Ship Finance Is a $680bn Market That Leaves Most Owners Out

The top 40 shipping banks grew their loan portfolios by 6% in 2025 to $300.6bn, according to Petrofin Research — yet bank ship finance globally still stands at just 63 on Petrofin's index, against 100 in 2008. The fleet and orderbook those banks are being asked to finance is now worth roughly $2.17trn.

That gap is the story. Total ship finance across banks, leasing, export credit and alternative lenders runs to about $680bn, and Societe Generale expects 2026 to remain a borrower's market — for top-tier owners, with margins of 100 to 150 basis points over SOFR. Accurate at the top. Less accurate below it.

Small and mid-sized owners, who by one industry estimate own up to 60% of the world's ships, still face low advance ratios on older tonnage, higher margins, or alternative lenders demanding equity kickers and profit participation on top of interest. For that majority, Captain Vikas Pandey of Shipfinex sets out a third route: sell a share of a single vessel's future net earnings to outside investors, while the owner keeps title, management and commercial control.

What does the structure actually change?

Three things: cost, cash flow and control.

Cost. Where an owner can borrow at today's bank margins, debt is almost always cheaper. Investors taking freight-market risk expect returns closer to equity. The maths shifts when the realistic alternative is private credit priced well above bank debt, with fees, tighter covenants and a profit share attached. At that point the owner is already paying for equity risk while still carrying the rigidity of a loan.

Cash flow. This is the bigger difference. Debt service is fixed. Amortisation often runs shorter than the vessel's remaining economic life, a balloon creates refinancing risk at maturity, and a minimum value clause can force prepayment or extra security when asset values fall. None of that adjusts when the charter market softens. An earnings share does. Investors receive an agreed percentage of net operating cash flow, so distributions fall when rates fall — and a weak quarter is not a default event. For an owner whose real exposure is a liquidity squeeze in a downturn rather than the headline cost of capital, that flexibility carries genuine value.

Control. Earnings-share investors hold an economic right, not title. The vessel typically sits in a single-ship SPV that remains the registered owner, and the owner keeps technical and commercial management, crewing and chartering. Investors get regular reporting and a vote on a short list of reserved matters: a sale of the vessel, new borrowing, a change of manager. A lender's covenants, by contrast, can restrict distributions, require consent for employment and accelerate the loan on breach. Both structures constrain the owner. Just in different places.

When does sharing earnings make sense?

Pandey's framework points to four situations:

• bank debt is unavailable, or priced close to equity;
• the vessel has visible employment, such as a period charter, that investors can underwrite;
• the owner needs to protect liquidity through the cycle;
• equity is locked in an unencumbered vessel the owner wants to release without selling.

For an owner with cheap bank finance and a firm view that rates will rise, the structure gives away upside. That's the trade.

What should owners settle before signing?

The documentation list is long and specific:

• the definition of net earnings and deductible costs;
• treatment of off-hire and drydocking;
• reserve funding;
• the term and any cap on investor returns;
• buy-back rights;
• what happens on a sale or total loss.

One priority point matters most: where a first-priority registered ship mortgage is in place, the mortgagee's consent is required, and investor distributions rank behind debt service.

The bottom line is simple. Debt remains the cheapest capital in shipping for owners who can get it on good terms. For many who cannot, sharing earnings matches the cost of capital to the way a ship actually earns its money — and with bank finance still at 63 on Petrofin's 2008-based index, that population isn't shrinking.