How To Sell?

This article is written, in order to guide the ship owners who, want to sell their scrap ships for recycling.  The information regarding the scrap ship sales has been categorized in three topics as follows;

1 - Get To Know Your Ship.
2 - Your ship's delivery location and condition.
3 - Pricing Strategy - to determine the correct price and Buyer.

1 - Get To Know Your Ship

To get the most accurate price; First you should give the buyer information about your ship, true and correct in a right way.  You may start the work by determining the light weight of your ship and provide the potential buyers with the solid proofs

The ship's Trim & Stability booklet is one of the most reliable documents showing the empty weight of the ship. We recommend you to scan the relevant papers of approved last version by Class and submit then to the buyer.

In bidding, the Ship Recycling directors take some important details into account such as the ship’s wastage- loss rate, potential corrosion rate and non-ferrous metal amount in the ship.

Wastage-Loss Rate;
It is related to the ship’s type. The waste – loss rate is evaluated as high as much as the number of accessories/ sections in your ship without metal. As an example, “Refrigerated Cargo” ships take part in the highest waste-loss rate ships because of the sheer number of cooling insulation materials in the cargo hold of these ships. The passenger ships also take part in the highest waste-loss rate ships because of too much furniture and insulation material in the passenger cabins.

By contrast, container carrier vessels are evaluated in the category of the lowest wastage-loss rate ships because of minimum levels of insulation and corrosion.

Corrosion Rate;
If your ship is laid-up for a long time, probably it means your ship is plenty of rusty.  Particularly the ships in the locations of West Africa, South America will rust faster due to tropical climate conditions.  Loss is bigger as much as rust is higher. For example, the tonnage loss of a ship aged 25-30 is seen between 5-8 % just because of rusting.  Thus adding the wastage of insulation etc to such loss, the average loss of weight of a ship is around 8 – 11%.

The Amount of Non-Ferrous Metal;
The equipment and sections made of some metals such as copper, bronze, aluminum, stainless steel etc. in the ship are called Non-ferrous.  For example; Propeller (s), wiring, Electrical panels, pipelines, Valves, pump systems and special-purpose cargo tanks in some ships etc.

For buyers, it is important to get detailed information and photographs to be guided correctly about the ship.

Contrary to what the Ship-owners think, the ship equipment such as the main engine, generators, separators, etc. do not have much value if they are aged older than 10 years during the dismantling process. 

However, if there is any renewed main engine or generator in your ship within 10 years, you should specify this giving detailed information.

2 - Your ship's delivery location and condition.

The delivery of your ship is the factor that affects the price directly. If your ship is operable and you can deliver it in the place of ship recycling location, the bids to be taken will be rather competitive. However if your ship is unable to operate in the port, you will just receive probably 1 or 2 serious bid(s).  If the empty weight of your ship is under the average of the market (Example:  between 500-2000 LTD), there is possibility that you could get no serious bid.

Briefly, as long as the distance of your ship to dismantling place increases, the bid value and the number of bids that you can get will decrease…

3 - Pricing Strategy - to determine the correct price and Buyer

For the ship that you want to sell, collect the bids when you are ready to sell.  The scrap ship market is rather narrow market and every player knows each other so every time information is exchanged among them anyhow. If you put your ship into sales tenders for several times and you cancel the sales later, you miss the real and serious buyers.  In addition, if you try to sell your ship by offering to several buyers or brokers at the same time, you may waste your time by getting speculative and unreal prices because of ghost buyers.

Requesting the references and the list of last purchased ships of bidder companies will provide you with important tips regarding the current activity status and the seriousness of the potential buyers.

Time to time, some ghost buyers can occur in the market by bidding the prices higher than the average. Such type of buyers can be disappeared at the stage of contract sign and deposit payment by requiring the suspension time depending on the current market conditions. The scrap ship prices are variable.  Serious decrease or increase in prices can be observed within short times in proportional to the scrap prices.  In such cases, to follow up an unserious buyer may cost you a lot…

Rota Shipping - 2015