Buy a Ship and Start a Shipping Company?

[Morgan]

This is a little off the wall, but has anyone purchased a merchant ship or know anyone who has purchased a ship? Not raised money from investors and started a company, but actually one dude buying a boat and building a fleet? There are tons of ships for sale, tons of boat tracking (this is very cool) and good news sites. Sometimes things aren't very transparent and data can be hard to find or must be manually created from different sources.

 

MSC was started in 1970 with a guy and one boat and now is the largest shipping company on the planet (I think). Net income is estimated to be $36b in 2022. Massive private company. 

 

For the last 5 years or so, the shipping industry has been (I think) abnormally profitable and the prices of used ships have gone up as well. So now it is not the time to jump in, but it is fun to learn. The most important aspect, like real estate, is getting in a good price. Once the cost structure is in place, it's not changing for a long, long time.

 

Shipping news:

https://www.joc.com/maritime

https://www.tradewindsnews.com/

 

Ship tracking:

https://www.vesselfinder.com/

https://www.marinetraffic.com/en/ais/home/centerx:96.4/centery:16.4/zoom:11

 

Ships for sale:

https://www.nautisnp.com/ - lots of ships for sale

There are also vessel brokers.

 

Other Issues:

- Ships seem to have a fairly steep decline in value as they age. I've read that ships generally are retired at around the 20 year mark unless there is strong demand, like there is now.

- Changing requirements for greener fuels. What happens if you buy a ship and the laws change and it needs a new engine? Ouch.

- Inspections over time and at various ports. I read the entire ship needs to be inspected, all the welds, mechanical, electrical at various periods of its life. I really don't know the regulations for this.

 

Small sample of pricing data sorted by Cost per TEU:

 

Here is a sample of a ship for sale from the list above. YC Barrier. From the pricing data, it is not at the bottom for $ / TEU, but it is at the bottom for $ / TEU / Age at $174, indicating it is near the end of its life.

Listing: https://www.nautisnp.com/container-ships/geared/23361

Tracking : https://www.marinetraffic.com/en/ais/details/ships/shipid:300164/mmsi:352003979/imo:9151917/vessel:YC_BARRIER - check out the photos over the years to see the degradation of the ship.

 

 

Anyways, I just wanted to share and get any input anyone has info on the small one guy shipping industry.

 

Thanks!

[Longnose]

No experience buying ships. 

 

https://www.amazon.com/Shipping-Man-Matthew-McCleery/dp/0983716307

This is a fictional story but was a good inside look into how the shipping industry works.  and if you chose to embark on the journey I would love to know how much it parallels this story. 

[Morgan]

I'll add more:

 

How do you make sure your ship isn't used to smuggle drugs? I assume the ship is confiscated after this?

https://www.marinetraffic.com/en/maritime-news/15/maritime-security/2024/11702/largest-cocaine-bust-yet-worth-dollar250-million-made-in-the

 

Battery powered ship - this is kinda cool

https://www.marinetraffic.com/en/maritime-news/17/container-shipping/2024/9439/cosco-welcomes-new-electric-containerships-for-yangtze-river

 

MSC is huge

https://www.marinetraffic.com/en/maritime-news/17/container-shipping/2024/553/msc-set-to-cross-the-5m-teu-capacity-mark

[Morgan]

Thanks @Longnose! I haven't read that book, but I should.

 

I'll add these two books as well. They've been discussed on the board before.

 

Dynasties of the Sea:

https://www.amazon.com/dp/0983716331?_encoding=UTF8&pd_rd_w=ftcyq&content-id=amzn1.sym.7d2923e8-7496-46a5-862d-8ef28e908025&pf_rd_p=7d2923e8-7496-46a5-862d-8ef28e908025&pf_rd_r=Q9NAB426J42S73QJFY7N&pd_rd_wg=YcEqN&pd_rd_r=f2ca9bbd-c5b2-4b02-b452-b7fb2966e37f

 

Maritime Economics:

https://www.amazon.com/Maritime-Economics-3e-Martin-Stopford/dp/041527558X/130-0621233-9779564?pd_rd_r=f2ca9bbd-c5b2-4b02-b452-b7fb2966e37f&pd_rd_wg=YcEqN&pd_rd_w=UEPJZ&pd_rd_i=041527558X&psc=1

 

[DooDiligence]

Anything that involves deep sea transport is extremely capital intensive even when business is bad.

 

This is not the same kind of shipping company you're talking about, but these guys have built an impressive fleet of multi-disciplinary service vessels (mostly oilfield). They own multiple US and international shipyards and loading facilities. They also engineer and build high tech proprietary marine products like ROV's and dynamic positioning systems.

 

https://oceantic.org/the-gulf-effect-how-legacy-shipbuilder-edison-chouest-made-u-s-offshore-wind-history/

 

Edison Chouest, the father of the Cajun Navy

[Morgan]

2 hours ago, DooDiligence said:

Anything that involves deep sea transport is extremely capital intensive even when business is bad.

 

This is not the same kind of shipping company you're talking about, but these guys have built an impressive fleet of multi-disciplinary service vessels (mostly oilfield). They own multiple US and international shipyards and loading facilities. They also engineer and build high tech proprietary marine products like ROV's and dynamic positioning systems.

 

https://oceantic.org/the-gulf-effect-how-legacy-shipbuilder-edison-chouest-made-u-s-offshore-wind-history/

 

Edison Chouest, the father of the Cajun Navy

 

Yes agreed. It is sort of similar to apartment buildings. They always need work, especially if they're empty. A major difference with apartments, is after 15-20 years the mortgage is paid off and you still have a rentable building. After 20 years the boat is most likely a rust bucket.

 

Thank you for sharing about Chouest. I'll read up on them.

[Longnose]

The book i mentioned "the shipping man" I read it several years ago after listening to Monish talk about an investment in some shipping company he claimed to have made a bunch of money on. I remember mohnish talking about how the shipping industry is pretty close to the commercial real estate business. Major boom and busts the product (ships and sky scraper sized commercial real estate) take year to deliver and projects only get entered into the pipe when the economics are booming. The people who are really good at the business are the ones who know how to buy and sell when the values are right. There are tons of people who get fleeced on thinking they are getting a deal and are really just the patsy in global game of poker. In the book the character makes a mentor friend who helps him navigate this and learn the rules of the shipping game early in his endeavor. 

[Stuart D]

37 minutes ago, Longnose said:

The book i mentioned "the shipping man" I read it several years ago after listening to Monish talk about an investment in some shipping company he claimed to have made a bunch of money on. I remember mohnish talking about how the shipping industry is pretty close to the commercial real estate business. Major boom and busts the product (ships and sky scraper sized commercial real estate) take year to deliver and projects only get entered into the pipe when the economics are booming. The people who are really good at the business are the ones who know how to buy and sell when the values are right. There are tons of people who get fleeced on thinking they are getting a deal and are really just the patsy in global game of poker. In the book the character makes a mentor friend who helps him navigate this and learn the rules of the shipping game early in his endeavor. 

It’s a fun book. The sequel was also good from memory (though it’s probably been ~5+ years since I read them).