Booming Secondhand Ship Market Sets Decade-High Prices

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  • In an unexpected surge, secondhand prices for tankers and bulk carriers have reached levels not witnessed in over a decade, with a scramble among owners for available tonnage.
  • Clarksons Research reveals that secondhand tanker prices are currently at a 15-year peak, while secondhand bulk carrier prices are nearing levels last seen after the global financial crisis.
  • The remarkable increase shows secondhand tanker prices surging by 98% since the beginning of 2021, and bulk carriers witnessing an 85% uptick.

Striking Profits and Investment Returns

Clarksons’ analysis showcases the substantial profits that shrewd investors could have amassed in Very Large Crude Carrier (VLCC) investments in recent years. For instance, a five-year-old VLCC bought two years ago, operated in the spot market, and sold today, could have generated an estimated $26 million in earnings after operating expenses and $30 million on the asset play. This translates to a total investment return of $56 million, indicating an impressive 80% return over two years on an initial outlay of $70 million.

Resurgence in Suezmax and Bulker Prices

The last two years have witnessed a remarkable surge in secondhand Suezmax prices, especially since Russia’s full-scale invasion of Ukraine. A five-year-old Suezmax, valued at $47 million in February 2022, now commands approximately $83 million, indicating a substantial increase. The capesize sector in the bulker market has experienced a surge in both prices and sales activity, with five-year-old, 10-year-old, and 15-year-old vessels seeing their values rise by 18%, 27%, and 23%, respectively, the highest levels in the last five years. The vibrant sales market is evident with 55 capesizes changing hands between October 2023 and February 2024.

Kamsarmax Sector and Container Ship Prices

Following the capesize trend, the kamsarmax sector is witnessing rising prices and active sales, driven by limited newbuild deliveries, investor optimism for a long-term rebound in freight rates, and asset diversification. Containership prices, after a significant correction last year, are showing signs of firming, thanks to the Red Sea shipping crisis. Brokers note a strong demand for eco-friendly vessels, with the recent $16 million sale of the 11-year-old, 1,850 TEU Starship Leo as a notable example.

Record-Breaking Year for Ship Sales?

Despite challenges faced by the shipping industry in recent times, the secondhand ship market appears robust. The year 2023 marked the second-highest year for ships changing hands, and early indicators for 2024 suggest a potential breaking of sales and purchase (S&P) records. A staggering 27 million deadweight tons, worth $10 billion, of secondhand tonnage changed hands in January and February 2024, according to Clarksons, hinting at a remarkable start to the year.

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Source: Splash 247