Container Shipping Remains Scream-Worthy Investment

When Sotheby’s sold “The Scream” on May 2 for a record $119.9 million on behalf of Norwegian shipping heir Petter Olsen, it touched off some random musings of what Edvard Munch’s iconic painting of modern day anxiety means in today’s shipping industry. Is it a picture of a shipowner’s despair in the face of this year’s red ink? Or does it depict a global logistics manager’s frustration with recent freight rate increases?

More to the point, I wondered what that $120 million would buy in today’s shipping market, so I called my friend Peter Shaerf, a former ship broker who is now managing director of AMA Capital Partners, the New York investment bank specializing in maritime deals.

“Four years ago, that wouldn’t even buy one Capesize bulker, which would have cost you $150 million for a resale, coming new out of a shipyard,” he said. “Today, you could order three of that size and still have enough change to buy a small island in the Caribbean.”

The decline in prices isn’t as dramatic for container ships. “Four years ago, it would cost $150 million to buy one 13,000-TEU ship,” Shaerf said. “Now, you could buy that same ship for about $110 million, based on the recent order by Evergreen Line.” Not only would a buyer pay less, but he also would get more for his money. “That same ship would give you $15 million per year in fuel savings,” he said.

Ironically, The Scream’s record sale price is due in part to the very globalization brought about by container shipping, which has given rise to fortunes in all parts of the world. The auction room at Sotheby’s Manhattan headquarters was packed with trophy-hungry buyers from China, Russia, Europe and the U.S. The sale came down to a tug-of-war between two buyers bidding by phone. Sotheby’s has not revealed the winner’s identity.

Does the decline in ship prices mean investment in art is a better bet than investing in ships? Not exactly. This version of The Scream, which is one of four Munch painted in the 1890s, was acquired in 1936 by Olsen’s father Thomas, who was the head of the family-owned shipping group, Fred. Olsen & Co., which used to own tankers, container ships, cruise lines and ferries, but now operates mostly offshore oil supply vessels and wind power farms. The Scream, the only one of the four versions still in private hands, remained in the Olsen family for more than 70 years, earning no income, while the family’s ships threw off a nice revenue stream.

Does the son intend to invest the tidy $120 million in new ships? No, he plans to build a new cultural center near Oslo that also will house Norwegian artworks, but not The Scream. That painting could wind up anywhere on this globalized planet.

Contact Peter T. Leach at pleach@joc.com. Follow him on Twitter @petertleach.

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