The factors that drive average daily hire rates are current market conditions, vessel size and age of vessel. Current market conditions effect average daily hire rates because they are based on supply and demand of capsizes. If the demand for capesizes increases the average hire rates will increase as a result and vice versa. During times of high demand it is ideal for ship owners to contract for periods as long as possible. The opposite would apply that charterers would try to contract a low average hire rate during low demand for capesizes for as long as possible. Age and size of vessel also affect the daily hire rate for capesizes. The supply of capesizes has been effected by advances in technology which have allowed capesizes to increase in size and efficiency. This allows newer capesizes to earn larger average hire rates from charterers. Exhibit 4 illustrates the 15% premium that is earned by the newer vessels. In the future the number of capesizes will decrease due to the efficiency of new vessels being produced. This will also lead to increased scrapping of older vessel ......

Word Count: 1065
Page Count: 4.2 (250 words a page / double spaced)

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