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This Drewry Review is a timely and invaluable aid for acquisition planning strategies, containing key data and insights into: 

• Key ship type analysis
• Evolution of benchmark freight rates, newbuilding prices and secondhand prices
• Routes to capital
• Ownership rationales
• Operating cost exposures
• Risk issues

Most importantly, the Report provides focus and insight on the drivers of shipping supply and demand, the different sectors of the shipping marketplace and the routes to capital… essential reading for business decision-makers.

Find out more in Desciption or order now…

Section 1.     Executive summary
                       ●    Key conclusions
                       ●    General considerations
                       ●    Ship considerations
                       ●    Report structure

Section 2.     Shipping – setting some context
                       ●    Shipping – the need for a health warning?
                       ●    Shipping – some changes in perspective
                       ●    Shipowners – categories and motivations
                       ●    Service providers/industrial shipowners
                       ●    Asset play/commodity shipowners
                       ●    National fleet shipowners
                       ●    Reluctant shipowners
                       ●    Shipping – a market lacking transparency
                       ●    Fragmentation
                       ●    Ships – anything but a homogenous commodity
                       ●    Differences in standards – and the influence of owner choices
                       ●    Flag state
                       ●    Classification society
                       ●    Maintaining standards – others with influence

Section 3.     Analysing shipping
                       Part 1   Shipping within its wider context
                       ●    The shipping industry and its relationship with wider market cycles
                       ●    Economic cycles
                       ●    Cyclical differences across the industrial sectors
                       ●    Sectors linked more directly to the shipping market
                       ●    The shipbuilding industry
                       ●    The shiprepair industry
                       ●    The ship demolition industry
                       ●    The marine insurance industry
                       ●    The bunker markets
                       ●    The forward markets
                       ●    The ship finance market
                       ●    Changes in customer requirements
                       Part 2   Shipping markets – areas for monitoring and analysis
                       ●    Introduction
                       ●    Market measures and indicators
                       ●    Freight rates
                       ●    Operating expenses
                       ●    Resale value
                       ●    The secondhand – or sale and purchase (S&P) – market
                       ●    The ship demolition market
                       ●    Newbuilding prices and newbuilding order backlogs
                       ●    The forward markets
                       Part 3   Financial analysis methods and tools
                       ●    Approaches to financial analysis
                       ●    Cash flow
                       ●    Capital cost recovery and return on investment
                       ●    Capital cost requirements
                       ●    Payback
                       ●    Net Present Value threshold
                       ●    Return on investment

Section 4.     Understanding shipping
                       ●    Introduction
                       ●    Shipping markets – the critical factors
                       ●    Liquid bulk transportation
                       ●    Crude and products tankers
                       ●    Market segmentation attributable to commercial factors
                       ●    Market segmentation attributable to ship size
                       ●    Demand factors
                       ●    Demand drivers
                       ●    Key trades
                       ●    Size preferences
                       ●    Supply factors
                       ●    Market factors
                       ●    Market outlook and investment considerations
                       ●    Chemical carriers
                       ●    Market segmentation attributable to commercial factors
                       ●    Market segmentation attributable to ship size
                       ●    Demand factors
                       ●    Demand drivers
                       ●    Key trades
                       ●    Size preferences
                       ●    Supply factors
                       ●    Market factors
                       ●    Market outlook and investment considerations
                       ●    Liquefied gas carriers
                       ●    LPG carriers
                       ●    Market segmentation attributable to commercial factors
                       ●    Market segmentation attributable to ship size
                       ●    Demand factors
                       ●    Demand drivers
                       ●    Key trades
                       ●    Size preferences
                       ●    Supply factors
                       ●    Market factors
                       ●    Market outlook and investment considerations
                       ●    LNG carriers
                       ●    Market segmentation attributable to commercial factors
                       ●    Market segmentation attributable to ship size
                       ●    Demand factors
                       ●    Demand drivers
                       ●    Key trades
                       ●    Size preferences
                       ●    Supply factors
                       ●    Market factors
                       ●    Market outlook and investment considerations
                       ●    Dry bulk transportation
                       ●    Bulk carriers
                       ●    Market segmentation attributable to commercial factors
                       ●    Market segmentation attributable to ship size
                       ●    Demand factors
                       ●    Demand drivers
                       ●    Key trades
                       ●    Iron ore
                       ●    Coal
                       ●    Grain
                       ●    Size preferences
                       ●    Supply factors
                       ●    Market factors
                       ●    Market outlook and investment considerations
                       ●    Containerships
                       ●    Market segmentation attributable to commercial factors
                       ●    Market segmentation attributable to ship size
                       ●    Demand factors
                       ●    Demand drivers
                       ●    Key trades
                       ●    Size preferences
                       ●    Supply factors
                       ●    Market factors
                       ●    Market outlook and investment considerations
                       ●    Other ship types
                       ●    Refrigerated cargoships (reefers)
                       ●    Market outlook and investment considerations
                       ●    Vehicle carriers and Ro/Ros
                       ●    Market outlook and investment considerations
                       ●    General cargoships
                       ●    Market outlook and investment considerations
                       ●    Cruise ships
                       ●    Market outlook and investment considerations
                       ●    Offshore
                       ●    Market outlook and investment considerations
                       ●    Others

Section 5.     Ship acquisition – the key processes and procedures
                       ●    Main elements of the acquisition process
                       ●    Acquisition of a newbuilding
                       ●    Acquisition of a secondhand vessel
                       ●    Inspections of (and related to) the vessel
                       ●    Classification society records
                       ●    The superficial inspection
                       ●    Drydocking
                       ●    Finance considerations – processes and procedures 139
                       ●    Satisfying the loan appraisal criteria
                       ●    Basel II
                       ●    Implications for shipowners

Section 6.     Ship finance – the routes to capital
                       ●    Access to capital
                       ●    The debt market
                       ●    Loans
                       ●    Leases
                       ●    The investment or capital markets
                       ●    Issuing equity
                       ●    Issuing bonds
                       ●    Other routes to the capital markets
                       ●    The ‘hybrid’ markets
                       ●    The KG model
                       ●    Singapore Maritime Finance Initiative
                       ●    Others

Section 7.     Ship acquisition and investment – running cost considerations
                       ●    The components of ship costs
                       ●    Ship operating costs
                       ●    Manning
                       ●    Current issues
                       ●    Insurance
                       ●    Current issues
                       ●    Repairs and maintenance
                       ●    Current issues
                       ●    Stores and supplies
                       ●    Current issues
                       ●    Management and administration
                       ●    Current issues
                       ●    Anticipated ship operating cost trends

Section 8.     Industry developments and issues
                       ●    Introduction
                       ●    Islamic finance
                       ●    Risk management
                       ●    Environmental and political issues
                       ●    Ship scrapping
                       ●    Climate change
                       ●    Ballast water management
                       ●    Coatings and anti-foulings
                       ●    Political issues
                       ●    Other considerations
                       ●    Seagoing personnel – is there a crisis?
                       ●    The insurance market
                       ●    Inexperience

Tables

• Key ship types
• Top 10 tanker and containership operators
• Indicative ship variables in the tanker and bulk carrier fleets
• Size evolution of Panamax bulk carriers
• Other IMO conventions
• Full members of IACS
• Banks providing finance to Greek shipping
• Illustrative ‘first pass’ cash flow projection approach
• Indicative annualised capital cost recovery co-efficients
• Tanker fleet and orderbook, mid-2007
• Leading regional seaborne liquid chemical trade flows
• The total chemical carrier fleet
• Total chemical carrier fleet by type/trading status: mid-2007
• Chemical carrier orderbook, mid-2007
• Chemical carrier newbuilding prices
• Chemical carrier secondhand prices
• LPG carrier fleet and orderbook, mid-2007
• LPG carrier secondhand values
• Indicative LPG carrier freight rate projections
• LNG carrier fleet and orderbook, mid-2007
• LNG Carrier newbuilding prices
• Principal commodity constituents of dry bulk trade
• Bulk carrier fleet and orderbook, mid-2007
• Estimated annual container growth by region
• Estimated world container trade by route, 2005
• Trends towards larger containerships
• Containership fleet and orderbook, mid-2007
• Development of secondhand containership prices
• Reefer ship orderbook, mid-2007
• Car Carrier orderbook, mid-2007
• Other Ro/Ro vessel orderbook, mid-2007
• Key lender rights under a ship mortgage agreement
• Supervisory slotting criteria for specialised lending – supervisory rating grades for object finance exposures
• Selected factors in risk assessment/default probability
• Recent trend in shipping IPOs
• Membership of the LL-Bloomberg top 50 shipping index
• Example bunker price variations – 380cSts fuel oil
• ‘White List’ countries
• TF uniform TCC collective agreement rates for OS and AB – 2007 terms
• Sample officer wage rates – mid-2007 conditions – for dry cargo vessels
• Some key areas of risk impacting on shipping

Figures

• GDP growth
• Consumer price inflation
• US dollar parity trends
• Newbuilding price indices
• Peak price indications: 3-25,000 ldt, based on Indian sub-continent and China
• Relative H&M rates
• Average general increases in the P&I market
• Bunker price trends
• Banks involved in international shiplending, 1992-2000
• Overall newbuilding order backlog trends in the main fleet sectors
• Illustrative trends in Panamax bulk carrier values, earnings and operating costs
• Present worth of US$1 at 5%, 10% and 15% continuous discount rate
• Selected indicative annual capital cost co-efficients
• Evolution of seaborne crude and products trades
• Crude oil spot prices: monthly averages
• Major seaborne crude oil flows, 2005
• Evolution of the tanker fleet and orderbook
• Tanker fleet on order
• Tanker fleet age profile
• Projected tanker fleet evolution
• Vlcc rate trend
• Tanker one-year rates
• Tanker newbuilding prices
• Tanker secondhand prices
• Projected tanker supply/demand imbalance and freight rate trend
• Evolution of seaborne liquid chemical trades
• Chemical carrier fleet age profile
• Evolution of transatlantic spot rates for easy chemicals
• Projected chemical carrier supply/demand imbalance and freight rate trend
• Evolution of seaborne LPG, ammonia and petrochemical gas trades
• Evolution of LPG carrier fleet and orderbook
• LPG carrier fleet on order
• LPG carrier fleet – overall age profile
• F/R fleet age profile
• Projected LPG carrier fleet evolution
• Trend in 6-12 month charter rates for LPG carriers
• Evolution of AG-Japan LPG spot rates
• Trend in LPG carrier newbuilding prices
• Evolution of seaborne LNG trade
• LNG fleet development
• LNG fleet age profile
• Combined carrier employment - the 'wet'/'dry' divide, 1972-2007
• Combined carrier employment – changes since 2000
• Evolution of major and minor dry bulk trade
• Evolution of the bulk carrier fleet and orderbook
• Bulk carrier fleet on order
• Dry bulk fleet age profile
• Projected bulk carrier fleet evolution
• Bulk carrier one year time charter rates
• Bulk carrier newbuilding prices
• Bulk carrier secondhand prices
• Projected bulk carrier supply/demand imbalance and freight rate trend
• Carrier owner and non-carrier owner/tramp shares within the
• containership fleet
• Evolution of transhipped container moves
• Evolution of empty container moves
• Evolution of the containership fleet
• Containership fleet age profile
• Trends in nominal global average container revenue
• Trend in containership timecharter rates
• Trend in containership newbuilding prices
• Recent and forecast moves in the Drewry containership global supply/demand index
• Projected trend in containership time charter rates
• Evolution of seaborne reefer trade
• Evolution of the reefer ship fleet
• Age profile of the specialised reefer fleet as at 1st January 2007: 100,000+ cu.ft
• Evolution of reefer freight rates
• Trend in reefer secondhand prices
• Estimated development of global seaborne trade in new vehicles
• Car carrier fleet age profile
• Approximate deployment of cruise ship capacity, 2006
• Key trends in the development of the international cruiseship fleet
• Key elements in the ship acquisition process
• Areas evaluated by a surveyor during the superficial ship inspection
• Elements of loan appraisal criteria
• Trend in 6 month Libor rate on US$
• Indicative trend in spreads
• Evolution of US treasury department 10-year securities rates
• Kommanditgesellschaft (KG) ship financing – organisational and communication chart
• Ship cost and charter type relationships
• Average of 'averages': 2000-2006
• Main stores and supplies budget elements
• Indicative operating cost levels, 2006
• Evolution of total operating costs
• Shipping’s risk spectrum

Not a one size fits all business
 
Drewry’s Ship Acquisition and Finance Annual Review 2007/08  provides important guidance for those embarking on ship acquisition or seeking to assess a proposal to provide finance by setting the context (and a few warnings) about the ever dynamic shipping markets.
 
Ship acquisition and investment strategies (and securing the appropriate financing) are not ‘one size fits all’ exercises. They come down to individual judgements, individual thresholds for returns on investment, good timing and expertise

• Understanding shipping markets
• Shipping markets – areas for monitoring and analysis
• Investment evaluation techniques
• Ship acquisition – key processes and procedures
• Ship finance – routes to capital
• Competition vs. co-operation
• After acquisition – running cost considerations
  

Key shipping market trends for:

• Tankers, chemical carriers, LPG carriers, LNG carriers, bulk carriers, containerships and many other niche shipping sectors
• Including demand, supply and market data
• Key sectoral strengths, weaknesses, opportunities and threats

Key factors
 
Turmoil in the financial markets has prompted questions about the direction of the global economy and how it might impact on the ‘China factor’.

The ship ownership, ship finance and ship investor ranks now contain an important tranche in their workforce with no experience of a bad shipping market. They will need to be able to respond to market realities and not just market sentiment.
 
Expertise comes from understanding shipping’s fundamentals and the influences driving them. It comes from appreciating that the market is fragmented and not transparent but understanding that there are a number of benchmark rates and values that ‘set the market’.

It comes from knowing that individual vessels differ from the benchmark and so each vessel incurs a basis risk. It comes from knowing that sentiment is a potentially dangerous influence. This Review helps to neutralise such notions.
 
Main findings
 
Five years ago the shipping markets started to become bullish and the ship finance sector was talking about shipping being ‘fun again’. This optimism was well judged – and under-estimated - as few initially expected the re-shaping of trade and shipping driven by China would reach the heights that it has. The period has seen large increases in newbuilding prices and soaring secondhand prices.
 
Shipping companies have returned to favour in the equity markets. Mid-2007 saw the financial markets in some turmoil amid talk of a ‘credit crunch’ and, perhaps, worse. Some feel shipping is sufficiently buoyant that it can ride out these problems. Time will tell – but it will prompt many in shipping and ship finance to give a nervous glance to their downside risk.
 
Shipping markets and the China effect
 
The single most important influence of the China effect on shipping markets is that it brought virtually every fleet sector along with it, so pushing the industry towards a cyclical high point. This, in fact, is a very rare coalition of circumstance and one that has swelled the order books of the world’s shipyards.
 
Normally, the shipping markets show some sectors in the ascendancy and others in decline. Current conditions, consequently, could mislead those who are relatively new to ship ownership, investment or finance. Shipping is anything but a homogeneous business.
 
Understanding shipping
 
On the contrary, shipping is fragmented operates in a far from transparent market environment. However, shipping is exposed to virtually the whole panoply of risk factors – including irrational sentiment. Hence, individual judgements have to be made about the acceptability of these risks and the returns and rewards sought. Success can result from good luck. However, most would prefer success to come from sound judgement.
 
Satisfying lender criteria
 
Most ship finance continues to be sourced from the debt market. Lenders will vary in their experience of shipping – and, ultimately, in their willingness to stay with shipping if times get tough. Owners will need to understand and satisfy lenders’ criteria and how these may be reshaped by changes in rules governing the financial sector.
 
However, other routes to funding exist – often sourced from investors with little knowledge of shipping and perhaps no real interest in understanding shipping – but these will expose owners to other, potentially onerous, rules and regulations.
 
Individual merits
 
Drewry does not offer generalised recommendations nor does it suggest that owners or investors should focus on any particular sector of the fleet. Each decision has to stand or fall on its own individual merits – assisted by the experience and expertise of those behind it.
 
Judgements should be sounder if they are backed up with key information alongside an appreciation of shipping and its wider complexities. It is in these areas that this Review underpins informed judgements.

The smart money should be on Drewry’s Ship Acquisition and Finance Annual Review 2007/08 New. Order your copy today…