Market sentiment has some brokers questioning whether they are ‘digging their own graves’ as five years from now they may have little business left.

Shipowning in Germany has become a battle for survival. For several years, German shipowners have been waiting for a recovery that never came.

It has been likened to the Samuel Beckett play, “Waiting for Godot”, in which characters wait in vain for the mysterious Godot.

But Godot, in the form of the recovery, still has not arrived and increasing numbers of predominantly containership tramp owners are throwing in the towel.

Others have been forced to, with banks losing patience and demanding the keys.

Possibly the biggest symbolic blow to German shipowning pride occurred last December with the $4bn-plus sale of Hamburg Sud to AP Moller-Maersk. Many in Germany saw the sale to a Danish rival as a lost opportunity, following the failed attempts to forge a merger with compatriot Hapag-Lloyd — a rare German success story that pursued another path by merging with CSAV and a pending deal with United Arab Shipping Co (UASC).

The Hamburg Sud sale was another slice of Germany’s shipping heritage and reflects what has been happening every week for several years. Also in recent months, sale-and-purchase (S&P) brokers report a big pick-up in activity, reflected in ever larger numbers of containerships being sold for demolition or further trading. Some brokers have mixed feelings. While they relish in the opportunity to sell more ships, there is consternation over what that means for the future.

“Digging our own graves” is the phrase one occasionally hears from shipbrokers. Their concern is that five years from now, there will be very little business left for them.

Now there is further trouble on the horizon as banks — having sat on their hands for much of the crisis — are ready to call time. Several years of bolstering banks’ balance sheets has left shipping lenders more able and willing to take a write-down on their assets.

“The Germans have been kicking the can down the road for so long — they have run out of road,” said one UK analyst. “That has led to a degree of action, or sensible negotiation.

“Banks have concluded that it is better to deal with issues in hand, even if that means a sell-off of vessels.”

German owners to reap what they have sown

One large German owner that has steered clear of the KG (limited partnership) market argues that owners are beginning to reap what they have sown. “If other countries benefit from a reduction in activities in Germany, then so be it,” he said.

That appears to be the harsh reality that German owners have to face up to, although they are fighting back.

Also, the German state is ready to support the country’s maritime industries through its Maritime Agenda 2025. Details will be made clear following a national maritime conference planned for Hamburg in April which German Chancellor Angela Merkel is expected to attend.

Some measures are already in place to promote the national flag, currently amounting to 353 vessels, including improved income-tax measures and the removal of the requirement to have a German engineering cadet onboard.

German owners, with a strong focus on containerships — which according to figures from the German Shipowners’ Association total 1,324 vessels or close to 60% of the fleet on a gross ton basis — are in need of help.

Figures from VesselsValue show there was a 46% drop in the market value of the total German-owned containership fleet from 2016 to 2017.

Analyst Nathan White says valuations of panamax containerships are still sliding for German owners. “The combined effect of a surplus of tonnage and poor rates after the opening of the new Panama Canal, have left panamax and sub-panamax containership values falling significantly over the past 12 months,” he said.

“The worst hit have been seven-year-old panamaxes. Today, you can buy one on the fair market for $6.1m — the lowest market value recorded on VesselsValue since the beginning of our daily values 1 January 1992. In the past year, these vessels have lost 60% of their fair market value.”

The impact of declining asset values has seen a shift away from ownership to an increased emphasis on shipmanagement and services.

German Shipowners’ Association (VDR) managing director Dr Max Johns said: “We now have a clearer distinction between ownership and management for technical reasons. These two were always blended together in one word, Reederei. But now shipping companies are saying these are two entirely different things we do.”

Meanwhile, shipbuilding is faring better with substantial investment from Genting Group to build a dedicated cruiseship-building complex in Northern Germany.

An influx of high-value cruiseship orders has made Germany Europe’s largest shipbuilding nation and the world’s fourth-largest in compensated gross tons (cgt).