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MONEY TALKS
As a result of the weak operating market, problem loans are far more common than they were five to 10 years ago, with non-payment of principal and interest, breach of financial covenants and breach of loan-to-value clauses all topping the list of issues. Jonathan Silver, a partner in the banking and finance team of Norton Rose Fulbright Hong Kong and head of shipping for the North Asia region, said there were still options for multipurpose ship owners facing loan troubles. “We are seeing more problem loans, but we also see far more restructuring opportunities. Prudent ship owners with short-term cash liquidity problems – caused by the downturn in the market
rather than anything else – may still have recourse to alternative financing, such as sale-and-leaseback lease finance structures, private equity investment, change of loan repayment profiles, and so on. It’s not all doom and gloom,” Silver said. Ship owners may be able to amend existing facilities to permit or waive short-term breaches and then reschedule repayment of existing debt to help manage cash flow and liquidity. They may enter into joint venture partnerships with experienced private equity players for fresh capital injection. They may entirely restructure their debt, giving them time to regroup, consolidate and trade out of a difficult spot. Lease finance, where a ship is acquired from an owner by a lessor then
leased back for a set term, is more popular than ever before – particularly with Chinese financial lessor counterparties, all of whom are experienced and can provide partnership opportunities and financial support. Jonathan Silver “The last Norton Rose Fulbright thing a financier Hong Kong wants to see is a struggling ship owner collapse,” Silver said. “Enforcement of security and the arrest of ships by financiers is costly, both labor and
“THE LAST THING A FINANCIER WANTS TO SEE
IS A STRUGGLING SHIP OWNER COLLAPSE.”
SALARY ROBUSTNESS Interestingly, the project cargorelated jobs market managed to avoid being tainted too much by the depression until 2015. “It’s only last year and this [year] that salaries have been affected,” explained Stine Martinussen, manager of commercial shipping and corporate services at Faststream. “Up until last year, if someone resigned without hav-
ing another job to go to, they wouldn’t have taken a pay cut. “That said, we are seeing a very distinct trend in the market at the moment, as more and more people are given redundancies and are active job seekers. Especially in the freight forwarding space, we see a lot of candidates competing for the same jobs.” She pointed up the example of an appointment of a supply base manager in Asia three years ago. Back then, the salary budget was US$7,000-9,000 per month plus home
FALLING SALARY EXPECTATIONS | TITLE
– Jonathan Silver
flights, and Faststream struggled to find people within that budget. “I am now working on the same role in the same location and the budget is US$4,000-US$6,000 and we have candidates lining up for the role.” There are, she said, still jobs in the project cargo sector, and Faststream is still looking for chartering managers and project managers. However, clients are actively looking for commercial people over other roles, so that once the market picks up they have the right sales people in place to come out the other side stronger.
Salaries have succumbed to the weaker market.
2012 SALARY / MONTH
Project Manager (Project Forwarding) Business Development Manager (Project Forwarding) Regional Head of Projects (Project Forwarding) Chartering Manager (BB/Heavy-lift Carrier) 3-5 years experience Operations Manager (BB/Heavy-lift Carrier) Team Manager with more than 10 years experience Chartering Director (BB/Heavy-lift Carrier) Team Manager with more than 10 years experience
US$5-7,000 US$4-7,000 US$20-30,000 US$6-9,000 US$9-14,000 US$17-22,000
2016 SALARY / MONTH US$4-6,000 US$3-6,000 US$15,000-18,000 US$5-7,000 US$8-12,000 US$15-20,000
Notes: The lower end of the ranges are for candidates that are unemployed and are prepared to take a cut compared to their previous salary to secure a job. The top end is candidates that are gainfully employed, that are headhunted for new positions. Ranges also differ depending on location: they are higher in Asia and U.S, and lower in Europe, where schooling and healthcare is free. / Source: Faststream 12 BREAKBULK MAGAZINE www.breakbulk.com
ISSUE 5 / 2016