MPV/HL owners face bleak financing environment

MPV/HL owners face bleak financing environment

The specialist nature of heavy-lift and multi-purpose vessels — particularly when they’re exposed to the whims of commodities markets — make them more of a financing risk than other merchant ships. Photo credit:

Expansion-minded and multipurpose and heavy-lift (MPV/HL) vessel owners face a challenging ship finance environment even though soft asset prices and improving market conditions suggest now could be a good time to invest, industry observers say.

“When it comes to vessel financing, traditional bank finance has just about gone,” Yorck Niclas Prehm, head of research at Hamburg-based ship broker, Toepfer Transport, told “Only shipping companies with low leverage might get finance from banks. We are also seeing some Chinese leasing companies, who have previously focused on container ships, spread their risk a bit more and are now looking at the MPP market.” 

Prehm said private equity firms are “interested,” as are new digital crowdfunding platforms such as New Shore Invest. “That’s where the money might come from,” he said.

However, “We don’t see MPP vessel financing from bond or equity issues. The amount of money needed for vessel financing is too small to justify a rights issue or public offering unless owners are looking at ordering a series of ships,” Prehm said.

That comes amid a limited number of orders for new vessels and few sales of second-hand heavy-lift ships and MPVs, although analysts indicated brighter prospects for the sector.

There are about 60 MPVs and open deck vessels on order with about 20 MPV sales this year, according to ship valuation specialist VesselsValue and ship broking house Clarksons. Figures for heavy lift and MPVs prepared for by VesselsValue show a combined fleet of 1,917 ships.

“The outstanding orderbook for MPPs — representing about 2 percent of the fleet on the water — is very small, which is a promising indication we are at the bottom of a shipping cycle in the segment,” VesselsValue trade analyst Court Smith said. “Around 30 percent of the MPP fleet is over 20 years old. The combination of few additions to the fleet and many potential removals means we will see fleet contraction. When the count drops, rates go up, even if underlying demand is softer as well.”

Cosco semi-submersible on order

Vessel orders include a $92 million deal in June from Cosco Shipping Heavy Transport to long-term shipbuilding partner Guangzhou Shipyard International for a fourth 50,000 dwt X-class semi-submersible vessel for deployment on the upcoming Canada liquefied natural gas (LNG) project. Cosco gave no details about vessel financing, although cash is likely to come from Chinese banks.

Spliethoff ordered six MPVs from China’s Zhejiang Ouhua Shipbuilding, but the deal fell through after the shipyard was declared insolvent last year. Spliethoff’s Hansje Dahmen‑Verkade told the “building of the R-Types has been put on hold,” although she said the company has expanded its fleet with 11 former Hansa Heavy Lift MPVs. Dahmen‑Verkade said the company does not provide details on vessel financing.

“The aging MPP/MPV fleet faces high cost and compliance issues due to changes to the regulatory environment like IMO [International Maritime Organization] 2020 and the requirement to install ballast water treatment systems,” Prehm said. “With the keen prices offered by the shipyards, we see a good window of opportunity for contracting newbuildings. We feel that now might be the right time to place orders.”

He noted current charter rates are below the 10-year average and despite forecasts calling for slowing growth in the next few months, Toepfer is “generally optimistic” the pace of growth will increase. 

“We see operators sharing this optimism by privately offering charter periods of up to five years that are significantly above spot market levels in a market where six to 12 months is the typical duration for a time charter,” Prehm said.

Finding financing is problematic

Pointing to the difficulties related to financing MPVs and heavy lifters, Holger Apel, global head of maritime industries at KfW IPEX-Bank, indicated the specialist nature of the vessels made them more of a financial risk than other merchant ships.

“We implement credit policies, which both reflect past experiences and lessons learnt as well as current developments,” Apel told “So, we [would] rather bank on corporates than on certain ships or vessel types. Thus, our exposure to MPVs, heavy lift and similar ships is very limited, as in the past these ships and their operations proved to be quite vulnerable against commodity price fluctuations.”

“Those ships are quite unique in their specifications and operations as they are in most cases purpose-built and so they cannot easily be transferred or liquidated,” he added.

Top ship finance banks including DNB, ING, and ABN Amro told they were not involved in the financing of heavy-lift and semi-submersible ships or MPVs, even though they are among the largest bank financiers of mainstream container ships and bulk carriers.

“We are not active in any of the sectors you refer to, unfortunately,” said Alex Ryland, head of ocean industries for Central Europe, Middle East, and Africa at Norway’s DNB.

His comments were echoed by Stephen Fewster, global head of shipping finance at Dutch bank ING. “This is not a sector that we are active in, particularly in view of the specialized nature of the vessels, so [it’s] not something I can meaningfully comment upon,” he said.

A banking crackdown on lending to fossil fuel and related projects, including coal, oil, and gas has also negatively affected ship owners’ ability to finance heavy-lift vessels, especially as offshore rigs and related equipment are their staple cargoes.

“We also take aspects around sustainability increasingly serious in our selection of transactions and in our approval process,” Apel said.

Coal projects, including related infrastructure essentially used for coal, such as power plants and coal-fired cogeneration facilities, are on KfW’s financing exclusion list.

With many top heavy-lift and MPV owners, including BBC, Biglift/Spliethoff, and Zeamarine, based in Europe, one avenue could be the European Investment Bank (EIB). Those companies together have about 25.4 percent of the MPV fleet market over 100 dwt, according to Toepfer Transport.

But the EIB, which helps European shipowners invest in greener ships, ruled out financing for vessels if they are involved in oil and gas projects.

“The EIB is trying to remodel itself as ‘The Climate Bank’ so you can see where its attitude is headed in supporting conventional shipping,” Mark Clintworth, the EIB’s former head of shipping finance, told “As long as the ship isn’t intended for oil and gas purposes, then it can be considered. If it’s for renewables, then it has more [of a] chance of being eligible for funding.”

Contact Keith Wallis at—