Obsolete or sacrificed?

Malcolm Latarche
Malcolm Latarche

25 November 2016


Yesterday it was reported that the 2009 built India Rickmers, a 4,250teu Panamax boxship has become the youngest ever operational container ship sold for scrap. There has been a lot of conjecture about the vessel being obsolete now that the Panama Canal can accommodate much larger vessels but while there may be some truth in that, the main reason probably has much more to do with the financial situation of the owner. According to reports from Vessel Values, India Rickmers is valued just above scrap at USD 5.87m. In 2016 the vessel fell 62% in value. Arguably this fall can be attributed to the fact that until earlier this year the vessel was chartered out to the now failed Korean operator Hanjin. Whether the ship’s charter ended and was not renewed or whether the owner was obliged to withdraw it for non-payment of hire is not known. Regardless of the reason the operator has probably not been able to match the hire rate the ship had previously enjoyed. The owner of the vessel – Singapore-based Rickmers Maritime Trust – was reported earlier this week to be unable to pay loan instalments of over USD 4m so it would be no surprise if, as a means to make payment, an asset was sold at fire sale prices. It is quite likely that Rickmers also gained a little more than the scrap value since the company operates a whole series of sister ships and any spare parts and stores on board will probably have been distributed to the other ships in the fleet. It is somewhat ironic that the ship chosen has another connection with a desperate last minute sale. When operating for Hanjin the ship was re-named Hanjin Newport. When the Korean operator began experiencing its own financial troubles one of its first attempts to raise extra cash was to sell half of its stake in the Newport container terminal it operated in Pusan. A year ago, Hanjin was obliged to offload the remaining stake in a vain bid to save its shipping operations.