Assist investment decisions in “next generation” vessels

Background

• A dynamic container shipping line wanted to invest in a new fleet of 14,000 and 18,000teu containerships. These were generally much larger than its current vessels and some were of a new design for the shipping industry.
• Before lending, the banks require an independent assessment of the financial viability, competitive position and likely deployment and risks of such large ships.

Objectives

Drewry proposed to provide an independent assessment of these new vessels including the following deliverables:

• A measure of scale economies in liner shipping
• A benchmark of the proposed vessels against competing vessels in terms of: fuel consumption and environmental features, speed, operating costs, ownership cost, projected round voyage costs and comparison with 8,000, 10,000, 12,000, 13,000, 14,000 and 16,000teu vessels
• Deployment options: identifying suitable trade routes and ports
• Charter rates and residual value
• Risks

Drewry Approach

Drewry carried out the assessment as a desk study, using key ship design data and its extensive research databases about:

• Historical changes in ship sizes by trade route
• Fuel cost and fuel consumption benchmarks
• Charter rates by ship size

Result achieved

Our report was able to convince the shipping line’s financial institutions and investors to order the new generation of vessels which allowed it to keep pace with and remain a valuable partner in the mega alliances on the East-West trades.