operations consistently facing various hurdles from the diverse range of factors from the contemporary financial environment, most of the respondents (35%) believe the complex CSR rules and guidelines creating obstacles for the operation. Besides, the large capital requirements (with 31% responses) are also creating a significant level of barriers for the shipping companies to fulfil the expected performance at the global levels. Additionally, higher contingencies (23%) in the operation and shipping logistics (11%) play their part of hindrances in the growth and success of these companies.

Q9: What measure could the shipping companies take in order to improve their chances of securing credit through alternative sources of capital?

The sluggish growth of operations and a wide number of failures in operations of the modern shipping companies lead towards the need of improving the current business approach and policies. It has necessitated these companies to adopt productive and strategic measures to maximise returns and improve funding for maintaining the key operations. As a result, most of the managers and key executives (39%) from the financial departments across the industry prioritised the requirement of resolving conflicts between asset managers and transportation companies to enable a free flow of operation without inadequacies. Additionally, they pointed out the requirement of improving cost management system (29%) to enhance pricing decisions for the shipping companies, and the need of adopting innovative approaches for delivering services (with 25%) to achieve the required pace of growth. Furthermore, the need for sound and effective strategies for capturing a vibrant share in the global marketplace cannot be ignored for achieving success in the chosen industry.

Q10: Do you believe that the alternative financial sources of capital are a viable option for the shipping companies in the long run?

Given the constantly declining rate of banking affiliation with the global shipping companies with little chances of regaining the momentum, most of the financial managers and executives (54%) as part of the industry believe in the importance of alternative capital sources for the long-running operations. However, 46% of these managers still signified the importance of banking assets and investment capabilities in supporting the achievement of quick success for the long-term basis.