Investments in the shipping of the future

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Introduction to ship investments

90%

of world trade takes place by sea

11 bil.

tons will be transported by sea (2018)

5,4 %

renewed growth of the world economy in 2021 (according to IWF)

Due to the long-term increase in global trade volume, a fleet structure in need of modernisation and stricter environmental regulations, the construction and purchase of ships that meet the latest environmental requirements is essential for shipowners. In order to meet this challenge, shipowners increasingly need more capital.
This offers new investment opportunities for investors. Thanks to ship investments via New Shore Invest, investors become co-owners of a ship and therefore benefit from the profits generated by the ship and participate in the performance of the ship. At the same time, shipowners receive the necessary equity capital for the realisation of new ship projects.

How does a ship generate returns?

The path from your investment to your returns

Investment

Shipowners increasingly need more equity capital to realise promising ship projects. They obtain this, for example, through investments from investors. After the shipowner has raised the necessary equity capital, he either buys a profitable existing ship or invests in the construction of a new ship, depending on the project. In view of the stricter environmental regulations, care is taken to ensure that each ship project complies with the latest environmental requirements.

Charter agreement

In the case of a shipbuilding project, the construction phase now begins, which usually lasts several years. Once the respective ship has been built or purchased, the long period of operation of the ship begins. Charter contracts are concluded between the ship owner and a charterer. This contract entitles the charterer to use the ship and obliges him to pay the charter rates (rent). In the following the charterer transports goods and other goods to his customers with the help of the respective ship.

Transport revenue

The charterer now generates revenues by transporting the goods and merchandise. He uses these to pay the respective rent to the owner of the chartered ship. The shipowner then uses this rental income to cover his costs and to repay existing bank loans.

Your returns

In the course of the profits generated by the ship, investors receive regular distributions. The amount of the yield depends on the amount of the profits generated by the ship. Investors through New Shore Invest become co-owners of the ship. Consequently, they also participate in the value development of the ship and a possible sale.

Investment

Shipowners increasingly need more equity capital to realise promising ship projects. They obtain this, for example, through investments from investors. After the shipowner has raised the necessary equity capital, he either buys a profitable existing ship or invests in the construction of a new ship, depending on the project. In view of the stricter environmental regulations, care is taken to ensure that each ship project complies with the latest environmental requirements..

Charter agreement

In the case of a shipbuilding project, the construction phase now begins, which usually lasts several years. Once the respective ship has been built or purchased, the long period of operation of the ship begins. Charter contracts are concluded between the ship owner and a charterer. This contract entitles the charterer to use the ship and obliges him to pay the charter rates (rent). In the following the charterer transports goods and other goods to his customers with the help of the respective ship.

Transport revenue

The charterer now generates revenues by transporting the goods and merchandise. He uses these to pay the respective rent to the owner of the chartered ship. The shipowner then uses this rental income to cover his costs and to repay existing bank loans.

Your returns

In the course of the profits generated by the ship, investors receive regular distributions. The amount of the yield depends on the amount of the profits generated by the ship. Investors through New Shore Invest become co-owners of the ship. Consequently, they also participate in the value development of the ship and a possible sale.

Tonnage tax –
a privilege of German merchant shipping

Low tax burden through tonnage tax

With a ship investment, investors benefit from the tonnage tax eligibility of the projects offered by New Shore Invest. In contrast to investments in shares or funds, for example, which are subject to capital gains tax, investors profit from a lower tax burden through New Shore Invest.

Tonnage tax

  • Tonnage tax usually below 1% on distributed profits
  • Tonnage tax is a method for determining profits
  • Application only possible in the shipping industry

Lower tax burden for investors

Capital gains tax

  • Capital gains tax 25% + 5.5% solidarity surcharge + possibly church tax
  • Applicable on all investment income
  • Application e.g. for stock dividends, interest and fund income

Higher tax burden for investors

Tonnage Tax Calculator

Calculate quickly and easily the profit after tax when applying the tonnage tax in comparison with the capital gains tax.
To do this, select your desired investment sum and then drag the slider to the respective returns in order to be able to compare different scenarios.

347 €
258 €
Profit after tax for
application of tonnage tax
Profit after tax at
application of capital gains tax
7 % p.a.
Choose the amount of your investment

How the profits are calculated

The following assumptions have been made in this exemplary calculation of tonnage tax and capital gains tax: (1) Total subscribed limited liability capital: EUR 3,000,000, (2) net tonnage: 1,250, (3) tax rate: 44.31% (= 42% plus solidarity surcharge of 5.5% without church tax) and (4) no crediting of the saver’s lump sum (tax-free amount). Project-specific calculations of the tonnage tax can be found on the respective project page.

Why invest in ships now?

Exploiting the promising phase of the shipping cycle

Illustration_Warum Schifffahrt_Warum-gerade-jetzt-in-Schiffe-investieren

Marküberkapazität

  • Sinkende Charterraten
  • Sinkende Nachfrage für Schiffsneubauten und Gebrauchttonnage
  • Sinkende Schiffswerte

Verbessertes Angebot- und Nachfrageverhältnis

  • Zunehmende Ausmusterung
  • Sinkendes Tonnageangebot & steigende Flottenauslastung
  • Erholung der Charterraten

Steigendes Angebot

  • Steigende Nachfrage für Schiffsneubauten und Gebrauchttonnage
  • Steigende Schiffswerte
  • Steigende Nachfrage für Schiffsneubauten und Gebrauchttonnage
  • Neubau und Bestellungen

Present situation

The current ship market is in the phase of phasing out older ships and improving fleet utilisation. Especially in the segment of multipurpose freighters (general cargo), little investment in newbuildings has been made in recent years. This segment is therefore characterised by numerous decommissioning operations, also in the wake of new environmental regulations. This fact makes the segment particularly interesting for investors. The declining number of transport vessels favours better fleet utilisation of existing vessels that meet the latest environmental requirements. In addition, new ships are needed in this segment in order to efficiently meet the long-term forecast increase in maritime trade.
Since the International Monetary Fund (IMF) forecasts renewed economic growth of 5.4% for 2021, an investment is particularly favourable for investors at this time. Investors through New Shore Invest can profit from the expected increase in charter rates and possible increases in the value of the ships.

The development of shipping since 2008:

Market overcapacity

The financial and economic crisis in 2008 hit the global economy hard. A large number of players in various markets suffered losses, some of them severe. The crisis affected a wide range of asset classes, from shares to real estate. The shipping market was also not spared by the global economic crisis. In the course of the crisis, the demand for goods to be transported and thus the demand for transport shipping fell. This resulted in market overcapacity.

Falling demand

As a result of market overcapacity, charter rates and consequently the value of the ships themselves fell. Due to the reduced demand and the oversupply of transport vessels, investments in newbuildings were neglected, especially in the segment of multipurpose freighters operating near the coast (so called Short Sea Market). As a result, more than 40% of the existing vessels in this sub-market are more than 20 years old and thus technically obsolete and uneconomical.

Retirements leads to modernisation

From 1 January 2020, stricter environmental regulations of the International Maritime Organization (IMO) will come into force, which contain stricter emission guidelines. From this date, the sulphur content of ships’ fuels in international waters must not exceed 0.5% (currently 3.5%). This Directive will bring about a major change in the shipping industry. According to IMO estimates, some 70,000 ships worldwide would currently be unable to comply with the Directive without upgrading their filtration systems, for example by installing new filters (scrubbers) to remove sulphur from ship exhaust gases. The alternative would be to switch to a more expensive marine fuel with a lower sulphur content, or to convert to a marine propulsion system capable of burning particularly low-sulphur fuel, such as LNG (Liquefied Natural Gas). In addition, from 2022 there will be regulations concerning ballast water treatment, which will require further retrofitting. Compared to the high age of most ships, however, retrofitting with modern technologies is often uneconomical for shipowners. For these reasons, the older fleet is likely to be heavily phased out.

Recovery in charter rates

The increasing scrapping of the obsolete fleet is reducing the supply of transport vessels and improving the utilisation of the existing fleet. The reason for this is a shortage of ships on offer with a forecast steady growth in demand for cargo. In the course of the improved supply and demand relationship, charter rates are also increasing.

Rising demand

Due to the economic developments caused by the coronavirus pandemic, the International Monetary Fund (IMF) expects a recession of 4.9% in 2020, but global economic growth of 5.4% is already expected for 2021. With this upturn in the world economy, global maritime trade is also growing. The global economy, in turn, is benefiting decisively from the growing world population and its prosperity. The world population is expected to rise from 7.6 billion at present to 8.5 billion by 2030 and even to over 10 billion by 2050. Shipping is also benefiting from this growth, as demand for goods to be transported is also increasing.

The importance of merchant shipping

90% of world trade takes place by sea

Textiles, electrical goods and rice from Asia, soya, coffee and cocoa from South America, cereals from the USA. 90% of world trade is by sea. Without global merchant shipping, our supermarket shelves would be virtually empty. Almost any cargo can be transported by sea, from bulk goods such as grain, to crude oil, to wind turbine rotor blades.

The ongoing globalisation promotes a production that takes place at different production sites, detached from the respective raw material. This international division of labour means that the individual sub-products are manufactured and dismantled in different countries on different continents. They are then transported by ship to the individual countries for final production. The reasons for transport by sea are numerous. Transporting goods by sea is particularly cost-effective in terms of the tonnes transported. Furthermore, ships have comparatively low CO2 emissions per tonne transported. A ship emits even less CO2 per tonne than a train. It is only thanks to merchant shipping that we can benefit from the diversity of products that we take for granted.

A smartphone, for example, consists of a touch screen from China or Canada, a battery from Chile or Argentina and a SIM card from South Africa. The finishing of these sub-products is then carried out in countries such as China or Taiwan. The transport of the sub-products to the final assembly and the transport of the subsequent final product would not be possible without shipping. Without merchant shipping, our life, characterised by a wide range of affordable goods, would not be possible.

Diversification of the investment portfolio with ship investments

An investor’s portfolio should contain different asset classes. This asset distribution serves to spread risk (asset allocation). Examples of the various asset classes that can be included in a portfolio are overnight money and fixed-term deposits, equities and ETFs.

Diversifikation Ihres Investment Portfolios

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