Is this a good time to invest in ships? (panamax bulk carrier)

• Main Author: Lian, Yixiang.
• Other Authors: School of Civil and Environmental Engineering
• Format: Final Year Project
• Language: English
• Published: 2012
• Subjects: DRNTU::Engineering::Maritime studies::Maritime management and business
• Online Access: http://hdl.handle.net/10356/49225
• Institution: Nanyang Technological University

Shipping is a ‘high risk, high return’ investment. Shipowner can expect a potential windfall if the correct decision is made at the right time. This paper proposes several key recommendations to shipowners looking to invest in the Panamax bulk market at the start of 2012. The study first identifies the real-world approaches to Panamax\ship investment through qualitative interviews with 4 maritime professionals specializing in dry bulk industry. These interviews yield 2 unique approaches to ship investment: 1) asset play 2) ‘buy & time-charter out’. These approaches are subsequently applied to current market conditions i.e. December 2011. Both new and 5-year second hand Panamax ships are examined in each approach. Recommendations concluded vary from one approach to another. Speculator intending to profit from asset play (approach 1) should scrutinize the Panamax market now. Technical analysis suggests both newbuilding and second-hand prices may have hit the bottom. This signals a good entry price for both new and 5-year second-hand Panamax ships. In addition, 5-year second-hand Panamax appears to be a better option for asset play, ceteris paribus. Shipowner, on the other hand, looking for secured but unspectacular profits from charter earnings (approach 2) is likely to be disappointed. Based on the projected 3-year time-charter rates, the calculated figures appear unexciting for both new and 5-year second-hand Panamax ships. This paper seeks to complement the available market reports on the dry bulk industry and provides shipowner with a clearer picture of the overall industry. In future, shipowner may also assess his own position relative to the industry using the methods described in the report and make his own judgment.