Japan Ship Investment Facilitation Co., a finance consultancy formed by the nation's shipbuilders, said it may help the yards win ¥100 billion in orders in three years by using government-backed funding.
JSIF is in talks with more than 10 yards to facilitate sales of ships to special-purpose companies it will help create, President Shinobu Kawato said Wednesday in Tokyo. The vessels will then be chartered to overseas customers for 10 to 12 years, he said.
Formed in April by a group of 21 Japanese shipyards, JSIF is part of the nation's efforts to boost sales as competition from South Korea and China, a stronger yen and lack of funding curtail deals.
Thirteen of the world's 19 largest shipping banks stopped new lending to the industry because of an "extreme" vessel surplus, DVB Bank SE said in March.
"Ships are cheap and it's time to buy, but financing is difficult to find," Kawato said. "The financing should help Japanese shipyards' competitiveness."
JSIF is advising shipyards on how to fund orders with a combination of their own money, investments from overseas shipping lines and loans from state-owned Japan Bank for International Cooperation and private lenders, Kawato said.
The shipyards will arrange to fund a portion of the vessel costs themselves and then borrow half of the remaining amount from JBIC and the rest from private banks, Kawato said. Creation of the special-purpose company will help the yards reduce the equity portion of the purchase price to about 20 percent from about 40 percent currently, he said.
Japan lost its crown as the world's largest shipbuilder to South Korea in 2005 and dropped to third place behind China the following year. The cost of Japanese ships has risen relative to its rivals as the yen surged 54 percent in the past five years against the dollar.
In comparison, the yuan has gained 19 percent against the dollar in the same period while the South Korean won has slid 20 percent.
The surplus of new vessels coming to the market has reduced the price of ships. The price of a 10-year Aframax ship, a tanker that can carry about 600,000 barrels of crude oil, has tumbled by more than two-thirds to $20 million each at the end of May, from a high of $63 million in 2008, according to figures compiled by Bloomberg.