SOME SHIPS, LIKE FINE WINES, INCREASE IN VALUE AS THEY AGE!

Thers's another old broker's adage that seems applicable these crazy days - "strong markets make old ships new".

On March 27th, a couple of sales were reported that, in calmer days, would have had me calling a broker friend to ask if the reports had been screwed up in transmission.

First, the IKARIA, a 26 year old small caper was reported sold for US$19 million.  In September of 2005, when the ship was only 24 years old, it was reported sold for US$12.5 million.  So, while aging two years, the ship increased in value by 52%.

Then, the MOSTOLES , a 26 year old panamax OBO was reported sold for US$13 million.  In January of 1998, when the ship was only 17 years old it was reported sold for US$10.8 million.  So, while aging nine years, the ship increased in value by 20.4%.

What's going on here?  Clearly, this is a game based on the expectation of a strong and very long lasting freight market.  History says "no", but history also says that the market peaks when the smart money says that "this time it's different and the market will stay strong for the indefinite future".

Question:  How many 20+ year old capers and panamaxes would it take to trade even-up for a prompt new-building slot?

Comments

[S.P.RAMKUMAR]

dear sir / madam

please send the vessels photographs & more details

tks