In creating the Freight Market Information for dry cargo indices‚ the Baltic Exchange currently requires its panellists to report their opinions based on the following ship definitions Capesize 172‚000 metric dwt‚ 190‚000 cbm grain‚ gearless Main Components Of A Vessel’s Costs For the purpose of estimating and accounting‚ the expenses of a vessel are usually divided into voyage costs and daily running costs. The former are those expenses which are incurred solely when a vessel is engaged
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1. Assess the demand and supply of the capesize dry bulk industry. What do you expect to happen to demand relative to supply over the next four or five years? Please thoroughly explain and justify. What do you expect to happen to prices over both the short-run and the long-run? According to Ocean Carriers‚ supply and demand of capesizes determined daily hire rates. The demand and supply of capesizes was largely determined by the amount of shipping capacity needed in areas around the world.
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Mar-07 Martha Verity Capesize 158.0 1995 12 gearless $63.0 May-07 Ingenious Capesize 170.0 1996 11 gearless $64.2 Nov-07 Sumihou Capesize 171.1 1996 11 gearless $106.0 Mar-08 Cape Sun Capesize 171.7 1999 9 gearless $135.0 May-08 Bet Performer Capesize 172.1 1997
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Ocean Carriers Assumptions and Methodology Based on an NPV analysis considering multiple scenarios‚ Ocean Carriers should commission the construction of a new capesize carrier in the event they are operating with no corporate tax and chartering the ship for its entire 25 year life. Such is the recommendation assuming the forecasted hire rates and estimated costs are accurate over the long-term. However‚ if Ocean Carriers chooses to adhere to their policy of selling ships at market value
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discount rate of 9%. Your case analysis must address the following specific questions: 1. What factors drive average daily hire rates? Do you expect daily spot hire rates to increase or decrease next year? 2. Should Ms. Linn purchase the $39 million capesize? (NOTE: the answer will depend on your answer to Q3 below.) Evaluate the impact of tax rate on the decision by evaluating two different scenarios: (a) Ocean Carriers is a U.S. firm subject to 35% taxation. (b) Ocean Carriers is located in Hong
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Executive Summary Industry Overview Capesize dry bulk carriers provide shipping services worldwide. Due to their size‚ Capesize carriers must sail around Cape Horn in order to travel between the Atlantic and Pacifica Oceans – the ships are too large to utilize the Panama Canal. In January 2001‚ there were 553 capesize vessels in service throughout the world. Demand for dry bulk carriers is determined by the world economy. Over 85% of the capesize vessels are used for shipping iron ore and
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REPORT ON CAPESIZE PURCHASE FOR OCEAN CARRIERS Introduction The purpose of this report is to evaluate whether Ocean Carriers Inc. should immediately commission a new capesize carrier that would cost $39 million‚ and would be completed two years hence‚ in order to finalize a lease of the ship for a three-year period with a potential charterer in very good faith. The contrasting tax regulations between the two countries where the company locates its office‚ and the different cost-benefit circumstances
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May 2008 BDI touched 11‚793 before suffering a major setback by fall to lowest 663 (4th quarter 2008) In 2007‚ around 5million dwt was ordered in newbuildings. Dry bulk carriers saw major price hikes for both new and old tonnages. Orders for Capesize newbuildings were 87% of the existing fleet. VLOC boomed‚ with 65 more ordered‚ twice that of the existing fleet. New bulkers saw order books grow from 90 million dwt to 240 million dwt . World iron ore exports increased by 8.1% in 2007(6.1% in
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over the next two years. Since that 85% of the cargo carried by the ship is iron and coal‚ we are able to conclude that the demand will stay at a similar level of 2000. Based on the supply and demand outlook‚ we can assume that the hire rate for capesizes will most likely decrease‚ while the supply of shipping capacity is likely to increase and demand will be stagnate. 2. As mentioned above‚ the daily hire rates are influenced and determined by the supply and demand. The number of ships available
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Carriers uses a 9% discount rate. 1) Do you expect daily spot hire rates to increase or decrease next year? (5 points) 2) What factors drive daily hire rates? (5 points) 3) How would you characterize the long-term prospects of the capesize dry bulk industry? (10 points) 4) Should Ms Linn purchase the $39M capsize? Make 2 different assumptions. First‚ assume that Ocean Carriers is a US firm subject to 35% taxation. Second‚ assume that Ocean Carriers is located in Hong Kong‚ where
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