Different Types Of Marine Finance

Sea trade in UK involves a lot of investment and risks, both at the same time. However, they both are the cost for great profits, but there are ways of reducing the investment and risk associated with the use of marine finance in UK. This type of finance helps in arranging the funds for a number of processes that accompany goods during the voyage.

Here are some types of this finance:

Acquisition of vessel

Vessels are chartered by traders who deal in commodities essential for living like wheat and corn. This charter is based upon a period of time and it certainly costs the trader lesser than owning a fleet himself. This can be called a time charter, which features to lend the vessel on a contract for a certain period of time, say one to five years depending upon the destination and distance.

Construction of vessels

The construction process for a vessel can itself account for millions of dollars of investment undertaking considering the various factors such as durability, dimensions, and construction time. These vessels can sometimes be required to carry around four hundred thousand tons of cargo for trade. This requires putting forth a huge sum of money that will essentially require financing to mitigate the associated risks with the venture and breaking a load of investments as well.

Deconstruction of vessels

After a vessel successfully completes its voyage and serving its lifetime period, it is deconstructed and the parts are auctioned among the interested buyers. While the auction realizes a portion of the costs, deconstruction of the giant vessel again requires a specific sum of investment because of the bulk work.