Courtesy of Bruce Krasting.
I spoke with a fellow who owns vessels and happens to be be Greek. Some of the business and social/economic threads of our conversation:
He discussed (with some obvious anger) a poor investment he had made two years ago. He purchased a ship for $6Mn. This was a 28 year old vessel (that still had some life) that fell into the (aptly named) category of “Handy Sized” vessels. In the good times (2000-2005), this ship might have gotten charters that earned $15,000 a day versus fixed costs of $8-10K. At that rate the cost of the vessel would be returned in about four years (includes down time and deadheading). Not a bad deal.
It didn’t work out. Cargoes for this vessel now pay a rate that no longer cover fixed costs. Layup times between cargoes has increased. Insurance companies charge more to cover shipments in older vessels; so this ship is shunned for newer ones. The final straw is that the ship needed repairs. A layup of three months, and another $1mn down a rat hole was necessary.