Real estate, alternative real assets and other diversions

In maritime investments it pays to cast your network wide

Alternative assets

In our last article we looked at how Ship Owners were attracting financial investments through innovating their product offering and slowly catching up with the digital age. This commentary will now focus on the softer skills required in dealing with marine money; the importance of good contacts and relationship management to help build trust in transactions.

The historic Baltic Exchange placed great importance on reliance at a global scale, with its moto being ‘our word is our bond’. Whilst the Baltic Exchange has seen many market shifts and recently been bought by Singaporean investors, its foundations on good business networks still holds great relevance.

With today’s instant communication era and 24/7 satellite monitoring, the concept of keeping track of only 52,000 global commercial trading vessels, its cargo, the associated cashflows and the people controlling it should be relatively easy; however, this is surprisingly not the case for such a small industry in terms of stakeholders. Whilst the world seems to be shrinking there are still lots of places to hide in the deep blue sea. 

The maritime commercial market is a made up of a truly wide mix of business regions, potential jurisdictions and legal practices. This can make establishing business practices, building trust and establishing integrity extremely difficult. For example, shipbrokers, the professional middle men used to fix cargos, sell vessels and facilitate the commercial negotiations of multimillion-dollar deals between parties yet have no professional standard or authority to adhere to. It is harder, in terms of qualifications, to be an estate agent in the UK; however, shipbrokers regularly give investment advice with limited reference to trading regulations. There are large, truly respected and publicly listed brokerages; however, there are also numerous one-man shops that conduct exactly the same business through their personal networks. The only limiting factor for these global dealers, big or small, is how good their black book of contacts are. It can seem that all is needed is the gift of the gab and a telephone to conduct business.

The reason for this seemingly loosely controlled market space is due to the industry being truly global, off-shore and with moving assets only spending hours within different regionally controlled waters due to the speed in loading/off-loading goods. If the best minds in the EU and UK cannot agree on Brexit there is little chance of the 143 coastal countries agreeing to one global authority and controlling body to manage all shipping standards and best practices.

Additionally, it is completely normal and beneficial for individual ships to be linked to SPV’s and standalone companies, registered offshore and carry ‘flags of convince’. The reasons for this range from normal monetary trading incentives to limiting the risk of having sister vessels arrested within the same fleet in case of unforeseen circumstances e.g. a ship running aground which could potential allow a different vessel to be fined or arrested.

Alternative assets, zLead Article, zNewsletter

About Martin Baber

Martin Baber

Martin Baber is a consultant within the commercial maritime industry with over 16 years of professional experience. Having gained a wide breath of sector exposure from setting new trading desks to advising new investors on maritime ventures he is well positioned to help others gain relevant shipping knowledge. He holds an Executive MBA from Imperial College and prior to his commercial shipping career Martin was a Captain in the Parachute Regiment, HM Forces. He can be contacted at martin@storesharp.com.

Articles by Martin Baber

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