Ship managers float on a rising tide of repossession

Banks are set to take tougher action against distressed shipowners this year, leading to a rise in loan foreclosures and lenders taking possession of vessels, shipping experts say.

The move will mean more business for third-party ship managers, firms that take on the day-to-day management of vessels, including crewing, repairs and provisions, in return for a fee.

Deepak Honawar, Wallem Shipmanagement director, said: "There has been a lot of interest from banks. We've got banks taking over ships and we take over the management. Banks are waiting for asset values to increase when they will probably offload the ships.

"We currently have 21 bank-related vessels in management plus another 15 bank-related workouts that could come into management in the near future."

Wallem is among the ship managers tipped to take over the running of eight tankers that are being repossessed by HSH Nordbank from US-listed Greek owner Omega Navigation.

Hong Kong-headquartered Wallem, and firms such as Anglo-Eastern Ship Management, V.Ships, Bernhard Schulte Shipmanagement, Univan and Fleet Management, are among the largest ship management firms globally.

Shipowners have been badly hit by a shipping industry downturn that began in 2008 as a raft of new vessels hit the waters, creating double-digit tonnage growth that massively outpaced single-digit growth in cargo volumes. As a result, charter rates for tankers and large dry cargo ships carrying iron ore and coal are now failing to cover vessels operating on some routes.