Hamburg seeks solutions to restore battered confidence

After nearly a decade in crisis, the national shipowning community gathered in Hamburg for TradeWinds Shipowners Forum to discuss ways to restore confidence and prove its capacity and skills still have a global role.

Amid the uptick in confidence about the outlook for many shipping markets, the mood is now turning towards new opportunities and new ventures. No more so is this the case than in northern Germany, where almost 10 years after the onset of the deep recession in the boxship charter market, the maritime cluster is having to imagine a new role for itself.

No longer do the boxship owners of Hamburg and Bremen dominate the charter market in the manner they did in the mid-2000s after a decade and a half of explosive growth. Unsustainable debts have sunk many owners, the private KG (limited partnership) investors who first funded them have retreated to nurse their losses, while the shipping banks that took a share of the business are struggling to stay afloat.

The shake-out is far from complete. Already this year, German containership owners have sold about 230 vessels, compared with 124 in 2016. Over the past five years, around 600 German-owned ships have been sold, cutting the fleet by one-third to about 1,250 vessels and slashing it from 33% of the total worldwide to 20%. Hamburg Sud, one of Germany’s crown jewels, has been sold, but not to fellow Hamburg line HapagLloyd. Rather, the Oetker family took $4bn cash from arch-rival AP Moller-Maersk north of the border in Denmark. Meanwhile, Germany’s five largest lenders continue to wrestle with their huge loan book, which Moody’s calculated at €59bn ($69.4bn) in June this year.

Although the loan book was cut by €29bn between 2012 and 2016, problem loans still made up around 37% of the remaining total, Moody’s warned. It has created a challenging commercial environment. Yet the mood at last week’s TradeWinds Shipowners’ Forum in Hamburg focused not just on managing past problems but on creating new businesses from the knowledge, skills and relationships that remain. Certainly, progress has been made. A number of traditional names are reinventing themselves away from being asset-heavy owners, and towards service orientated management companies, able to provide professional commercial, technical and financial management. Faces from the younger generation of traditional owners are cutting through and making their mark, sometimes with the backing of private equity investments from overseas.

Chartering brokers are having to create bigger platforms that are responsible for more ships, to be better able to negotiate with larger, more consolidated liner operators. Germany’s excellence in marine engineering also remains a stronghold of technical innovation and quality that makes products in global demand. Despite those strengths, of which the country is rightly proud, the problems remain real — and they cast a long shadow over the sector.

The collapse of Rickmers Holding over the summer showed that even seemingly smart restructuring plans ultimately remain at the mercy of the freight market.

In recent weeks, further stories have emerged about the continuing banking crisis. DZ Bank is looking to sell its DVB Bank transport finance subsidiary, largely because of the precarious state of its loan book. HSH Nordbank is in talks with private equity firms about a possible sale, and Nord/LB continues to battle through its restructuring. Some take comfort from the modest uptick in the boxship charter market over the past nine months. However, so far the gains are small and insecure. It is no reason to believe the market has yet reached a sustainable level. Germany’s shipowner community has taken huge blows in recent years. It no longer plays the all-powerful role in boxship markets that it once did.

However, not all has been lost. Professional values and the financial strength of many traditional owners have been channelled back into new ventures. Combined with the sharp entrepreneurial skills of a younger generation, it is clear the world will hear much more from the new German maritime cluster in the decade ahead.

Julian Bray, Editor-in-Chief, TradeWinds
20 October 2017

TradeWinds inaugural Shipowners Forum was sponsored by DNVGL, Pictet, Nautisk, SMM, IRI / The Marshall Islands, ABS, ShipParts.com and The Baltic Exchange. Hamburg’s major biennial trade fair SMM will host the next TradeWinds Shipowners’ Forum on 4 September 2018.