The ship financing market has evolved dramatically since the 2008 global financial crisis. Traditional banks have reduced their exposure and ship owners have had to explore alternative sources of financing for fleet renewal and growth.
Over the past decade, Chinese bank-affiliated leasing companies have come to the fore and emerged as global leaders in ship financing, in part due to the Chinese government’s Belt and Road Initiative that aims to create a modern-day maritime Silk Road.
These developments have created new opportunities for BSM China, as Chinese leasing companies increasingly look to third-party ship management to manage their assets.
Indeed, Chinese leasing companies are looking beyond asset plays – they are seeking new growth strategies including tendering for long-term ship charters to the oil majors and cargo owners such as Shell and BHP.
Leading Chinese leasing companies wanting to own new tonnage to be offered for these tenders are looking to partner with third-party ship managers like BSM, a point which BSM China Managing Director, Liu Mingfa, made during his panel session at the Marine Money Week Asia conference in Singapore last year.
He cited mining giant BHP’s recent public tender for long-term charters on bulk carriers as bolstering interest among leasing companies to invest in more tonnage.
BHP’s tender, open to ship owners, banks and LNG fuel network providers, is intended for the charter of LNG-fuelled bulk carriers to transport 27 metric tonnes of iron ore from Australia to China.
This particular tender, which went public in July 2019, extends leasing companies an avenue to make inroads with BHP, an Australian-based resource giant which exerts significant demand in the bulk carrier market.
Mingfa noted that the market is aware of BHP’s high standards on shipmanagement. In response, leasing companies keen on the tender have teamed up with experienced ship managers such as BSM China to satisfy the charterer’s requirements.
Mingfa pointed at similar opportunities arising from Shell’s now-concluded tender for LNG dual fuel tankers. He postulated that more of such tenders may surface in the tanker market — one segment in which charterers tend to impose more stringent demands on ship management, as compared with those in the bulk carrier market. “Such new opportunities are likewise supporting BSM China’s foray into tanker management,” Mingfa added. “Tapping into the Schulte Group’s vast experience in managing and operating tankers globally.”
“Given China’s growing need for medium sized LNG carriers of above 80,000 cbm in capacity to transport cargoes to certain terminals, managing gas carriers and LNG-fuelled ships would be the next opportunity for BSM China,” said Mingfa.