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EXIT
As a financial asset, there is an income
stream for a ship and it has utility and
therefore tangible value, which tends
to track charter rate trends. That said,
the ultimate value depends upon there
being buyers for these large, specialist,
costly items and what they are prepared
to pay. This is likely to limit the market
for buyers and prospective investors
need to take this into account, bearing
in mind the current over-supply of ships
and the uncertain timeline of the route
back to balanced supply and demand
for ships, both in terms of chartering
and purchase prices.
CONCENTRATION RISK
A sensible investment option is to
spread risk by diversifying across a
range of sectors – some of which may
be correlated and some uncorrelated to
general market conditions so that losses
in one section of the portfolio may be
offset by gains in another. Investing
solely in any single investment sector
is a greater risk, although on the other
side of the equation, it carries the
potential of larger gains if the optimum
conditions exist. This type of risk profile
is very unlikely to be for inexperienced
or non-professional investors.
Within the Dry Bulk sector, those ships
which are most versatile and diversify
across routes and commodities, provide
some protection against changes which
adversely affect the investment sector.
INEXPERIENCED MANAGERS
With so many complicated aspects
to consider, including all of the risks
in this section, as well as technical
factors and international logistical
imperatives requiring compliance and
commercial and professional expertise,
a sizeable risk lies in the persons and
entities in control of the Dry Bulk
shipping operation. Companies such
as British Marine, Anglo Eastern Ship
Management and Wallem Group can
help to mitigate this risk, with their track
records, experience and expertise.
DUE DILIGENCE
Key due diligence issues include the
track record and expertise of the
fund manager; the methods used
by investment managers to assess
the investments they make in such a
complex sector; the issues examined
in the acquisition of ships – such as
the reputation/perception of the
shipbuilder company to maximise
second hand value (this may mean
purchasing from a South Korean,
Japanese or possibly Chinese
shipbuilder), vessel size and type, with
the aim of ensuring it meets current
demands and has flexibility for cargoes,
and opex costs versus current and
potential freight rates.
“As a financial asset, there is an income stream for a ship and it has utility and therefore tangible
value, which tends to track charter rate trends”
DREWRY:
independent global mar
and research organisation
International
Association of Dry
Cargo Ship Owners
INTERCARGO
Independent global
maritime advisory and
research organisation
DREWRY
Provider of info on maritime
transportation markets,
used for the trading and
settlement of physical and
derivative contracts
THE BALTIC
EXCHANGE
ICS whose membership
comprises of the ship
owners’ associations
from over 40 countries
INTERNAT.
CHAMBER OF
SHIPPING
Informative in print and
online shipping mag, with
international offices and
journalists, covering all of
the shipping sectors
TRADEWINDS
Membership
comprises of owners,
brokers, ships agents
and other operators
BIMCO
Leading international
accounting and consulting
network with a strong focus
on various industry sectors,
including shipping
MOORE
STEPHENS
SOURCES OF INFORMATION: