What you never knew about ships
Ever dreamed of owning a ship? I have!
What factors that impact decisions related to the KG model of ship finance?
CHARTER LENGTH
The Length of the Time Period of a Charter has a major influence on the viability of a vessel investment. Shipowners who have long charter agreements in place with well-known shippers have a significant advantage when it comes to finding capital for their investment.
They can show banks that their repayments will be done regularly. Banks find this important.
Many institutions are probably still haunted by the recession of the 1980's that was caused by over-extension of loans to shipowners.
On the other hand, short time periods may be beneficial when a shipowner wants to be flexible. This may help him to speculate on market developments.
Hedge funds who follow arbitrage strategies often operate exclusively with short-term agreements precisely for this reason. It gives them room to adjust to rapidly changing market conditions and, in some cases, to hire ships themselves and then exploit the differences in the futures and spot markets.
Very good insights about ship...good post...thanks for sharing this
Thank you. Are you also a ship fan?
This post has been ranked within the top 50 most undervalued posts in the first half of Sep 20. We estimate that this post is undervalued by $19.19 as compared to a scenario in which every voter had an equal say.
See the full rankings and details in The Daily Tribune: Sep 20 - Part I. You can also read about some of our methodology, data analysis and technical details in our initial post.
If you are the author and would prefer not to receive these comments, simply reply "Stop" to this comment.