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RE: DO YOU KNOW HOW MUCH A CONTAINER SHIP COSTS?
I like where this is going. I wish you could've broke the graphic into layman's terms but that's just me. Clearly others got it since you got 50 other votes. :p
I agree, all this graphic is saying is that the shareholders are protected because they don't invest directly into the operating entity (the vessel itself). They invest in the GmbH (German acronym for Company with Limited Liability).
So it is a, let's say, efficient and low risk way (for them) of getting people to invest in your shipping project if you want to buy a ship and rent it out. There are two key advantages I think:
If you contribute, let's say, 10% of the money to buy the ship (this is called "equity", think of a deposit on a home), you don't have to ask a bank to lend you the full other 90% (would be quite risky for the bank because freight rates - the amount in USD that you get per day for renting out your ship - are notoriously volatile), but not only that, even if you hedge out that risk with forward freight contracts, in other words you lock in your rate - like fixed interest rate on your home - you still have the issue of insurance companies not being willing, or reluctant to say the least, to insure ships that are worth hundreds of millions of dollars. First they are usually not able to judge the risk very well, because they are not specialized at all in shipping. Secondly, the amounts are just too high.
I forgot, but I think it may be included in number one above :-)
I shall edit that one or do another one with another cool graphic OK?
Have a wonderful day, and please ask if you have more questions. I am not an expert, but it is a fascinating industry.
Thanks for the clarification. I have a friend who works govt contracts for naval ships but this is something all together different.
Maybe maybe not! Thanks for stopping by!