Since 2009, freight rates for three main ship types continuously hit record low due to sluggish shipping market and overcapacity. Many domestic shipyards begin to face order famine. Apart from intense external competition, internal overcapacity of low productivity and increasing mergers, shipping enterprises also have to face the shortage of ship financing.

Shipbuilding is a capital-intensive industry with long recycling period and high risks. It is difficult for an enterprise to totally operate on its own capital, especially for the young, under-developed shipbuilder with insufficient professionals.

The recent report from Clarkson, new orders secured by Korean shipyards in the first three quarters accounted for 51.2% of the global total, while China only got 35%.

Korean banks are very professional and efficient in risk assessment of loans application. But many domestic banks are severely laggard in loan credit and many yards would have to wait for few months for financing loans.

Moreover, current ship financing institutions are mostly policy banks, commercial banks and insurance companies are still not active in the market.

Insiders point out that one of the difficulty for Chinese ship financing market is the lack of professional human resources. However, with the structural optimization and upgrading, multi-source financing including ship mortgages, M&A loans and shipping industry funds are expected to grow.