A wave of new maritime companies locating their head offices on Singapore’s shores – in addition to the republic’s growing reputation as the “go-to” destination for arbitrations – has raised expectations of significant growth in the shipping sector for 2011.
According to reports, Singapore is vying for London’s position as the world’s top shipping hub, as many companies seeking a presence in Asia choose the Lion City over its neighbours, and Chinese and Indian demand for commodities and raw materials drives freight market activity increasingly eastward.
“We have seen continued growth in the amount of shipping work coming to Singapore,” Norton Rose Asia senior associate Robert Driver told ALB. “We have acted for a number of shipping companies relocating or expanding operations here. This trend is particularly noticeable in the offshore sector. Singapore is the market leader for offshore vessel construction and where the shipping companies go, the brokers will inevitably follow.”
These sentiments were echoed by Watson Farley & Williams managing partner Chris Lowe. “There was a slowdown 24 months ago, but a revival of momentum of shipowners, brokerages and underwriters freshly establishing in Singapore is currently underway,” Lowe said. “In terms of shipping activity, we have witnessed an increase of 20% with an uptake of upstream oil & gas work.”
Norton Rose has similarly witnessed particular growth in the offshore sector. “LNG and FLNG are particular areas of interest to our clients at the moment. We are also seeing an increase in the amount of strategic M&A in the sector as companies who weathered the global financial crisis better than others look to consolidate and take advantage of their stronger financial positions,” Driver said. “Other trends we are seeing include a number of companies looking to consolidate through raising finance through both the debt or equity capital markets – and commodity houses looking to invest in ship fleets as a result of the increase in commodity trading throughout the region.”
Singapore’s favourable tax incentives, stable public policies and reputation as a leading arbitration centre have attracted new maritime set-ups such as: the UK-based The Shipowner’s Club sitting its first Asian office (also its first office outside the UK) in Singapore recently; Rolls Royce’s relocation of its marine global headquarters from London to Singapore; Swiss Re’s relocation of its marine operations from Hong Kong to Singapore; and global ship broker Clarkson’s decision to base its dry cargo broking teams out of Singapore instead of Hong Kong.
A global survey of 679 international respondents conducted by Norton Rose showed that most shipping companies have switched focus from retrenchments and raising more equity or debt in 2009 to strategic acquisitions and joint ventures in 2010. And this trend is expected to continue.
"Shipping has seen a strong recovery over the last year, driven in large part by significant regional trends. Demand from China, as well as Asia-Pacific more generally, has helped inject optimism to the market that was lacking this time last year,” Norton Rose global head of transport Harry Theochari said. “The reaction to that uplift from companies involved with shipping is particularly interesting. Last year there was a muted reaction towards any suggestion of growth or expansion. Now we’re seeing a lot more appetite for joint ventures and even acquisitions.”ALB
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