The cost of funding, overcapacity and fuel costs are the major issues facing companies in the transport sector, a new report says.

Law firm Norton Rose Fulbright’s Transport Survey polled companies in the aviation, rail and shipping sectors, finding that the most pressing issue across all three sectors was pricing (54%), with the lack of liquidity in the market proving to be the second-greatest concern (52%).

The finance issue is scalable, with those at the top of the food chain finding it easier to tap debt markets than smaller players. Furthermore, there is greater availability of finance in certain regions, such as Asia and sectors, such as aviation.

Leigh Borello, partner in the firm’s Sydney office, says: “In our experience debt funding in the aviation market in Asia is readily-available for better credit airlines and lessors. This competition has driven down the pricing for many financiers and it is not surprising that the respondents would like to see more government-supported financing to enable debt funding to a broader range of borrowers.”

In the US, debt financing has been difficult to come by and the report finds that the US private equity sector has stepped into fill the gap.

However, for those on the financing side, there is great optimism about the state of the market. At the top-end, large debt transactions continue to close. Petredec, a trader of liquefied petroleum gas (LPG) vessels, this week announced the closure of a US$200mn loan facility, for the purchase of four 84,000 cubic metre LPG carriers from Hyundai Heavy Industries.

The finance was led by Crédit Agricole; with HSH Nordbank, ABN Amro and ING also joining as mandated lead arrangers and the Korean export credit insurer K-sure providing insurance for the commercial debt.

The French bank was advised by Watson, Farley and Williams and the firm’s London finance partner Michael O’Donnell tells GTR that the debt market is still a very active source of finance. “Other types of financing have become much more prominent, particularly private equity and the public markets, but we have seen the debt market become much more active again, particularly over the last year or so, and it’s often very competitive between the banks for debt financing for the top tier owners and the right deals,” he says. He describes the deal as being “typical” for the market.

The shipping market is the most active transport sector for companies seeking finance. 57% of respondents in the sector sought finance over the previous 12 months, compared with 44% in aviation and 41% in rail.