Singapore Shipping Corp

[smile67]

I just simply assume that interest at 4% and loan for new ship at 30 years and 2 old ones at 15 years.

1) EBITDA ( from Nick): US113 x 10.8% = US12.2mil
2) 80mil ship: annual financial cost at 4.63mil
3) 33mil ships: annual financial cost at 2.97mil

still bring in profit of US4.6mil.

The risk is PCTC market condition at 15 years later when all ships need to get new charted contract. But 15 years are already very good and no business can guaranteed so long

[Boon]

Interesting article.

(vested)
________________________________________________________________________________________________________________

The Evolution of the PCTC Cascade

International Shipping News 25/09/2014

Shipping as an industry is used to upsizing as shipowners and charterers forever strive to maximise economies of scale. In the bulk carrier market, for example, contracting of traditional Handymax vessels drifted from being 40-50 k Dwt in size during the 1990s to becoming 50 k+ Dwt Supramaxes in the 2000s, and are now being displaced by 60 k+ Dwt Ultramaxes, and there are countless examples of upsizing across most commercial shipping sectors.

What has set the PCTC sector apart, until now, has been the very clear size limitations defined by the width of the Panama Canal (which sees approximately 800 PCTC transits per year) and the length restrictions in some key Japanese ports (where Japanese exports still account for 28% of global light vehicle deepsea shipments). As a result, the current industry benchmark vessel (6-7 k CEU with 2-4 hoistable decks and 100-150 tonne quarter-ramps) has persevered since it first began to be built in the early 1990s, with limited scope for upsizing. Of course, some owners have opted to build longer ships or lengthen existing ones in order to increase cargo capacity, but these vessels have typically been deployed on non-Japan trades or called at unrestricted ports.

New Dawn for PCTCs

However, the widening of the Panama Canal heralds a new dawn of sorts for the PCTC sector as the shackles of past design constraints are thrown off. Originally scheduled for completion in 2014, the widening of the canal will now be completed in 2016, and owners and shipyards have been quick to seize the opportunity to develop new vessel designs intended to maximise cargo carrying capacity. The fi rst generation of new wide-beam post-Panamax PCTCs already hit the water in 2013 with Hyundai Glovis leading the way, and their emergence throws up some interesting conundrums for the PCTC sector moving forward, particularly as post-Panamax vessels begin to be deployed on the mainlane trades, thereby displacing smaller vessels.

Of course, the capacity cascade is by no means a new phenomenon. The overwhelming preference amongst owners and operators to build and deploy 6-7 k CEU vessels on mainlane...................................

http://www.hellenicshippingnews.com/the-...c-cascade/

[Drizzt]

there aren't much new builds and if you monitor the orders of NYK, whom SSC gets cosy up to in their last ship sirius leader, not just glovis and hoegh, their latest builds are post-Panamax. so the new build is technologically latest. got to save much fuel and more environmentally friendly.

however, would this result in better charter rates? hard for us to know. a advance 7k CEU ship vs a normal 7k CEU ship how much of a premium? does it justify it being so much more expensive?

to put into perspective the 2 second hand pctc are not small at 6.2k CEU.

to be fair, its not like the smaller ships are useless. they are probably good for intra regional shipping.

[Drizzt]

“K” Line Orders Four Wide-Beam Car Carriers

Kawasaki Kisen Kaisha, Ltd. (“K” Line) announced today a signed agreement to build four next-generation car carriers at Japanese yards Shin Kurushima Dockyard Co. Ltd and Japan Marine United Corporation.

Each shipyard will build two vessels with expected deliveries in 2015 and Q1 2016.

“We have spent considerable length of time studying and investigating the most suitable next generation car carrier with shipyards,” notes Yoshiyuki Aoki, Executive Managing Officer, Car Carrier Sector at “K”Line.

“We have appointed two shipyards and are adopting state of the art design in terms of top notch fuel efficiency and flexibility on cargo handling that will be far better than our existing fleet. These vessels will be the widest beam ever built, around 37-38 meters with 7,500-unit capacity. Length of the vessel is kept at 200 meters, considering ability to call at any port.”

“37-38 meter beam has come as a result of a series of simulation tests, exploring both better stability of the vessel and better fuel efficiency at the same time. Thanks to full support from the Shipyard, we are confident that we will have success in optimizing those two factors. These new vessels will be equipped with “CAUL” to mitigate wind pressure for optimum fuel consumption. Another technical point being addressed with these new ships is cargo loading equipment inside of the cargo hold and loading ramp as well in order to be best suited for not only passenger cars but also other RORO cargoes.”

“These four ships will replace existing aged tonnage. It is our estimation that the car transport market and RORO cargo market will steadily grow, so we will continue to develop our fleet to deliver value added efficiency and capability of handling an even wider variety of cargo mix to assure our services successfully meet the needs of our valued customers,” Aoki added.

http://gcaptain.com/k-line-orders-wide-bea-carriers/

[Drizzt]

NYK to Build Four New Pure Car and Truck Carriers

http://www.nyk.com/english/release/1964/NE_121015.html

October 15, 2012

NYK has decided to build four next-generation type PCTCs (Pure Car and Truck Carrier). Two of the vessels will be built by Imabari Shipbuilding Co. Ltd. at its factory in Marugame city in Kagawa prefecture with technical assistance being provided by Mitsubishi Heavy Industries Ltd. The other two vessels will be built by Shin Kurushima Dockyard Co. Ltd. at its Onishi Shipyard in Ehime prefecture. All four vessels are scheduled to be completed from 2014 to 2015.

These new vessels are part of the investment plan contained in NYK’s medium-term management plan "More Than Shipping 2013" and will be the first PCTCs decided to build by the company since the collapse of Lehman Brothers in 2008.

NYK expects the worldwide demand for PCTC transport to steadily expand, and these four new vessels will be the Post-Panamax vessels capable of transiting the Panama Canal when the third lane of locks, larger than the current two, becomes operational in the autumn of 2014.

These new vessels will be 2–3 meters wider than current PCTCs and will be equipped with the latest energy-saving technology, improving fuel performance by about 30 percent per unit.

NYK will continue its effort to offer advanced vessels to customers by working positively to develop new designs, improve quality, and emphasize environmental consciousness.

--Vessel Particulars

Length Overall: Less than 200 meters
Breadth: 35–36 meters
Total Car Capacity: About 7,000 units
Ramp Capacity: Stern ramp, 150 tons; Center ramp, 20 tons

[Boon]

Another interesting article which gives many interestinig insights on the PCTC business/industry including

" ........... as of August, a confirmed order book of 63 vessels for delivery from 2014 through 2017 - 72% of the current order book is Post-Panamax tonnage.................

(vested)
________________________________________________________________________________________________________________

Communication and transparency key to successful partnership

Dale Goetz has responsibility for the Ford key account for Höegh Autoliners. He shared his views on the industry with Sam Ogle.

Oct 15, 2014

........................According to Goetz, the order book is still “sober” with a current (as of the beginning of August) global trading PCTC fleet of 712 vessels and a confirmed order book of 63 vessels for delivery from 2014 through 2017. 72% of the current order book is Post-Panamax tonnage. This should reflect a somewhat balanced supply/demand situation in the years to come if demand develops as planned.

“In Höegh Autoliners we have this year taken delivery of two new vessels; the 6,500 CEU Höegh Jacksonville and Höegh Jeddah,” says Goetz. “These new additions will be capped off with the highly-anticipated Post-Panamax new Horizon Class vessels currently on order. These vessels will be delivered over the 2015-2016 timeframe and will be the world’s largest PCTCs, each equipped with a car-carrying capacity of 8,500 CEU’s.”.........................................

http://www.automotivesupplychain.org/fea...rtnership/

[Boon]

Gearing would not be as bad (or as high) as many have thought as the delivery of the new vessel would not happen until about 2 to 4 years from now.

By then:
1) More cash (equity) would have been generated to fund the purchase of new vessel – hence less debt needed.
2) Debt A (to fund the purchase of MV Boheme + Sirius) would have been paid down to about 9 m (in 2 years) and fully paid off (in 4 years)
3) Debt B ( to fund the purchase of 2 x PCTC vessels) would have been paid down to 75% ( in 2 years) and 50% (in 4 years) – assuming equal monthly/yearly principal repayments over 8 years – similar to that of Boheme + Sirius.
4) Overall, gearing = total debt / total asset value , would still be less than 70%, I reckon.

(vested)

[Nick]

Gearing would not be as bad (or as high) as many have thought as the delivery of the new vessel would not happen until about 2 to 4 years from now.

By then:
1) More cash (equity) would have been generated to fund the purchase of new vessel – hence less debt needed.
2) Debt A (to fund the purchase of MV Boheme + Sirius) would have been paid down to about 9 m (in 2 years) and fully paid off (in 4 years)
3) Debt B ( to fund the purchase of 2 x PCTC vessels) would have been paid down to 75% ( in 2 years) and 50% (in 4 years) – assuming equal monthly/yearly principal repayments over 8 years – similar to that of Boheme + Sirius.
4) Overall, gearing = total debt / total asset value , would still be less than 70%, I reckon.

(vested)

Not necessarily true. If we are acquiring existing shipbuilding contracts, delivery of the vessel could take place in the coming months. Without information from the Management, it's hard to be certain when the delivery is.

In any case, the debt is secured by a bond-like income stream. I don't imagine why it will be difficult financing this deal when Shipping MLPs in the US are trading at higher gearing.

[greengiraffe]

Gearing would not be as bad (or as high) as many have thought as the delivery of the new vessel would not happen until about 2 to 4 years from now.

By then:
1) More cash (equity) would have been generated to fund the purchase of new vessel – hence less debt needed.
2) Debt A (to fund the purchase of MV Boheme + Sirius) would have been paid down to about 9 m (in 2 years) and fully paid off (in 4 years)
3) Debt B ( to fund the purchase of 2 x PCTC vessels) would have been paid down to 75% ( in 2 years) and 50% (in 4 years) – assuming equal monthly/yearly principal repayments over 8 years – similar to that of Boheme + Sirius.
4) Overall, gearing = total debt / total asset value , would still be less than 70%, I reckon.

(vested)

Not necessarily true. If we are acquiring existing shipbuilding contracts, delivery of the vessel could take place in the coming months. Without information from the Management, it's hard to be certain when the delivery is.

In any case, the debt is secured by a bond-like income stream. I don't imagine why it will be difficult financing this deal when Shipping MLPs in the US are trading at higher gearing.

Hi Nick,

Good speculation on your part - not that we encourage speculation but looking at things differently, what u mention is a good possibility as well.

Anyway, Ow is not a SorChai... for him to gear SP Ship to position for a new lease of life is eye opening. It has been 6-7 long years since Ow liquidated the boom & bust bulk shipping sector and for him to continue SP Ship's track record in a new but related form - there must be good reasons.

POISED FOR GROWTH is the theme for the latest annual report.

In Ows We Trust
Vested
Minor Core
GG

[Contrarian]

If SSC's RORO new ship is built for the Japanese carriers, then

1. RORO carriers seem to needing new fleet because of environmental concerns, ageing and bigger capacity

2. The loan will likely be borrowed from the Japanese bank. If this is the case, will be interesting to know if the loan is Yen. Make sense to borrow in depreciating currency right, and collect charter revenue in USD? Got so good deal like that?

NYK to Build Four New Pure Car and Truck Carriers

http://www.nyk.com/english/release/1964/NE_121015.html

October 15, 2012

NYK has decided to build four next-generation type PCTCs (Pure Car and Truck Carrier). Two of the vessels will be built by Imabari Shipbuilding Co. Ltd. at its factory in Marugame city in Kagawa prefecture with technical assistance being provided by Mitsubishi Heavy Industries Ltd. The other two vessels will be built by Shin Kurushima Dockyard Co. Ltd. at its Onishi Shipyard in Ehime prefecture. All four vessels are scheduled to be completed from 2014 to 2015.

These new vessels are part of the investment plan contained in NYK’s medium-term management plan "More Than Shipping 2013" and will be the first PCTCs decided to build by the company since the collapse of Lehman Brothers in 2008.

NYK expects the worldwide demand for PCTC transport to steadily expand, and these four new vessels will be the Post-Panamax vessels capable of transiting the Panama Canal when the third lane of locks, larger than the current two, becomes operational in the autumn of 2014.

These new vessels will be 2–3 meters wider than current PCTCs and will be equipped with the latest energy-saving technology, improving fuel performance by about 30 percent per unit.

NYK will continue its effort to offer advanced vessels to customers by working positively to develop new designs, improve quality, and emphasize environmental consciousness.

--Vessel Particulars

Length Overall: Less than 200 meters
Breadth: 35–36 meters
Total Car Capacity: About 7,000 units
Ramp Capacity: Stern ramp, 150 tons; Center ramp, 20 tons