Earlier in 2023, our firm, Karatzas Marine Advisors & Co., had the privilege to survey and appraise the world’s first electric escort tugs for the lenders. As exciting as the assignment has been, one question implicitly came to mind: how the technological marvel of a battery-powered vessel would affect the values of comparable conventional vessels?
The delivery of a new design of a vessel does not necessarily make existing designs obsolete, but the risk cannot be ignored. And, existing designs of a vessel are not a uniform market, as they can be of varying generations, upgrades, states of condition and maintenance. In appraisal terms, the obsolesce risk may be in the form of functional obsolescence (intrinsic to the asset) or economic obsolescence (external to the asset). Obsolescence is of great interest to lessors, having undertaken asset risk, and in today’s times with talk of alternative fuels, emissions, etc., obsolescence is even more critical.
In the Spring 2023 Issue of the Journal of Equipment Lease Financing, Mr Basil Karatzas, ASA, MBA had authored an article on the subject, titled “Economic Obsolescence to Marine Assets: A Timely Update”.
The link to the article is provided herein to the Journal of the Equipment Leasing and Finance Association (ELFA), while the article in pdf format can be accessed on the following link: