by Nick Owens, Director, Idwal Marine
Baltic Exchange member Idwal Marine warns that in a time of rising markets, your potential investment might not be as well maintained as you might have hoped.
Last month the BDI (Baltic Dry Index) reached a three year high of 1588, showing long-awaited signs that the market is on the road to recovery. Here at Idwal, we have also witnessed a similar upward trend, in the form of a surge in ship inspection requests. While the most significant increasing in requests has come from banks and lenders, we are also seeing the number of enquiries from owners and operators, brokers and charterers rise significantly, too.
This renewed interest in maritime investments worldwide can be seen as a reflection of the generally more positive sentiment in the shipping market, as we near a decade since the financial collapse of 2008. This is a welcome development, of course, but it is important that we all remain cognisant of the risk of returning to an unhinged trading and financing environment that spurred the financial collapse in the first place.
At times like this, ship inspections provide a critical service to the shipping industry.
At times like this, ship inspections provide a critical service to the shipping industry. Inspections ensure that vessels are fairly traded, financially viable assets that can offer a return on investment. Inspections are also an essential way to ensure that vessels are built, maintained and operated safely and efficiently for all who have a stake in them. However, for several years now, thanks largely to sustained low freight rates and a restricted lending environment – many vessels have been pushed to their operational limits. Routine maintenance and inspection may well have been sacrificed to the detriment and health of the vessel, particularly for segments that have had to stretch their maintenance budgets to the bare minimum – bulk vessels being a fair example of this. The likelihood of there being complex mechanical issues lying dormant is now much higher.
In today’s highly competitive S&P and chartering markets, it is so important that all parties with an interest in a vessel, whether a shipbroker, charterer, owner, ship manager or finance lender have the right tools at their disposal to make informed judgements on the condition of the ship, in order to mitigate risk. And this is the ship inspector comes in. To ensure that the situation is fair for all involved in the transaction, and to show that decisions have been based on empirical evidence and facts.
In recent years, there has been a cultural shift within the maritime industry with increased transparency and accountability now becoming the norm, from how vessels are operated to how they are traded. To ensure this, each party should have a comprehensive understanding of the current monetary value of the asset and also a clear picture of its ability to perform now and in future. They also need to have a clear and objective view of any likely high cost capital requirements that might be just around the corner. Vessel inspections are intended to provide this impartial assessment and advice.
For an S&P broker, being able to find a reliable inspector at a moment’s notice can allow them to get a head start in a fast-moving market. An owner working to secure a charter on the spot market, being able to quickly determine the operational condition and financial value of a ship is critical to making sound business decisions.
What sets Idwal Marine aside from our competitors is that our clients have access to a global network of hundreds of independent ISO:9001 accredited inspectors who can be deployed at any time. For an S&P broker, being able to find a reliable inspector at a moment’s notice can allow them to get a head start in a fast-moving market. An owner working to secure a charter on the spot market, being able to quickly determine the operational condition and financial value of a ship is critical to making sound business decisions.
We work hard to ensure that our technical reports – which can be highly complex – are easy to understand without being light on detail. A service which is particularly valuable to market players who do not have a technical background and for newcomers without shipping industry experience, but who are charged with making high-stakes decisions about the value of an asset.
We also recognise that ship inspection services are an important tool for decision making – but admittedly, they can be a cumbersome read. It is our job to provide an impartial assessment and digestible advice; to be pragmatic, practical and persistent in our efforts to provide accurate information that is fair to all parties involved. This is why we work hard to translate the findings of any ship inspection to give a clear and concise overview with supporting evidence.
Ultimately, while we are an external service provider, we understand that traders and brokers face considerable pressure to make decisions within a very fast-paced market. All inspection services providers should do all that they can to alleviate this pressure, provide clarity and help to reduce risk. This way, we can avoid returning to the risky trading environment and practices across the industry that led to the bursting of the shipping bubble some ten years back.
Idwal Marine is a global ship inspection service provider headquartered in Cardiff with offices in London, Shanghai and Manila, providing support throughout Asia. Idwal’ s network of ISO accredited inspectors’ provide inspections on a wide range of vessel types from bulk carriers to offshore vessels. Visit www.inspectmyship.com for more.