Investment proposal evaluation for the acquisition of a 2nd-hand 1000 TEU vessel and analysis of the sub-3000 TEU container market

Abstract

A small reference to the history of shipping cycles is first made. Then, international changes in trade and in the containership market are discussed along with the evolution of the size of container vessels and the recent formation of alliances between liner companies. Afterwards, the theoretical background of the four shipping markets is presented and analyzed. An in-depth analysis of the current situation in the various segments of the container market is given where the TC rates, demolition activity, new buildings and second-hand market are presented and compared with previous years. Lastly, an investment proposal is formed for the acquisition of a 1.000 TEU second-hand vessel, partly funded by equity and partly by lending, where three different scenarios (based on TC rates course) are tested against profitability for 5 years of operation of the vessel. The base and high case scenarios demonstrate a satisfying rate of return for the investor, considering the risk undertaken.