Shipping firms’ debt payment speed deteriorates on back of oil price rout

Smaller players are much more vulnerable.

Small shipping firms are struggling to stay afloat as the oil price rout continues. According to the DP SME Commercial Credit Bureau payment speed in the Shipping and Marine sector slowed drastically in the fourth quarter.

The sector took 63 days, on average, to pay its debts in the fourth quarter. This is nine days longer than the 54 days which the sector required to pay debts in the third quarter.

The report noted that while this is a rather steep decline, the payment speeds in the industry have now returned to where they were for all of 2013, following two quarters of relatively fast payment.

“SMEs in the sector commented that falling oil prices since mid-2014 may have contributed to the slower payment cycle as the anticipation of a further drop in prices might have added to cash flow constraints. While the big players tend to be slower payers in lieu of more tedious payment processes, smaller players who are less able to fend themselves in times of uncertainty also find an added pressure in their ability to make prompt payments,” the report stated.