Preparation vessels

 In the previous episode, we talked about three ways to prepare a vessel.

They are called shipbuilding, purchasing and chartering.

In this episode, I will go into further details.

I would like to talk about owning and leasing a vessel.

Shipbuilding is to build a new vessel at a shipyard and own it.

Purchasing is to buy an used vessel from Owner and own it.

Leasing is to charter a ship from Owner for a contract period.

We will talk about the breakdown of costs when owning and Leasing a vessel.

Shipbuilding and Purchasing means to own Vessels.

When owned, Vessels are appropriated as a depreciable asset and so the cost of

purchasing Vessels are split by the depreciation period and the depreciation

expenses are calculated.

In addition, ship management costs are needed which consist of maintenance, 

crew, repair and Ship Manager costs. Depreciation expense and

Ship management cost determine Vessel cost.

On the other hand, Leasing is to charter Vessels and its cost will be fixed

during the process of negotiation with Owner. The lease fee is a price index

in Chartering Market and the market price determines Vessel cost.

Today's summary is;

Preparation of Vessels consists of 3 ways, they are shipbuilding, purchasing,

and chartering.Shipbuilding and Purchasing means to own a Vessel. The cost of

an owned vessel is depreciation expense and Ship management costs. 

Leasing means to charter Vessel and the Charter Hire is Market Price in Chartering Market. 

In general, when comparing Vessel cost, Owning is cheaper than Chartering. 

Because the owner's profit is always added to the leasing fee. 

But in terms of risksbetween Owning and Chartering, Chartering is less risky.

Because if cargo volume decreases, the Charterer can return the vessel to Owner flexibly.