Aframax Tankers and LR1s Among Top Future Investment Opportunities for Shipowners
Predicting the recovery in asset prices involves many factors, and the current strength of spot market returns, or term hire rates are only a part of the story. Value investors still have plenty of opportunities to acquire prime aged assets at a significant discount to their expected future market value.
Tankers offer the most promising investment overall, as most large crude tankers still have significant upside remaining based on an analysis of expected market trends over the next several years. However, opportunities abound in other vessel classes as well.
- Handysize Bulkers – Lagging other bulker segments, but ton mile demand for these units remains on a gradual upwards slope.
- Panamax Container Vessels – The removal of a significant number of older ships has preserved the value of prime age and fuel-efficient vessels.
- LR1 Tankers – The large clean product tanker segment has seen a tough market environment over the past several years due to the large growth in vessel supply.
- Aframax Tankers – Aframaxes have suffered from changes in trade patterns, but remain the workhorses of the crude tanker fleet, and the average age of the fleet on the water remains high. Rates should recover as older units come out of service, preserving the value of a five-year-old ship.
Vessel specific forecasts give a much better view of the expected asset value performance, but the trend in five year old asset values is a good starting point when looking for discounted vessels.