Shipping Quintet Grows Fleet Value by USD 5 Bn in a Year

Transocean Inc, Euronav, GasLog Ltd, Costamare and Star Bulk Carriers have seen a combined fleet value growth of nearly USD 5 billion over the past 12 months, according to data provided by VesselsValue.

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The biggest buyer in 2018 of second hand vessels is the Greek company Star Bulk Carriers. The vessels involved in the 2018 transactions were valued at just under USD 1 billion on the day of sale. Star Bulk have acquired vessels from a variety of sources, including six Capesize bulkers in a part share and part cash deal from ER Schiffahrt, 15 more bulkers from Songa Bulk with USD 145 million cash plus 13.7 million shares, three Capesizes from Oceanbulk for 3.4 million shares, six Panamax and Post Panamaxes from Augustea Group in a debt and shares deal and another six from ABY Group Holding at the start of the year in another part debt, part shares deal.

Euronav’s acquisition of Gener8 is a great example of the power of a large listed company to make a counter cyclical market play. This boosted the market share of Euronav significantly in the VLCC market space.

The year saw Transocean Inc cement itself as the top publicly listed shipping company. This is due in part to the recent acquisition of George Economou’s Ocean Rig with its two harsh environment semisubmersibles and nine ultra deepwater high specification drillships, plus two more of the latter currently under construction.

“The normal trend in markets is for established participants, or survivors, to lock up market share when in a down cycle as smaller transient players leave the space. Once the markets recover, those with large market share will receive an outsized reward,” VesselsValue’s Senior Analyst, Court Smith, explained.

“Cashflow volatility is always an issue. Investment funds often seek these markets to add upside potential to their portfolio, but the fundamental issue is that shipping requires patience in order to reap profits, and many market participants have a very short return on investment timeline.”

Smith further informed that next year is expected to bring more consolidation and more mergers.

Shipping has faced another challenging year as excess yard capacity and the resulting surplus of ships has continued to weigh on spot and term market rates. However, green shoots are appearing, and several long term trends are developing that will reward those with the tenacity to stay in the shipping markets, VesselsValue concluded.

Image Courtesy: VesselsValue