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Prospective buyers of secondhand tonnage have had pause for thought this month with prices now getting to the point where the numbers do not necessarily work, especially for modern tonnage with brokers anticipating a much slower second half of the year in the sale and purchase markets. Some big names in shipowning have now started to sell tonnage as prices get closer to perceived peaks. Since the end of 2023, secondhand prices have continued to strengthen across many sectors of shipping. For certain vessel types, such as oil tankers, this trend builds upon sustained value improvements over the last couple of years. Despite inflated prices, the S&P markets remain active. Dry bulk sales in Q1 exceeded recent record quarterly volumes, although container transactions are far below 2021 levels. However, the prices are now far outside the median - data from Gibson (see chart below) shows 10-year-old aframax tankers, for instance, are now costing twice as much as their average of the last 10 years. “We anticipate a softening of resale values for oil tankers, bulkers and containers in the second half of this year as earnings decline, with this trend continuing into next year,” predicted Dr Adam Kent, managing director of UK consultancy Maritime Strategies International (MSI). MSI is forecasting that oil tankers and bulkers will experience a moderation in asset values, while container values will see a sharper decline. Nobody ever went bankrupt from taking profits after a good run “From a pure asset play perspective and based on our outlook, now or the imminent future presents an excellent opportunity for owners to sell tonnage and maximise returns,” Kent told Splash Extra, pointing out that from an asset price cycle perspective, values are considerably higher than the long-term averages. Emanuele Lauro, one of the world’s most famous shipowners, has already started to take profits on his ships. The chairman and CEO of New York-listed Scorpio Tankers (STNG) told Splash Extra he and his team have been trimming the fleet over the past six months. “The market looks like it will remain strong in 2024, and likely into 2025. But from 2026 onwards it becomes more difficult to read. Why would we not sell opportunistically?” Lauro said, adding: “It’s not a bad time to cash in. The market is not as deep or as liquid as people would think, specially if rates correct downwards.” Tim Huxley, chairman of Hong Kong-based Mandarin Shipping, felt that while there still might be some mileage yet in pricing, he advised owners to start considering an exit. “It takes time to sell and it’s better sell into the peak than try and catch a falling knife,” Huxley said. This point of view was shared by Dr Roar Adland, the global head of research for UK broker, SSY. “Nobody ever went bankrupt from taking profits after a good run, so with sentiment and expectations maybe running slightly ahead of fundamentals at this point it's not a bad time to take some money off the table,” Adland said. Many surveyed by Splash Extra felt that current values could still rise so there is still an argument to hold on to tonnage. “The main ethos is to make as much as you can whilst you can and we see there is still a margin to improve,” said Giuseppe Rosano, founder of British broker, Alibra Shipping. One factor keeping owners in the hunt for secondhand tonnage is the extraordinary situation at the world’s busy shipyards. With shipyards booked through to 2027, Dag Kilen, head of research at Norwegian broker Fearnleys, predicted yard prices will hold well, which in turn will influence secondhand prices. Another issue prospective sellers have to grapple with is what to do with all the cash. “It’s an unstable time,” cautioned Dr Martin Stopford, the author of Maritime Economics. “Cashing in is all very well, but what do you do with the cash? Gold is up 20% since February. Ships are an equally good store of value and at least running them does something useful.” For all the latest S&P sentiment turn to our Monthly Broker section.

Owners advised to cash in

Selling tonnage now could be a smart play as prices look close to peaking

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