IIn 2008, shipping entered unparalleled territory as rising Chinese demand drove demand for new builds. VLCC ratings have risen to levels never seen before. But amid all this volatility, there was no reliable, unbiased data to guide decision-making. The market has been flooded with speculation, theoretical forecasts and optimistic estimates, but little reality on the ground. In that environment, decisions worth tens of millions of dollars were made based on instinct, rumor and wishful thinking.
It was precisely this gap between what the market looked like and what actually happened that led to the founding of VesselsValue, now part of Veson Nautical.
Nearly two decades later, we find ourselves at a strikingly similar inflection point, driven by market shifts amid conflict in the Middle East. This, combined with years of surging demand thanks to the COVID-19 pandemic and Russia’s invasion of Ukraine, has pushed valuations to historic levels.
This time, we have something we didn’t have back then: access to unbiased, data-driven algorithmic intelligence. At Veson, this comes in the form of validated proprietary data that is updated daily across our database of 76,000 vessel reviews. These daily assessments are continually tested against actual sales prices across key shipping segments, ensuring our customers always have data they can trust. As one of the first providers of this data to the maritime industry, we have spent years improving our algorithms.
Technology is only as good as the data and algorithms that support it. The question is: Are we using this data well?
Evaluations are based on validated data, not wishful thinking
In the wake of the escalation of the conflict in Iran and the Strait of Hormuz, media coverage has been filled with headlines of supertanker installation rates of $700,000 per day – figures that seem extraordinary but are rarely achieved in actual transactions. These calculations are largely theoretical maximums, not market reality. When you take into account vessel repositioning, overlapping costs, insurance, and loading requirements, deals simply do not close at these key prices.
Broker valuations for VLCC resale today range from $175 to $185 million with their models or opinions based on these inflated numbers. Shipowners know best. I recently spoke with an owner who, when I told him the VLCC had a resale value of $185 million, jokingly replied, “If you can get me that price, you can marry my daughter.” He understood what many in the market ignore, which is that these estimates are not tied to an achievable market price.
VesselsValue today estimates the VLCC’s resale value at $168 million, with new construction estimated at $136 million. I would argue that these are conservative estimates compared to our peers, with a modest premium recorded for resale with immediate delivery, compared to new build scheduled to be delivered within three years.
The important thing is that our assessments are based on quantifiable transactional data, not wishful thinking. The $20 million gap between VesselsValue ratings and competitor estimates represents the cost of ignoring basic truth and reminds me of a time long ago.
Overfinancing poses a real risk and inflates asset prices beyond what fundamentals justify. When leverage is cheap, investors are incentivized to reach yield. The feedback loop is tempting: rising prices validate borrowing and encourage more borrowing, until the cycle breaks – violently.
This is where unbiased, algorithm-based data becomes vital again. When markets are turbulent, everyone wants to believe the optimistic narrative. Owners, brokers, and investors all have incentives to rely on the highest reliable estimates. But clients don’t need optimism, they need precision. They need to know the actual value of the ships, not what we hope they are worth.
The difference between 2009 and today is not that volatility has disappeared. Rather, we now have the tools to cut through the noise and see the market reality clearly.
In volatile markets, the truth is not always comforting. But it is always valuable.
Each month we publish how our ratings perform over 1-year and 5-year periods, so you can track how they hold up across each market cycle. Download VesselsValue’s Market Value Accuracy Report to stay on top of the latest market shifts.
Source: Faison Bahri
