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'Worse still to come' predicts survey
Friday, 11 September 2009 00:00

Transport firms are predicting the recession will get worse before any real upturn begins, according to a survey from legal group Norton Rose.

It said the lack of bank lending in the shipping sector had created a funding gap that needed to be filled from other means but added that enforcement on outstanding loans would tighten over the coming months.

Some 654 people in the rail sector, 153 people in the shipping sector and 154 in the airline sector were surveyed between 17 June to 3 July 2009.

Around 81% predicted it would be at least 12 months before the number of banks actively lending to the shipping sector increases. Some 63% of those surveyed foresaw widespread bank enforcement of troubled shipping loans while 66% expected those enforcements to peak in three to nine months time.

Harry Theochari, head of transport at Norton Rose LLP, London said: “The current financial crisis was sudden, unforeseen and global. Most transport businesses did not plan or make provision for such an eventuality, particularly the difficulties in obtaining finance, especially from the banking sector.

"Bearing in mind that we are only beginning to see the real ‘fall out’ of the crisis, as evidenced by the recent foreclosures and enforcements in the industry, it comes as no surprise that most respondents are of the view that the crisis will not be short and sharp.

“Notwithstanding improvements in certain sectors, the prevailing view seems to be that business will get worse before it gets better.”

While three quarters of shipping respondents see no return to pre-crisis levels of available bank debt within three years, more than half of shipping respondents think it likely or highly likely there will be a significant role for private equity or hedge funds in shipping markets.

“Another 68% believe it is more likely that joint ventures between private equity or hedge funds, banks and those with technical expertise will increase to take advantage of opportunities presented by low vessel and stock values.” International

Freighting Weekly, 9/11/2009