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Analysis of quantitative and qualitative data

Chapter Four: Data Analysis

As discussed in the previous chapter, i.e. Research Methodology, this chapter will portray the analysis of both quantitative and qualitative data obtained during the overall research. The initial sector comprises of the quantitative analysis encompassing the quantifiable data obtained from 100 managers and key executives from the finance departments of various shipping companies. Subsequently, the analysis follows the qualitative aspect by conducting and recording the views and opinions five of the senior managements from the chosen industry over the sources of finance available to the companies. The combination of the approach would provide suitable views and reflections to produce useful conclusion and recommendations as part of the research.

Quantitative Analysis

Q1: What is the major reason do you think leading the commercial banks exiting the shipping finance market?

Question

Basel III Regulation

Heavy Losses and Balance Sheet Shrinking

Lending Capacity of the Banks

What is the major reason do you think leading the commercial banks exiting the shipping finance market?

40

35

25

Data Analysis img1

Based on the individual responses, it is observed that the finance in the global shipping industry is largely affected due to the heavy losses and shrinking trends in balance sheet figures and newly imposed Base III regulation. With 35% of the responses indicating the shrinking balance sheet figures and 40% considering a regulatory change in the shipping environment, the financial lending by the commercial banks is highly deteriorating. Besides, 25% of the overall responses provide liability to the diminishing lending capacity of the financial institutions, especially the commercial banks for such implication.

Q2: Do you believe that the banks will provide finance again to the shipping industry at the same level as before the financial crisis of 2008?

Question

Yes

No

Do you believe that the banks will provide finance again to the shipping industry at the same level as before the financial crisis of 2008?

32

68

Data Analysis img2

Most of the respondents (with more than 68% responses) believe that the banks cannot regain the pace at which it used to provide financial assistance before the economic crunch of 2008. On the contrary, only 32% believe that the banking industry will gradually cope up with the financial requirements of the global shipping industry after the Great Recession.

Q3: What do you believe the major financial source for the shipping companies as part of the current lending environment in the shipping industry?

Question

Bank Loan

Alternative Capital Sources

What do you believe the major financial source for the shipping companies as part of the current lending environment in the shipping industry?

27

73

Data Analysis img3

Due to the limited importance of banking investment in the capital structure of modern shipping companies, possible changes can be observed in the lending environment as part of the global shipping industry. As a result, most of the participants, i.e. 73% consider alternative capital sources as compared to the bank loan would be the vital sources of finance for the shipping companies in the future periods of operation.

Q4: What do you think is the most effective source of finance for the shipping companies?

Question

Senior Debt

Mezzanine or Junior Debt

Equity

What do you think is the most effective source of finance for the shipping companies?

22

30

48

Data Analysis img4

Since the declining emphasis on the banking investment or huge credit arrangements obtained from the commercial financial institutions, the managers and key executives associated with the shipping companies are relying on some other relevant types of financial sources. While 48% of them is favouring equity as one of the most effective sources of financial sources, other 30% and 22% signify junior debts and senior debts as the possible sources respectively for fulfilling the capital requirements.

Q5: Based on your experience, which source of alternative financing do you expect most in the shipping industry?

Question

Initial Public Offerings

Private Equity

Bonds

Export Credit Agency

Loan to Value Covenants

Based on your experience, which source of alternative financing do you expect most in the shipping industry?

23

30

8

29

10

Data Analysis img5

Given the inclining importance on the use of alternative financial sources for fulfilling huge capital requirements of the shipping operations, the key personnel from the finance department highly prioritise private equity (with 30%) as the most reasonable source for these companies. Besides, export credit agencies (29%) are playing a pivotal role nowadays in funding and maintaining the operational flow of the global shipping companies. Additionally, Initial Public Offerings (23%), Loan-to-Value Covenants (10%) and Bonds (8%) also play their influential roles as part of the alternative sources of finance available to these companies.

Q6: Do you expect growth in alternative capital sources in the shipping industries?

Question

Yes

No

Do you expect growth in alternative capital sources in the shipping industries?

79

21

Data Analysis img6

With the ongoing disputes at the banking level, reduced lending capacity and increasing instabilities in the global financial environment, a large number of managers and key executives (79%) of the shipping companies believe the expected growth of alternative capital sources in future. As compared to the over-dependence on the bank loans and reinvestments, alternative financial sources are expected to play growing influence in the global shipping industries.

Q7: Do you think that the alternative financial source defined above will be mainstream and available for at least 20-25% of all the short-term (less than five years) transactions in the shipping industry?

Question

Yes

No

Do you think that the alternative financial source defined above will be mainstream and available for at least 20-25% of all the short-term (less than five years) transactions in the shipping industry?

87

13

Data Analysis img7

Most of the managers and key personnel (87%) from the financial departments across the shipping industries believe that at least 20 to 25% of the mainstream shipping transactions comprise of the alternative financial sources. It signifies the importance of such sources in the modern shipping activities and operations to control the growth and sustainable progress.

Q8: What is the major factor preventing shipping companies from using an alternative source of finance?

Question

Shipping Logistics

Large Capital Requirements

Stringent CSR

Higher Contingencies

What is the major factor preventing shipping companies from using an alternative source of finance?

11

31

35

23

Data Analysis img8

With the modern shipping operations consistently facing various hurdles from the diverse range of factors from the contemporary financial environment, most of the respondents (35%) believe the complex CSR rules and guidelines creating obstacles for the operation. Besides, the large capital requirements (with 31% responses) are also creating a significant level of barriers for the shipping companies to fulfil the expected performance at the global levels. Additionally, higher contingencies (23%) in the operation and shipping logistics (11%) play their part of hindrances in the growth and success of these companies.

Q9: What measure could the shipping companies take in order to improve their chances of securing credit through alternative sources of capital?

Question

Capturing Vibrant Market Share

Improving Cost Management System

Innovation in Service Offering

Resolving Conflicts between Asset Managers and Transportation

What measure could the shipping companies take in order to improve their chances of securing credit through alternative sources of capital?

7

29

25

39

Data Analysis img9

The sluggish growth of operations and a wide number of failures in operations of the modern shipping companies lead towards the need of improving the current business approach and policies. It has necessitated these companies to adopt productive and strategic measures to maximise returns and improve funding for maintaining the key operations. As a result, most of the managers and key executives (39%) from the financial departments across the industry prioritised the requirement of resolving conflicts between asset managers and transportation companies to enable a free flow of operation without inadequacies. Additionally, they pointed out the requirement of improving cost management system (29%) to enhance pricing decisions for the shipping companies, and the need of adopting innovative approaches for delivering services (with 25%) to achieve the required pace of growth. Furthermore, the need for sound and effective strategies for capturing a vibrant share in the global marketplace cannot be ignored for achieving success in the chosen industry.

Q10: Do you believe that the alternative financial sources of capital are a viable option for the shipping companies in the long run?

Question

Yes

No

Do you believe that the alternative financial sources of capital are a viable option for the shipping companies in the long run?

54

46

Data Analysis img10

Given the constantly declining rate of banking affiliation with the global shipping companies with little chances of regaining the momentum, most of the financial managers and executives (54%) as part of the industry believe in the importance of alternative capital sources for the long-running operations. However, 46% of these managers still signified the importance of banking assets and investment capabilities in supporting the achievement of quick success for the long-term basis.

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