Anyone can become a cargo ship owner either you are an individual, a company, or a bank. The purpose of owning a cargo ship is earning profit through moving cargo.
Can an individual own a cargo ship?
Cargo ship like any vessels that both individual person or individual entity can own it.
To be able to own a cargo ship, first step is deciding what kind of ship you need and how much money you will need for it. Tonnage and capacity is what you have to consider when talking about buying cargo ships.
If you have all the money you need then you can go to next step to approach ship broker. The broker will help you locate the ships in the market, and also find the one matchs your requirments. The broker will not only assist you in searching for the ship but also signing the final documents to purchase the ship.
Experts strongly against to purchase cargo ship from shipbreaking yard. Ships went to breakyard are typically at the end of their lives. You are not allowed to use the ship unless you carry out extensive repairs and refurbishments. Your ship need inspect by the authority before sail on internationl water. You may end up spend as much as buying a new cargo ship, if you count all the repair, refurbish, inspection fees.
Purchasing a secondhand ship is a good choice if you are on budget. Once a while you may find some shipowners willing to sell at a bargain. Those ships will be seaworthy with valid class certificates.
Also Read:
What is it like to work on a cargo ship?
How Do Cargoships anchor at sea?
How Different Types of Cargo Can Affect Ship Stability
Can a company own a cargo ship?
Both private owned and public trade companies can own cargo ships. Actually majority container ships are owned by private owned companies.
Based on www.statista.com, the top 3 world leading container ship operatos are APM-Maersk, Mediterranean shipping and CMA CGM Group as of February 28, 2022. Out of these three, two of them are private owned companies, except MSC is a public trade but still a family owned company.
The top 1 container operator- APM-Maersk owns and charters total 738 vessels in 2022. Maersk is based in copenhagen, Denmark. It operated in 130 countries and with employees around 83,000 worldwide. Based on en.wikipedia.org, Maersk’s 2018 annual revenue was US$39 billion.
The top 2 container ship operator- Mediterranean shipping (MSC )was founded in 1970 and headquarteder in Geneva, Switzerland, since 1978. MSC has total 655 vessels and CMA CGM Group has 572 vessels in 2022.
Does amazon own cargo ship?
Amazon does not own any cargo ships, but it has been chartering private cargo ship many years ago. Instead berth in Los angeles or Long beach heavily congested ports, Amazon can choose less packed ports such as houston, charleston etc to dock it’s chartered vessels.
When other retailers, ecommence struggled for vessel delay in los angles, long beach west coast, Amzon already docked it’s chartered vessel in houston, a less crowed port.
Does walmart own cargo ship?
Walmart also does not own any cargo ships. Walmart start chartering cargo vessel in 2021 to ship it’s toys and consumer goods to other US ports other than LAX or Long beach to avoid extremely delay.
Does container ship makes money?
Container ship operators made good fortune during the pandemic.
According to bloomberg.com reported by Chris Bryant in Aug 9, 2021 that world largest container ship operator APM-Maersk expected $14.5 billion operating profit in 2021, due to surging freight rate.
Germany shipping company Hapag-Lloyd AG has earned more in the last six months than in the previous ten years combined.
Even the small cargo ship owners earned good money during 2020 and 2021. Many retailers such as warmart, target, Costco all start charting private cargo ship to ship their product to US. Daily rate of chartering is around $40,000.
How much a cargo ship cost?
Cargo ship cost varies depending on the ship’s tonnege and capacity. The typical cost of a normal cargo ship is somewhere between $35 million all the way up to $150 million.
A used small to medium cargo vessel in semi-decent condition can cost as low as $10 million.
How much does a cargo ship owner make?
You have to invest millions or billions dollars up front before you can earn some money. Cargo ships are long term investments that only make money when they transport cargo.
Profits in shipping business are very unstable. It can vary widely from year to year.
2020 and 2021 are good years for cargo ship owners. The extremly back log in US major ports pushed more and more retailers to charter cargo ship. The current charter rate for a standard cargo ship is about $30,000~$40,000 per day.
Benefits to own a cargo ship
There are 3 major benefits that a owner of a cargo ship have
- Have a flexible time frame to ship your cargo. it is your ship so you can decide when to ship, when not to ship.
- Choose the port more convenient to you.
- Rent your ship to others when you do not use it.
Risks to own a cargo ship
Owning a ship is expensive, not just the purchase price but the maintenance costs can be a significant percentage of the value of the vessel.
The average operation cost for a standard cargo ship is between $25,000~$85,000 per day. Fuel cost is roughly $130,000 per day.
Ships do not function well if you do not maintain them regularly. At least every five years you have to dry dock them.
It costs time and money to deal with the regulations and inspections on your ship. You will need insurance on your ship. For example a standard tanker carries probably a billion dollars of liability insurance for oil spills and about $500 million for other liability. You also need insurance for the crew, if you have crew on board.
You will need an agent in every port you call at. The agent will help you arrange for berthing, fuel, custom clearance etc.
Remember the definition of a boat “a hole in the water into which you throw money”.
Summary
Owning a cargo ship is a potentially very expensive thing. It is easily to spend millions just to keep your cargo ship afloat, certified and registered, let alone crewed and in a port to load, unload cargo.
If you do not have shipping experience. You would be much better off chartering a ship rather than buying it. If you do not have so much cargo to move, then it is a net loss for you to own a cargo ship but sitting there.
In summary there are more risks associated to own a cargo ship than charter one. Think carefully and run the numbers to make sure you can afford it before purchase.
Resources
https://www.msc.com/gtm/about-us
https://en.wikipedia.org/wiki/CMA_CGM
https://www.cnbc.com/2021/12/04/how-amazon-beats-supply-chain-chaos-with-ships-and-long-haul-planes
https://www.fool.com/investing/2021/10/07/walmart-charters-its-own-cargo-ships-to-skirt-port/
