A SHIP SALE OFF THE CHART!

When strange things happen during the frenzy of a shipping bull market it may mean that the top is imminent and the inevitable decline will soon follow.  On the other hand, the craziness may just be one person's warped hopes and perspective.  We'll know soon enough.

An extraordinary ship sale was reported recently.  The SAMJOHN CAPTAIN, a 22 year old panamax bulker, was sold for 20 million dollars.  Just half a dozen years ago, 20 million dolllars would have bought you a new panamax bulker, not a ship of an age soon to be recycled into rebar and razor blades.

Since 1994, the price of a 22 year old panamax bulker has stayed in the 13 or 14 million dollar range, so the 20 million dollar sale is off the chart - literally.  If you look at a graph of the historical distribution of the resale prices of 22 year old panamax bulkers for the last twenty years (adjusted for inflation) you will see a big bulge at about 5 million dollars (the long term average), a smaller bulge around 13 or 14 million (average for the current bull market) and a very slim tail that extends up to 20 million where the sale of the SAMJOHN CAPTAIN sits in solitary splendor.

In a previous blog entry we reminded our readers of the old broker's adage that "you can't make money in the tramp business with a new ship".  This situation is so unusual that it probably doesn't deserve a pithy saying of its own, but it's hard to see how you can make money in the tramp business by paying too much for a ship  with a very limited life span.