Port State Control performance is not an input to the valuation model. It is an input to the value

MUSCAT — There is a persistent assumption in the second-hand market that a vessel's inspection record is priced into its value. It is not, at least not by the valuers. VesselsValue's market-value model works from five factors — age, size, type, features and market sentiment — with real age taken from the actual build date rather than in twelve-month intervals. Premiums and discounts are applied for builder, ballast water treatment system, engine, gearing, Jones Act status, pumps, segregations, scrubber, tank coatings, ice class and design and green features, with efficiency ratings including CII and EEXI referenced. Yard of build is scored, with top-tier yards taking no discount. Transactional data from roughly the past three years feeds a regression, recent sales weighted more heavily. Port State control records, detentions and inspection history are not among those inputs. The model's market-value certificates assume the vessel is in good, seaworthy condition and free of class recommendations — stated assumptions rather than data. A separate product, the condition-adjusted valuation, applies an inspection-based condition score. That is the structural point this article turns on. The published valuation does not discount a poor inspection record. It assumes the record is clean, and leaves the adjustment to be made by someone else — which means the discount, where it exists, is applied by the buyer in the negotiation rather than by the valuer in the certificate. What the record is worth in earnings The money starts with lost days, and the lost days are documented. RightShip's analysis of 2025 data covered more than 77,400 port State control inspections across more than 32,470 ships, finding 184,738 deficiencies, around 2.4 per inspection. Some 53 per cent of inspections found at least one deficiency, up from about 48 per cent in 2023 — a vessel is now statistically more likely than not to be found non-compliant. Of all inspections, 3.6 per cent ended in detention, and detained vessels lost an average of 5.6 days. Inspections rose 5.5 per cent between 2023 and 2025, with average detention length holding at about six days. Severity scales sharply. A single high-risk deficiency carries a 4.1 per cent detention rate, above the fleet average. A vessel with eleven or more deficiencies including high-risk items faces a 61 per cent probability of detention. Set 5.6 days against current earnings and the number stops being administrative. On the Baltic Exchange's week to 30 October, a VLCC on Middle East Gulf to China earned $1,345,710 a day; 5.6 days is roughly $7.5 million. A Suezmax on Nigeria to UK Continent at about $396,100 a day loses around $2.2 million. A Capesize at $37,420 loses about $210,000, and a Panamax at $19,836 about $111,000. Those are my calculations from the published rates. Against asset values, the proportions are striking. The Korea Ocean Business Corporation's 1 October assessments put a five-year-old VLCC at $178.09 million, a Suezmax at $109.57 million and a Capesize at $72.42 million. One average detention therefore costs roughly 4.2 per cent of the VLCC's assessed value, 2.0 per cent of the Suezmax's and 0.29 per cent of the Capesize's, in forgone earnings alone. On the 2006-built VLCC Vadin, reported sold at $117 million on 6 October after an earlier purchase at around $60.5 million, it is about 6.4 per cent. To that must be added the direct costs. RightShip estimates a single detention at roughly $25,000 to $200,000 or more before delays and reputational effects. One inspection-software vendor puts the all-in cost of a 48-to-72-hour detention at €75,000 to €250,000, with long cases exceeding €1 million and off-hire alone quoted at €20,000 to €150,000 a day — figures that vendor attributes only to unnamed industry estimates and which should be treated as indicative rather than sourced. Under the Paris MoU Memorandum, the owner or operator pays all costs of the detention-related inspection, and the detention is not lifted until those costs are paid or guaranteed. The hire itself usually stops. Under NYPE 2015 clause 17, detention by port State control for vessel deficiencies is an off-hire event: hire ceases while the owner's costs continue, and the charterer may additionally claim for cargo delay depending on the terms. The second channel: charterability The inspection record is public. Paris MoU and Tokyo MoU results are published and searchable through Equasis, and commercial vetting reads them directly. RightShip's vessel risk rating includes port State control performance as one of nine risk groups, alongside the port State control performance of other vessels sharing the same DOC manager. Its own data shows vessels holding a valid RightShip inspection averaging 2.0 deficiencies per inspection against 2.4 for the wider fleet, a detention ratio of 2.4 per cent against 3.6, and average detention duration of 3.7 days against 5.6 — a correlation the company itself attributes to inspection readiness and follow-up rather than to proven causation, and which comes from a party selling inspections. From vetting the chain runs into the charter. Standard approval clauses treat repeated vetting failure as an operative trigger: under the Shelltime 4 provisions considered in Dolphin Tankers Srl v Westport Petroleum Inc, three consecutive failures caused by owners or the vessel permitted off-hire, constituted a breach and allowed cancellation on thirty days' notice. ANALYSIS. A detention therefore has two costs separated in time. The immediate one is days and dollars, settled within a fortnight. The second is a public record entry that sits in the vessel's file and feeds the vetting score and the risk profile for the next three years — which is to say, for the next three years of chartering decisions, and for whatever part of that window falls inside a prospective buyer's due diligence. The first cost is paid by the current owner. The second is paid partly by whoever owns the vessel next. The third channel: the cliff The channels above are linear. The banning regime is not. Under the Paris MoU regime, three detentions within 36 months for a vessel flying a black-listed flag, or within 24 months for a grey-listed flag, trigger a regional refusal-of-access order. The first ban runs for at least three months, the second for twelve, the third for twenty-four, and beyond that the ban is permanent. A ban cannot be lifted before its period has expired, with narrow exceptions where a port State authority permits access to a specific port in cases of force majeure, overriding safety considerations, or to reduce or minimise pollution risk. The Paris MoU issued 19 banning orders in 2025. ANALYSIS. This is where an inspection record stops shading a valuation and starts determining it. A vessel that cannot enter a region is not a vessel with a discount; it is a different asset, with a smaller addressable trade and a buyer pool restricted to owners who do not need that region. The arithmetic of the loss is extreme enough to need a caveat: at current VLCC earnings, a year of forgone trading would exceed the ship's own assessed value several times over, but that comparison assumes the banned vessel would otherwise have traded at peak rates, which is not a realistic counterfactual. The honest statement is narrower and still decisive — the step from two detentions to three is the single largest discontinuity in the relationship between a vessel's compliance record and its worth, and nothing in a standard valuation captures it. Where that matters most is at the margin of the market. The exposure concentrates in older tonnage: vessels aged 14 to 24 years account for the largest share of inspections globally, and bulk carriers alone for about 38 per cent, with bulk carriers and general cargo together making up nearly 60 per cent. Those are precisely the segments where buyers have been paying up this year on earnings rather than on specification. Why the market prices one compliance signal and not the other The valuation model's own feature list contains the anomaly. It references CII and EEXI ratings — regulatory efficiency measures with a defined, published methodology — and prices scrubbers, ballast water treatment systems and green features. It does not reference inspection record. There are defensible reasons. Efficiency ratings attach to the vessel's design and are stable over its life; a deficiency record attaches to its management and changes with the manager, who changes on sale. A buyer who replaces the DOC holder arguably inherits the record for reporting purposes but not the behaviour that produced it. And a regression built on comparable sales can only price what is systematically visible in those sales, which an idiosyncratic detention history is not. ANALYSIS, and ARK's view. The practical consequence for a buyer is that the adjustment is theirs to make and theirs to justify. Because the market-value certificate assumes freedom from class recommendations, a vessel carrying outstanding conditions of class is being valued on an assumption that does not hold for it — the certificate is not wrong, it is answering a different question. The gap between the certificate and the ship is the buyer's negotiating room, and it is quantifiable from public data: the Equasis record, the deficiency categories, whether any deficiency was high-risk, the number of detentions and their dates against the 24 and 36-month banning windows, and the ISM company's own fleet record, which feeds the Paris MoU risk profile and can change a vessel's category overnight on another ship's inspection. Three practical rules follow. First, obtain the inspection record before the valuation rather than after, because the valuation does not contain it. Second, count detentions against the banning clock, not merely against the vetting history — a vessel with two detentions inside the window is one inspection away from a different asset class. Third, price the post-acquisition inspection exposure: a high-risk profile means a Paris MoU inspection becomes due between the fifth and sixth month after the last and is mandatory after the sixth, up to six inspections across three years against one for a low-risk ship, each an opportunity to add to the record the buyer has just acquired. What to monitor Whether any valuation provider begins to publish an adjustment for inspection record, which would be the clearest sign the market has decided to price it. The Paris MoU's banning orders, as the measure of how often the cliff is actually reached. RightShip's next annual inspection analysis, for whether the deficiency rate continues rising from 48 to 53 per cent. Second-hand values in the 14-to-24-year band, where inspection exposure is concentrated and where this year's buying has been heaviest. And the Tokyo MoU's quarterly company performance lists, which make a manager's record comparable for the first time and may do to management reputation what the flag lists did to flag reputation. The bottom line A valuation certificate tells a buyer what a vessel of that age, size, type and specification is worth on the assumption that it is in good condition and free of class recommendations. It does not tell them whether this particular ship has been detained twice in the last two years. That information is free, public, and worth a measurable percentage of the asset. The market's habit of treating it as a technical matter for the superintendent rather than a commercial matter for the buyer is the reason it remains available at no cost to whoever bothers to look. ARK Management SPC — Marine Consultancy & Brokerage, Muscat, Sultanate of Oman.