URSABLOG: Vespa Investments

I have been without Benedetta, my beloved red Vespa, for most of this week. I knew that we would have to spend some time apart, because the signs were there. Maybe we needed some space, some time alone, but she had been complaining for some weeks now. The little red light showing excess temperature had been winking away. It was not as if I didn’t care: I tried to solve the problem. I took her to the garage where I bought her, and the mechanic there fiddled around and after adding some coolant said everything was ok. I went again, he topped up the coolant, and said everything was ok again, but both Benedetta and I both knew something was more fundamentally wrong. So on Monday morning I took her to another mechanic, and this time it was clear. There was a problem with the cooling pump, they needed to get some parts, and they would let me know when it was ready.

I had come to take Benedetta for granted, and ignored her coughs and fevers, just told her to keep going. And she did until she couldn’t any more. It was with a heavy heart that I left the garage.

What was I to do now? I was without transport. So I started looking around for a replacement. Not a permanent one you understand, just something for a few days. So I called a shop here in Piraeus, and they had some available (of course they did) and I went to see them.

I was shown the options. I chose the cheapest, a white Chinese manufactured Vespa imitation type scooter, a bit flashy and eye-catching. I signed, hopped on and drove back to the office. On my way home later, it was bouncing all over the place, the speedometer didn’t work – which didn’t matter as speed was not an issue – and generally it felt like I was driving a plastic toy, which was fine, because all I wanted was some fun, a bit of a change. It was not fine in the morning: it started ok, but after ten metres it spluttered and would not start again. The battery was dead. I called the man.

“I have a problem, the scooter doesn’t work,” I said.

“What’s wrong?” he asked.

“The battery’s dead,” I said.

“Ah yes,” he said, as though it was perfectly natural, and in fact was expecting it.

He turned up after a while– with two spare batteries – on a replacement for me, a Kymco Agility 125i. I hopped on and drove off. It was better, but only slightly. It was plastic, and had little power, and was light, and moved alarmingly in the wind. But after a while I got used to its idiosyncrasies, and tolerated it. We didn’t bond by any means, but we tolerated each other, if only because we both knew it wasn’t forever, and there was no commitment.

This week was also another interesting week for dry ship bulk sale and purchase. Prices have jumped again, and many buyers that were window shopping in the past couple weeks have gone home, for now at least, to see if there is enough money in the bank to support their ideas. Others, seeing the objects of their desire move out of their budgets are looking at cheaper versions of the same thing, which means instead of Japanese or Korean built, or ships built in Japanese affiliated yards elsewhere, they will look at those built in Chinese yards, or India, or Vietnam. I have been discussing these with a couple of my clients.

Let me first of all say that we cannot afford to be racist about shipyards. There are some very good shipyards around the world, and they are not all in Japan and Korea. But there is a ship for everyone’s budget and risk appetite, technically and commercially. I was very fortunate during my time at HSBC Shipping Services that not only did I do a fair amount of newbuilding business, I had excellent colleagues and friends in Shanghai who could guide me and my clients to the best yards for them. And I also spent a fair amount of time taking shipyard representatives to our clients in Greece, and absorbed their knowledge and expertise.

Let me be clear, I am not a naval architect, or a marine engineer, sadly I sometimes think, but I think I have a fairly good idea of what is good and what isn’t. So for those that want a quick guide for what to look for in ships built in unfamiliar yards, here is a quick guide:

-         The quality of the yard. By this I mean not only their track record, but also who they have built for, which Classification Societies worked with the yard. Also the financial stability of the yard at the time, and how long the ship took to build, from keel laying to final delivery.

-         The original buyer/contractor of the ship.

-         Did the ship deliver from the yard to the original buyer, or to someone else?

-         Who supervised the ship? The buyers own team? An independent, or no-one in particular?

-         What is the maker’s list of the machinery and the equipment? And where were they built? I remember a story of one buyer supplying their own main engine from MAN B&W to the shipyard, but this had been constructed in Russia under license and was delivered to the yard in China in something like 50 different boxes and crates of varying sizes. I provided the same service to two of my clients, but ours arrived from Korea in one package more or less. The best engines are made in places like Chiba, in Japan. Others are not so great.

-         What has happened to the ship since she was built? Were there many owners? Why? Has the vessel changed classification societies a lot? What do the class records look like?

-         How has the ship performed?

All the other stuff is the stuff that you should look at any time you buy a ship, although in this heated atmosphere it may be overlooked.

However, as I was in the process of looking at the more exotic ships trying to be sold in this hot market, I once again felt a nagging feeling tugging my conscience. And I referred back to my own experience.

Why did I buy a Vespa? Style and shape, certainly, and yes, they are very cool. Red is my favourite colour. But why didn’t I buy cheaper versions? Well I did a review of the literature on reliability, performance, road handling, safety, and resale liquidity, and all things considered I decided to pay a lot more – in percentage terms at least - for something that was better, and I would feel comfortable with over a period of time. And that has proven true - until recently at least – and I am very happy.

How can I recommend a ship that I know that has a high probability of being problematic over a period of time, will not perform consistently, will have problems in maintenance, and is not designed or constructed for optimum use, and has a less than stellar resale value? I can only make it clear to my clients what I think, and resist the temptation of selling something, anything, in a rising market. They will be left with the problems after delivery. If however they do wish to buy the ship, they do so with eyes wide open.

There is a wonderful Spanish proverb which is true in shipping and in life:

God says take what you like, and pay for it.

Another is:

If it looks too good to be true, it probably is.

Ships are more expensive now, and more expensive for a reason. Cheap ships are cheap for a reason. Like mopeds.

The happy news is that I was reunited with Benedetta this afternoon. The parts had arrived, the work was done, and thanks to the machinery warranty I didn’t have to pay anything. And I have a nice feeling that the fault was with the parts, and I had not mistreated her. I am looking forward to the Friday night drive with more than usual pleasure.

Is there a place in my life for an imitation Vespa? Or a Kymco? Yes for a short while, on an island, or in an emergency. But a Vespa, like a ship, is for the long term, and I am glad I invested wisely. As I said, when I first acquainted myself with Benedetta:

“This could be the start of a beautiful relationship.”

And so it has proved. 

Simon Ward

www.ursashipbrokers.gr