The marine industry has somewhat unique traits when it comes to the vessels operating within it. Like aircraft, both commercial and personal vessels have strict regulations regarding keeping them seaworthy and, in turn, marketable. Two distinct reports are often involved in this process: a certified marine survey and an accredited market valuation. While both involve evaluating a vessel, they serve different purposes and require distinct expertise.

Marine Surveys: A Deep Dive into Condition and Safety

A marine survey is a detailed inspection of a vessel’s specifications, condition, structure, and systems. A certified marine surveyor typically performs it and is an essential requirement for several reasons. The Coast Guard performs regular inspections and issues a Certificate of Inspection (COI) for working vessels. The minimum requirement is that a current survey be completed at least once every five years and, in many cases, more frequently.

If you are considering buying or selling a marine vessel, ask for the current survey and COI. A copy of the survey and COI is also required for securing property and liability insurance and obtaining bank financing.

In summary, surveyors inspect everything from the hull and electrical systems to the propulsion and safety equipment. The goal is to determine seaworthiness, identify necessary repairs, and ensure compliance with maritime regulations. The surveyor will generally not estimate value as part of the survey. If they are asked to provide an estimate, they should do so outside of the specific survey report, and their opinion of value may not be supportable for these purposes unless they are also accredited appraisers.

Marine Appraisals: Determining Market Value

A marine appraisal, on the other hand, is more focused on estimating a vessel’s monetary value. The valuation professional should have experience as an accredited or certified expert with credentials different from that of a surveyor. The American Society of Appraisers (ASA) is a reputable organization offering specialty training in marine valuation.

As part of the appraiser’s data requests, they will ask the owner for a current survey, which will assist them in better understanding the specifications and condition of the vessel. They will then complete their analysis relying on factors such as market demand, comparable sales, replacement cost new, chronological and effective age as well as average annual market depreciation.

Marine appraisals are commonly used for the same reasons as surveys, as well as for other purposes such as estate settlements, business disputes, divorce proceedings, tax, accounting, and financing decisions.

In short, get a survey if you need to know if a boat is safe and functional. If you need to determine its market worth, obtain an appraisal. Both services are crucial in their own right and can help vessel owners make informed decisions.

Valuing marine vessels has certain unique variables to consider that are unlike other types of machinery and equipment. That being said, the approaches and methodologies to rely upon remain consistent with other tangible assets. Therefore, whether it's a supply boat, barge, towboat, fishing vessel, yacht, or container ship, if you are a generalist M&E appraiser, there's no reason to shy away from valuing ocean-going or inland waterway vessels.

To begin, factor in the purpose of the appraisal, which will assist in guiding the necessary criteria. Are you looking to support a resale effort, an acquisition, a determination of insurable value, or an assessment of the vessel's worth for financing or leasing purposes? Each objective may require a slightly different approach.

Once engaged, collect all relevant paperwork, including:

• Registration and Ownership Documents: Verify the vessel's legal status.
• Maintenance Records: A well-maintained boat retains more value.
• Inspection and Survey Reports: Essential for a comprehensive condition assessment.
• Recent Modifications and Upgrades: These can increase the vessel's value.

Reviewing the most recent survey/inspection report, along with reinvestments involved with rebuilds and/or upgrades, can assist in making necessary adjustments to value. Most generalist appraisers are not mechanics or technicians and can only independently adjust for these factors if they have third-party reports and invoices to reasonably verify the condition and work completed.

Focus on comments regarding the hull and structural integrity, mechanical systems (engines, propulsion, electrical), and interior and fixtures (cabin, navigation, and safety).

Develop an effective age for the vessel based on its original build date, annual usage, and major component rebuilds.

Research the current market value of similar vessels by considering the make and model, current specifications, and recent sales of new and used comparable vessels, along with economic data impacting the marine industry. Rely on both the market and cost approaches to value in an effort to balance the two perspectives and weigh them based on the level of comps available to consider.

In summary, as with other types of equipment, once you have the data in hand, use your experience and common sense to develop an analysis that factors in all relevant components to arrive at a reasonable estimate of value. I think you'll find that valuing marine vessels is a challenging but very interesting area of machinery and equipment appraisal work.

What Kind of Equipment is Covered in a Marine Vessel Appraisal? 

• Inland Barges: Though much of the midwest and west was settled because of river traffic, many people don't consider this type of transport anymore, despite its function to keep things moving that would otherwise be prohibitively expensive, such as aggregate, sand, grain, trash, oil, timber, metal ores or other bulky, heavy goods, providing a much-needed, inexpensive option to move these materials to market.
• Offshore Barges: Rivers aren't the only places that you'll see barges moving materials, though offshore barges tend to be larger and with more displacement than their smaller riverboat counterparts. Offshore barges are able to move a wide range of materials between points on the shoreline, without going further afield in many cases due to rougher weather and waterways that may be found further from the coast. At the same time, their smaller engines help provide a more economic option for moving bulk goods.
• Tugboats and Pushboats: Whether it's pulling barges off of sandbars or similar obstructions, getting large ships safely out to sea before their main engines are engaged, shuttling barges at a loading station or any number of other circumstances, tugboats and pushboats are powerful marine vessels that do a wonderful job of getting much larger ships underway, typically sticking closer to shore for the majority of the time to avoid choppier waters further out to sea.
• Hopper Barges: When large amounts of material must be moved, unpowered hopper barges are often chained together, creating a waterborne train of material. This provides the option to move large amounts of material without having to have numerous navigators or crews manning the different vessels, as one is simply pulled along behind the other. This allows a single crew to pull thousands of tons of material along a set course without a lot of extra manpower.
• Oilfield Support Vessels: Offshore oil platforms and drilling rigs need a wide range of materials, changes in crew, new parts for the rig and a number of other items that have to be exchanged at a dizzying rate. Food, medicine, protective equipment, pipeline, couplers, experts, oncoming and offboarding crew members and a wide range of other people and items are carried by oilfield support vessels, providing an inexpensive alternative to spendy helicopter rides for many petroleum companies.

By having a marine vessel appraisal performed on your equipment, you can gain valuable insights into its condition, expected useful lifespan and several other important pieces of information that will help you better manage your equipment assets. However, it's of vital importance that you have the appraisal performed by an accredited equipment appraiser, who will provide you with a properly calculated estimate of your marine assets' value.

When your business is on the water, knowing the value of your assets is a vital part of understanding your company's bottom line. But understanding the process of marine vessel valuation can seem like a much more complicated process. However, when you're working with an experienced certified equipment appraiser, the process is much more seamless. Here's a quick look into how the valuation of marine vessels works, whether you're looking at barges, ships, tow boats or any other type of marine vessel.

What exactly is involved in Marine Vessel Valuation?

A few decades ago, the value of a marine vessel was simple to determine - it was what you could get for it on the open market. But today's connected world has opened up new options, and with those options have come new ways to calculate the overall value of your marine vessels in a wide range of specific circumstances. This allows you a greater level of flexibility in determining what your marine vessel is worth based on your needs.

To start, a certified equipment appraiser will take a solid look at your marine vessel, in terms of the manufacturer, model and condition. If it is in good shape, it will be expected to last much longer than a similar vessel that has been abused or poorly maintained, and that superior condition is reflected in a higher overall value. The manufacturer's reputation and the performance and popularity of that specific model will also come into play, with better reputation, performance and popularity driving a higher overall value.

The next aspect of the vessel's value that will fall under consideration is the reason for valuing the equipment. If the vessel must be sold quickly to pay for other business debts, it's not unexpected that the vessel will sell for a lower value than if the vessel is sold to the right buyer at the right time or held onto while being used as collateral for a business loan. There are some circumstances where the vessel's value must be determined in a specific way, typically when it's being used as proof of value in a court of law.

The third aspect of determining the value of marine vessels is the market conditions. As an example, when trade is booming, cargo ships hold a much higher value than when the economy is poor and the vessels are not as strongly in demand for trade. However, just because trade is poor in one part of the world where you typically do business doesn't mean that you need to settle for a low price. A good equipment appraiser will take these factors into account and determine if there are other areas where your marine vessels would command a higher value, allowing you to capitalize on good trade in other areas.

By having a better understanding of how marine vessel valuation works, you'll have a better idea of what to expect when you're ready to have your marine vessel assets appraised. This allows you to ensure that your business books are accurate and up to date, so that you can leverage the value of those assets to grow your business into a promising new future. However, make sure that you're working with a certified equipment appraiser to ensure that the figures and calculations are accurate and can hold up well in a wide range of situations well into the future.