Shopping, dontcha love it? The thrill of bargain hunting in twee shops and finding the perfect present. Shopping malls. Aren't they just the pits, though? The same old shops with the same mass produced stuff. Shopping, dontcha just hate it? As Private Eye's Glenda Slagg might have put it, it's a neat summary of people's experiences at this time of year. For ship owners the problem is even more fraught. After all, a ship may not be for life but it's usually more than just for Christmas.

Busy Year for Buyers
So just what have ship owners been getting up to in their shopping this year? Surprisingly, given the straitened times in which we live, buyers have been pretty active. As our brokers put it last week… there is an unusual yet reassuringly high level of activity for this time of the year.
With still a couple of (albeit very likely quiet) weeks of the year to go, the volume of reported second-hand sales this year is already 10% higher in numbers than last year and over 6% higher in dwt terms at 53.8m dwt. This is a volume of activity higher than anything prior to the boom years of 2003-07 and only surpassed since in 2010. In contrast, the purchase of newbuildings is down by over 50% and is at its lowest level since 1998. Overall that’s the lowest level of investment in ships since 2001.

Bang for Buck?
Values of second-hand sales are down, by around 35% on average this year and in total by around 30%, but then so are owners earnings. Despite this the value of transactions is still greater than before the 2003-07 boom. However, while buyers have been getting good bang for their buck, sellers have been losing out. The value of transactions is the lowest since 2003 and the average value of sales, already 65% below the peak level in 2008, is heading for pre-boom levels. The ghost of Christmas past could be coming to haunt Christmas future.

Bargain Bulkers Buck Trend
Perhaps not surprisingly it is bulk carriers, for which earnings have taken the biggest battering, that are bucking the trend in the second-hand market. Prices are at bargain levels, down 29% on average from last year and 73% (more than other ship type) from their peak in 2008.
This incentive for buyers has pushed the volume of bulk carrier sales up by 43% this year to almost 31m dwt. In contrast volumes for tankers and other vessels are down by 22%. As a result the value of second-hand bulk carrier transactions has increased by 1%, a far cry from the decline of 40% for tankers and 50% for other ship types.

Good Buy 2012?
So, it's been a busy year for buying ships with bulkers as the bargain buy of the year. But how good have this year’s investments been? Earnings are at rock bottom levels and values are heading down as well. Will this year's Christmas purchase still be in the same hands this time next year? Only if we have a good 2013!