The shipping industry is international in scope. A number of its sectors are characterized by highly cyclical freight markets. Due to intense competition and a widely dispersed ownership structure, no one shipowner maintains a dominant market share in any sector in which the Company shall operate its vessels. The Company’s vessels shall compete primarily on the basis of price, the condition of the vessels and the reputation of their Manager.

The resale values for vessels are determined principally by supply and demand, by expectations of future earnings and by their age and condition profiles. In a market upturn, resale values can approach the value of comparable new ships and conversely, in a market downturn, they can approach scrap values. Ship values tend to move quickly if the perception of participants in the market is that the relationship of supply to demand has changed or is about to change. It follows that timing is a critical factor in investing successfully and in enhancing the likelihood of realizing capital appreciation.

Newbuilding prices can also affect resale values. During a continuously rising market, in the interval between ordering and taking delivery of a new vessel, newbuilding prices tend to rise with increased ordering activity. Shipowners attempt to anticipate the expanding demand by turning to the second hand market, where ships can be obtained more quickly with the expectation of generating profits in a rising market. By this mechanism, in a strong market upturn, the values of second hand ships are subject to upward pressure and tend to approach prices for newbuildings.