Despite the large number of vessels changing hand since the start of the year, investment activity in the shipping market is lower than the past year, amid a challenging financing environment and the global economic uncertainty. According to a report from Piraeus-based shipbroker Golden Destiny, secondhand purchases of ships fell 27 percent in the third quarter, compared to the previous quarter, while a decline of 24% was noted in the newbuilding ordering activity, while an additional 23 vessels were sold for scrap. “Overall, 840 vessels of total deadweight around 40million tons changed hands, 1305 vessels of 78million tons ordered and 640 vessels of 29million tons scrapped, during the period January – September of the year. The enormous newbuilding tonnage under construction for delivery in the forthcoming two years jeopardizes the prosperity of shipping players, as the deadweight sent for disposal is only 37% of the total deadweight ordered” said Golden Destiny.
In terms of the presence of Hellenic ship owners, the third quarter of the year ended with weaker investment plans in the secondhand market by Greek shipping players, showing a 24% quarterly decline in terms of vessel acquisitions, due to 42% and 31% downward revision in bulk carriers and tanker purchases. “The expectations for a firmer Hellenic buying activity, from the positive upturn seen in the second quarter of the year, were not confirmed. Hellenic owners increased their buying interest only in the container market by 57% from the previous quarter concluding 11 more vessel purchases. Overall, 125 vessels reported to have gone to Greek hands at a total invested capital of more than $3,1 billion, 7 transactions reported at an undisclosed sale price, posting a 44% decline from the period January – September 2010, when Hellenic players have invested more than $7,4 billion for 222 vessel acquisitions” said Golden Destiny.
Bulk carriers are in the first rankings of Hellenic appetite, by grasping 41% of their total secondhand ship purchasing activity, tankers follow with 27% and containers 22%.
It is difficult to foresee if the investment plans of Hellenic owners will rebound in the fourth quarter. It seems that Hellenic players have lost some of their confidence in the positive outlook of the traditional main shipping segments, bulk carriers, tankers and containers. Their cautiousness could be justified by 54% lower purchases in the bulk carrier, 40% in the tanker and 33% in the container segments from their level of buying activity in January – September 2010.
However, Hellenic owners are still outpacing Chinese purchasing plans due to stronger appetite in the tanker and container market with 27 and 25 respectively more vessel acquisitions. Chinese have bought 97 vessels during January-September 2011 at a total invested capital of more than $1 billion, which implies that their interest is still being centered on more vintage tonnage. Their volume of buying activity is down by 22.5% from the Hellenic buying  momentum, but 65% lower from the total invested capital of Greek owners in the shipping market. What is noteworthy is the invested capital of Chinese in the purchasing of bulk carriers, which is region $660 million for 58 total vessel acquisitions in contrast with region $1,37 billion for 51 vessel purchases by Hellenic owners.
Golden Destiny went on to mention that “bulk carriers and tankers appear in the first rankings as the most popular purchase candidates in the secondhand market, with liners and containers to follow and asset prices signaling sharp reductions for larger vessel sizes, especially in the tanker market for crude carriers. Despite a 17% decline in the S&P momentum for bulk carriers during the third quarter, they are still holding the lion share of secondhand ship purchasing activity by grasping 34% share of the total number of vessels changed hands. Overall, 284 bulk carriers reported sold at a total invested capital of more than $5 billion, down by 26% from January-September 2010. It is worth emphasizing that the secondhand ship purchasing activity showed a sharper quarterly decline for the other two main vessel segments, 34% for tankers and 40% for liners.
In the tanker market, 229 vessels have been reported sold, down by 17% from January-September 2010, with the purchasing interest in the crude market being downsized from the dark outlook that looms in the charter market.
In the container market, vessel acquisitions were in a downward trend from the start up of the year with newbuildings being more appealing investment types, but during the third quarter of the year there has been a shift towards more vessel purchases and less ordering. During July – September 2011, the newbuilding activity for boxship units posted a 42% decline from the previous quarter in contrast with a 32% rise in the purchasing of secondhand units. During January-September 2011, 78 container vessels reported sold at a total invested capital of more than $2,1 billion, down by 43% from January – September 2010.
Under the current distressed shipping environment and the worldwide economic turmoil, there are still investment opportunities at attractive asset prices, in the dry and wet market, which support the high volume of invested capital in the secondhand market. Smaller and modern size units seem flexible and profitable types of investments in today’s instability of freight markets for larger size units and the tight financial credit status of many European banks. We still maintain our position that secondhand investments seem to hold lesser risk of exposure than newbuildings, with bulk carriers and tankers being more popular candidates in the secondhand rather in the newbuilding market” concluded Golden Destiny.