Originally published in Marine Money
[It is 1985, a shipowner and broker decide, over drinks at
the Four Seasons in New York, that the time is right to build a new
vessel.]
After the euphoria of the evening wears off, the questions begin
to swirl. How do we choose the right yard? Have we timed the market
correctly? Where will we get the money?
We haven't heard too much about our owner's
business. He has made a good deal of money in the United States
– his business is buoyed by Uncle Sam. His is one of the
lucky companies that had successfully negotiated Operating
Differential Subsidies ("ODS") with the U.S.
Maritime Administration. The U.S. government is contractually
obligated to provide these funds to the owner who happens to
operate a fleet of primarily U.S. flag vessels in certain desirable
liner trades. In 1985, one of these contracts alone is worth up to
$2 million per year per vessel. Despite the collapse in the tanker
trades, our owner is doing quite
