Op-Ed: Alternative lenders will ignite shipping’s growth
Written by Heather Ervin
Tobias Backer
By Tobias Backer, executive director, Pelagic Capital
The introduction of protectionist policies by the new U.S. administration has reignited uncertainty across the global economy. The International Monetary Fund’s (IMF) World Economic Outlook suggests that every major economy will be impacted by the newly introduced tariffs, resulting in a 2.8% reduction in forecasted global growth for the year. It might seem counter-intuitive, but alternative lenders to the shipping space would likely benefit from such trade disruptions as they can more adroitly adjust to the new reality.
Despite the recent appearance of a cooling off in the U.S./China trade war, the substantial new trade barriers raised by President Trump adds to an already complex and challenging operational environment for the maritime industry. The war in Ukraine continues to impact global energy markets and trading routes, while attacks on vessels in the Red Sea have led to a rerouting of vessels around the Cape of Good Hope to protect crew members and cargo. Furthermore, the introduction of more onerous emissions regulations, as well as the need to adopt new clean technologies to support the industry’s energy transition, is having a tangible impact on fleet’s replacement costs and operational expenses.
There is no escaping the fact that the current global climate is a choppy one, yet, amid this volatility, shipping continues to demonstrate structural resilience.
Despite the current challenging operational environment, the maritime industry is experiencing a period of sustained growth, with Clarksons‘ recent newbuilding price index indicating a 45% increase in new build orders since 2021. Freight rates remain supported by a constrained orderbook and sustained global commodity demand. However, this period of relative expansion also means that certain segments are approaching their peak, which represents a critical phase for fund managers.
These challenges also bring opportunity, especially for investors who understand how to navigate such volatile markets and capitalize on the opportunities they present.
Maritime investment has transformed since the 2008 global financial crisis. Traditional banks, once the cornerstone of shipping finance, adopted more cautious lending practices. Stricter regulations, higher capital requirements, and a shift in institutional priorities have reduced their lending appetite.
This contraction in traditional lending capacity comes at a critical juncture. Over the next decade, nearly 15,000 vessels will reach the end of their economic life. Fleet renewal across all segments will require substantial capital. But as traditional banks adopt a more cautious lending attitude to the industry, an increasing share of this capital requirement must be bridged.
This is where the rise of alternative lenders is reshaping the maritime investment landscape. Specialist credit institutions, like Pelagic Partners’ MareVia Credit Fund, have emerged to fill the void. With deep market insight and a flexible approach to structuring capital, these funds and finance companies are playing an increasingly central role in supporting shipping’s long-term growth and renewal.
Launched in 2024 by Pelagic Partners, the MareVia Credit Fund seeks to address precisely this market need. Rather than competing with banks, alternative credit institutions work in collaboration with them, combining the institutional strength of traditional lenders with the sector-specific expertise, speed, and adaptability of specialist funds. These partnerships are driving innovation in maritime finance, enabling the creation of leasing structures and capital products tailored to the industry’s complex requirements.
Because of their close proximity to the market, alternative lenders are more attuned to the current market opportunities and are more willing to deploy capital in down markets. While the capital cost of alternative lenders is higher than that of senior banks, their ability to obtain bank funding themselves, less expensively than what a shipping company can do directly, allows the alternative lender to pass through the cost savings to clients. As such, they can offer high levered loans and leases on a margin over the secured overnight financing rate (SOFR) which—while more expensive overall than a bank loan – is much more cost efficient than to bridge such funding gap with shipowners’ own equity. This collaborative model offers shipowners the flexibility they need to move quickly, while giving investors exposure to a historically resilient, uncorrelated asset class.
At Pelagic Partners, our position as both a shipowner and fund manager give us a dual perspective. With investments spanning a broad range of maritime and offshore segments, we prioritize flexibility, allowing us to enter and exit positions strategically in partnership with our clients. This approach has helped deliver consistent equity-like returns while reducing risk and enhancing the resilience of our investment model.
Shipping has long proven its ability to generate strong returns during volatile periods. As an asset class, it continues to attract investors who recognize the significant investment opportunities that are available to those that are positioned to react quickly to the various ebbs and flows of the market and the needs of their clients
In shipping, timing, conviction, and access to capital remain critical drivers of value. Periods of instability reward those who can adapt.
