The days when owners could run their vessels literally until they would run no more appear to be seriously on the wane, because it is now much harder to get bunkers for older vessels.

How long can smaller, less well-known owners, especially ones with only one ship, continue to run their grand and less than grand old ladies?

Older tonnage is a relative term of course. 1995 is old for a container ship, 1985 is positively geriatric for a bulker, whilst 1975 is not that old for a livestock carrier or LNG tanker. A 1965 bunker barge is still flushed with youth, comparatively speaking. Bunker companies are now, as a result of a number of losses, much more careful about giving credit not just on counterparty risk but also for vessel risk.

You've all heard the much-lamented stories I'm sure. I'd guess most if not all bunker companies these days have one or two to tell. Bunker company gets approached to extend credit to a company they know and have been doing credit dealings with in the past. Stem takes place in a port in the Med. A week later the invoice drops onto the mat and falls due thirty days later. Two weeks go by. Bunker company chases the invoice. There is a week of various people not being in the office or being stuck down with a mystery illness, hit by lightning etc

Bunker company reviews the stem. Chases some more, and then credit manager or commercial head searches online on AIS (other global vessel searching sites are available) and falls off his/her chair in stunned horror as the vessel is noted to have arrived in Alang four weeks ago.

Phonecalls are made. People are unhelpful. Bunker company now realise their precious lien against the vessel is now somewhat difficult to enforce given that the vessel in now little more than a murky stain on the sand.

A mentor and friend of mine once arrested a very large Pielstick engine block sitting on the sand there pending sale to a third party, but this is the only time I've heard of it. Its rare.

Time's Up

So what do you do? How do you know when a vessel's time is up, and when she is sadly headed for a long run up a short beach?

The answer is you can't possibly know for sure and it is just another facet of the importance of knowing your counterparty. The depressed bulk, tanker and box markets at the moment, coupled with comparatively buoyant steel and scrap metal prices means the age divide is harder to see than most can remember. We've seen mid-90s built boxships go for scrap, late-80s built Capes, and yet there are large numbers of far older vessels running around quite happily.

Of course bunker companies are more cautious and more aware that the market is depending on scrapping to pick up, and with higher numbers of ships going to breakers than at any time in history. So operating older tonnage is not just less efficient because of the age of the vessel, but also because in some cases, owners have to pay cash for their bunkers where they may have credit for their newer vessels

We check class, P&I, and PSC status of every old lady we see enquiries for. If she has been detained for PSC violations or is out of class, then it's a no, unless we can get the enquiry via trader we trust who is happy to take the risk. Corrosion / cracking is a big one. That's the ship equivalent of The Big C. If your vessel has it, it is going to be a traumatic and expensive thing to fix, and in some cases, it is sadly fatal.

I was listening to some music and reading the maritime press on the train the other day, and a great song by a favourite artist of mine came on – 'So Far From The Clyde' by Mark Knopfler. At the same time I was reading about a newish bulker built at a reputable Chinese yard that was detained recently for hull corrosion issues, reported as being in a very poor state. A five year old vessel with corrosion and cracking issues.

What, indeed, are we to think about that?

Author: Chris Morgan, Credit Manager, Peninsula Petroleum        Source: shipandbunker.com