What is a vessel worth?
I n Gene McKeever’s column in the April issue of WorkBoat, his question: “What is the vessel really worth?” was certainly a very valid query.
The fair market value of any vessel is, of course, the most probable price the vessel should bring in a competitive and open market, bearing in mind that the actual value of any vessel can only be determined at the time of purchase by a willing buyer and a willing seller.
I’m an accredited marine surveyor (SAMS, AMS) and frequently survey one-of-kind vessels. When surveying a unique vessel, similar to the one that Gene alluded to in his column, I use what is referred to as the Martin Scale of Vessel Depreciation. This scale is named in honor of Mr. Francis A. Martin, marine engineer, appraiser and surveyor.
The Martin Scale was first recognized in 1925 by the U.S. Supreme Court in Standard Oil Co. v. Southern Pacific Co. The Martin Scale was again referenced in 1966 in Oliver J. Olson & Co. v. The American Steamship Marine Leopard, etc., Luckenbach Steamship Company. It was used in determining the valuation of the steamship Howard Olson, which sank as the result of a collision.
The court noted that “depreciation was predicated upon the so-called Martin Scale which is a declining balance depreciation of 5% reduced over the years. This produced a figure of $399,013.77, to which (were) added the depreciated cost of the cranes ($33,720.71), for a total reproduction cost depreciated of $432,734.48. This method of determining the reproduction cost depreciated of the Howard Olson was not challenged.”
It should be noted that the estimated present day replacement cost is used as the base for the calculation to determine a vessel’s estimated fair market valuation. A vessel’s condition including equipment upgrades and the extent of repairs should also be factored into the final calculation.
I have used this method of determining a unique vessel’s fair market value many times, and I have testified as an expert witness in probate matters concerning the establishment of value.
Capt. Jay Michaud
Marblehead, Mass.
Coast Guard letter addressed military to marine credentials
I read with interest the “Military to Marine Credentials Needed” story in the March issue of WorkBoat. (See page 36.)
As the chief of the U.S. Coast Guard Baltimore Regional Examination Center in 1997, I saw a lack of information on the aforementioned. Information was not being disseminated to active duty members on how they could obtain Coast Guard licenses based on their sea service assignments and experience.
I put together a best practices letter in 1997 that was endorsed by Capt. Charles L. Miller, who was the commander of Activities Baltimore at the time. It was sent to the Atlantic Area command. Needless to say, nothing was ever done with the suggestions contained in the letter.
John K. Cassady III
Retired Chief, REC Baltimore
Finksburg, Md.
