It is not just old ships that are on trial during recessions. Capital costs cannot just be
written out of the picture. Ships financed with bank loans have a fixed cashflow which
may exceed operating costs by a considerable margin. In these circumstances it is the
owner of the modern ship who is on trial. If the freight is not enough to cover financing
costs and the owner defaults, the bank may enforce its mortgage rights, seize the
ship and sell it to cover the outstanding debt. In this way the market filters out the
substandard owners as well as the substandard ships.