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Leaders Convene At Ship Finance Forum

The fact that it is a down market did not discourage head executives of the world's top shipping companies from meeting to discuss marine finance options.

By Regina P. Ciardiello, assistant editor It was an international display of knowledge and know-how at the 10th Annual Ship Finance Forum that took place in June at Manhattan's New York Palace Hotel.

Sponsored by the Institute for International Research and Chase Securities, the event kicked off on June 23 with an introductory presentation.

Discussions began the following day with an introduction by Peter Evensen, head of global shipping at Chase Securities, who was not at all hesitant to comment on the industry's obvious decline.

"This is the worst shipping market since the mid-80's," Evensen declared. "High-debt servicing costs remain, while earning prospects continue to weaken." Throughout his presentation Evensen pointed out that the market's less-thanstellar showing is attributed to factors such as poor global economy, a slowdown in world trade, as well as a weak capital structure. Although these observations would most likely shy away any potential investors from entering into the shipping industry, the end is not near, according to James E. Glasstnan, senior economist & managing director U.S. Economic & Policy Research, Chase Securities.

"There are many reasons to be optimistic," Glassman said. "It's a good sign that the Asian market is rebounding and we'll see a period of solid growth when the economy catches up to where the U.S. has been." Recent developments in the market were also discussed throughout the conference's proceedings. Jarle Hammer, director, Fearnsearch, Fearnleys A/S, commented that the drybulk market has experienced a four-year long decline, but should gain muscle by the end of the year. Hammer also mentioned that the Biffex market is on the rise, and interestingly, this summer will be one of great interest for those wanting to first enter into the market.

"A key issue for shipping market analysts and all others interested in world economy trade," according to Hammer is whether the crisis in Asia is already over and how soon we shall again see sustained economic growth." Perhaps the most innovative assumption proclaimed at the conference was the question of why the industry in general is not more closely followed by institutional investors. The reasoning behind this query, raised by Bjorn Moller, president and CEO of Teekay Shipping, quite simply stems from the fact that the bulk shipping business, which has failed to develop into a large, industrial business is unprofitable. This, along with poor returns throughout the 90's, provides an unappealing mix.

Moller, whose presentation focused on, "Maintaining Shareholder Value in A Company That Has Reached Critical Mass," explained how executives can determine what exactly it is that shareholders want. The answer — share price maximization.

"Ultimately, what all shareholders want is maximization of their share price," Moller said. "For this to happen requires the creation of Shareholder Value. As the company's management, everything we do should be the long term interest of our shareholders, with the ultimate aim of raising that stock price.

 
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