Japanese operators raising own capital ratio in newbuildings

Against the backdrop of favorable business results, Japanese operators are raising the ratio of their own funds in the construction of their own ships.

Sanko Steamship has significantly increased its own capital ratio to 50 percent in its own ships to be completed in the future, while Mitsui OSK Lines (MOL) has boosted its equity to an average of 40 percent in ships that will be built with its yen funds. According to Marine-net, Shinwa Kaiun Kaisha and Daiichi Chuo Kisen are shouldering about 20 percent of the ship prices using their own capital. Other operators are studying taking the same step. Japanese operators mainly procure ships through three methods. Building their own ships, chartering from shipowners and tax leasing such as the Japanese-style operating lease (JOL). When constructing their own vessels, the operators build the ships using their own capital and funds obtained through loans from banks. But when the shipping industry plunged to a recession, there were cases in which virtually no own capital was invested in building their own vessels. However, there is now a growing number of operators who are raising their own capital ratio in building ships with the growth in their cash reserves thanks to excellent business results in recent years, as well as the anticipated effective use of funds, reinforcement of the competitive edge of fleets and the reduction in interest-bearing debts.

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