However, we have confined our discussion to financing of shipping projects.
Shipping is a capital-intensive industry.
A LNG carrier costs around USD 250 million, a double-hulled VLCC costs around USD 90 million and a Handysized chemical ship is around USD 70 million. In such a scenario, a shipowner or a potential shipowner wishing to acquire a vessel finds a considerable gap in his personal funds availability and additional funds requirement. Shipping finance has to a large extent remained a specialty sector on account of a number of unique characteristics associated with the shipping industry such as volatile markets, international service, mobile assets and others. Despite the intricacies involved in shipping finance, sophisticated financial instruments are conspicuous by their absence. Internationally, term lending backed by security in the form of collateral and mortgage has been the most prevalent form of financial assistance given to shipping companies.