Return On Tankship Investment Subject Of N.Y. SNAME Meeting

The New York Metropolitan Section of The Society of Naval Architects and Marine Engineers held its April meeting at the Seamen's Church Institute in New York City.

After a social hour and dinner, the technical session was held, and a paper entitled "Estimated Return-On-Investment of Oil Tank Ships" was presented by Robert G. Walsh Jr., Exxon International Company.

A model to estimate return on investment of oil tank ships is developed to assess the historical returns of various types of tanker ownership. Looking back in time may offer some guidance for the future and also expose pitfalls of this investment area. Study results are that the return on investment for oil tank ships has historically ranged from, at best, break-even, to about 30 percent for early '50s, and 20 percent for the late '60s and '70s.

To perform numerical computations, specific vessel sizes, periods of operation and trade routes are selected. Sizes selected are the typical tanker, the largest Suez Canal tanker, and the largest tanker at the beginning of a particular period. Also, three time periods are selected: 1950- 70, 1959-76, and 1969-76. Instead of forecasting future costs and revenues, the model is truncated in 1976 using resale or scrap values. Because of the high volume of long-distance crude movement, the Gulf (Ras Tanura) to Northern Europe (Rotterdam) trade route is selected.

Maritime Reporter Magazine, page 48,  May 15, 1977

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