Task description & requirements The attached article written by Baker, J 2017, ‘One third of boxship fleet worth no more than scrap value’, Lloyd’s List, viewed 22 February 2017, , reports on the market value of container ships. Based on the information provided in the article and relevant references, answer the following questions. a Identify and explain the effect of the factors affecting the market values of the world’s boxship fleet. [10 marks] b Given your answer to Question a, predict the changes in both container freight and second- hand ship markets in the short and long terms. Make assumptions if necessary. [5 marks] c Suppose a new environmental management regulation requires shipyards to immediately invest in new equipment that results in significantly higher costs of new-build boxships. Use the two-part diagram model in Module 9’s lecture PowerPoint to evaluate the effect of the new regulation on the container freight market. In your answer, clearly explain variables covered by the diagram and effect of the new regulation, i.e. how it takes place. [5 marks] See the Essay/report assessment criteria sheet on page 16 for information about the criteria and the standards by which your work will be judged. Department of Maritime and Logistics Management – JNB521 Maritime Economics for Managers 17 One third of boxship fleet worth no more than scrap value • Monday 20 February 2017, 12:31 • by James Baker • Back to Lloyd's List Containers Vessel scrapping: more than 85% of the panamax fleet capacity was at scrap value, VesselsValue said. © GMS Classic panamax asset values fare worst, with 85% of capacity worth scrap prices ALMOST one third of the world’s containership fleet capacity is worth no more than scrap value, according to figures from VesselsValue. “There are 2,028 container vessels currently at or below their demolition value, compared to 3,242 vessels which have a market value higher than their demo value,” VesselsValue said. “In capacity terms, 7.3m teu is at scrap value compared with 16.2m teu above. This represents 31.5% of the global container fleet.” Broken down by size, the figures reveal a grim picture for some classes of vessel, particularly in the beleaguered classic panamax market. More than 85% of the panamax fleet capacity was at scrap value, VesselsValue said, with 2.9m teu of the fleet’s 3.3m teu worth no more that scrap prices. In the post-panamax fleet, 3.3m teu of the 8.9m teu, representing 36.7% of the fleet, is valued at scrap prices. For non-operating owners of boxship tonnage, the valuations make grim reading and may require writedowns on their balance sheets and the risk of breaching loan covenants. According to VesselsValue, the entire panamax fleet owned by Rickmers Maritime Trust is valued at no more than scrap. Its 15 ships, with an average age of just nine years, are worth ****** $******m — the same figure they would reach if sold for scrap. Last week, Rickmers Maritime appealed to its lenders to write off its debts as it struggles to find fixtures for its vessels. Article from Lloyd's List https://www.lloydslist.com/ll/sector/containers/article******.ece Published: Monday 20 February 2017 © 2017 Informa plc. All rights Reserved. Lloyd's is the registered trademark of the Society incorporated by the Lloyd's Act 1871 by the name of Lloyd's