With the shipping industry inextricably linked to global trade, moves by banks to tighten credit to manufacturers, especially those on the mainland, would further depress the shipping sector, especially container operators serving export markets in Europe and North America.

Willy Lin Sun-mo, managing director of Milo's Knitwear International, said Hong Kong and mainland small and medium-sized enterprises faced difficulties getting finance from banks because of tightening credit.

Lin, who is also chairman of the Hong Kong Shippers' Council, said manufacturers who were seeking overdraft facilities or who were trying to increase their short-term debt to pay wages and suppliers were unlikely to get it. This could affect their capability to meet further manufacturing orders, denting export performance and container volumes.

'Small and medium-sized manufacturers are facing a lot of uncertainty and we notice many SMEs have decided to close down rather than continue their business,' he said.

Tim Huxley, chief executive of tanker and dry bulk cargo ship operator Wah Kwong Maritime Transport, agreed. 'If trade finance freezes up, it will absolutely put the market in a tailspin,' he said 'It is going to be a very tough year.'

He said the shipping industry was facing 'more of the same' as in 2011, when cargo demand was unable to meet the raft of new tonnage hitting the water. This depressed freight rates, mauling shipping companies such as China Cosco that either stopped paying charter hire payments or tried to renegotiate charter contracts, which led to ship arrests and legal disputes.

Ships are 'arrested' by creditors owed money by ship owners. The owners either pay the creditors or a court orders the sale of the ships to pay the outstanding bills.

Transpacific and Asia-Europe freight rates have risen about 30 per cent since the end of December. 'Even though we have seen increases, current Asia-Europe and transpacific freight rates are unsustainable,' Tim Smith, chief executive for Maersk Line in north Asia, said. 'The fact is that too much capacity was introduced on the Asia-Europe trade last year and will be introduced in the year ahead. We foresee the outlook for 2012 for the shipping industry will be volatile and difficult.'

Outlining the challenges facing the shipping sector, the Baltic and International Maritime Council (Bimco) - which has about 900 owners as members who control 66 per cent of global merchant ship tonnage - said the dry cargo fleet grew by 13 per cent last year, while overall cargo demand rose by 6 per cent. Dry cargo fleet carries bulk materials like iron ore, coal, grain and cement.

By comparison, the box ship fleet grew by 7.3 per cent, while container volumes on Asia-Europe trades were up by around 3 per cent, and flat or negative on transpacific routes. Box ships usually carry finished products.

As a result of this ship supply and cargo demand imbalance, the Baltic dry index, a basket of freight rates covering different ship sizes and trade routes, fell 12 per cent last year. The China container freight index, compiled by the Shanghai Shipping Exchange and which measures container freight rates from China on key trade lanes, fell 16 per cent last year. The increase in tanker tonnage, with a 6 per cent rise in the supertanker fleet alone last year, was higher than oil demand.

Bimco shipping analyst Peter Sand said he expected the dry bulk fleet to grow by at least 12 per cent in 2012. 'While the container ship fleet is set for another year of growth close to 8 per cent, crude oil tankers face another challenging year as the fleet is set to grow by 7 per cent,' he said.

This influx of tonnage would again outpace cargo demand to depress charter and freight rates as too many ships chased fewer cargos and would have an impact on shipping company revenues.

Jim James, a partner at Norton Rose, said: 'Some sectors may fair better than others, but overall the outlook is less positive than last year; with cash reserves depleting, little new money lending expected and contract defaults and other problems multiplying as time goes by.'

Fellow Norton Rose partner Davide Barzilai added: 'In the year ahead we expect to see an increase in the number of ship arrests, mortgage enforcements, charter party disputes and companies either seeking protection and restructuring or going into liquidation.'

His views were echoed by several other law firms. Nigel Binnersley, a partner in Blank Rome, said it was 'very likely' there would be an increase in the number of ship arrests. And Bill Amos, a litigation specialist at Mayer Brown JSM, said there had been a 'recent slew of shipping companies filing for Chapter 11 bankruptcy protection in the United States', such as General Maritime, Marco Polo and Omega.

48%

The percentage of the 29 ship finance banks polled by Petrofin Research who thought banks' ship loan portfolio would slip 10 per cent