Shipping finance

Abstract

By the term finance, it is meant the lending of money for starting, completing or improving a business or business with ease in reimbursing the amount. By the term shipping finance, we mean the process of borrowing money from shipping companies against an interest rate that is determined each time in relation to the interbank offer rate prevailing in the world's main financial markets, in particular London (LIBOR), in order to allow both the continued operation of the company by the purchase of a new or second-hand ship and its further development. Shipping finance is a key factor in the development and expansion of shipping business. It is distinguished in short-term and long-term. In the short term, money demand is intended to cover the ship's operating costs (commissions, occasional or regular inspections, shipbuilding or repairs, etc.) and lasts for between 1 and 2 years. Long-term financing concerns the purchase or construction of a ship or ships and lasts 3-4 and 6-8 years at most. Lack of stability and uncertainty about the future make shipping a risky one, which is not acceptable from sources of finance such as the stock market. The choice of the shipping method followed by a shipping company is one of the most important decisions that are called to get its experts. The form of shipping industry financing has been constantly changing over the years. This is due both to the situation of the prevailing economic conditions and to some factors that are directly related to and affect shipping and, consequently, maritime financing.