The Northern Sea Route as an alternative container shipping route: A hypothetical question or a future growth path?

Commercial ship financing is a century old, yet a risky business. It typically involves high leverage, with up to 80% of the vessel’s building cost financed by loans (Stopford, 2009; Verny and Grigentin, 2009), and is mostly organized by establishing a

one-ship company

that only holds one large asset (the ship itself) in its books. To securitize his loans, the financer will typically encumber this ship with a mortgage. Many one-ship companies (including their ship managers) do not have access to the vessel’s cargo. Their revenue is generated only by the operation and chartering of the vessel they own. Therefore, often not only does the ship itself but also the charter party contract serve as collateral for the loan.