The Drybulk Panel at Capital Link’s International Shipping Forum (now in its 16th edition)th Year) turned out to be lively, to say the least, as the participants from the shipping companies delivered a friendly salvo along the lines of “which is better?”.
Martyn Wade, CEO of Nasdaq-listed Grindrod Shipping (symbol “GRIN”), which operates 31 Handy and Ultramax bulkers — most owned, some on long-term charters — under the Island View Shipping (IVS) banner, said : “It’s our turn time…” and “You pinch yourself…it’s really, really hot out there,” after recently spotting a roughly $50,000-a-day, 33,000-ton truck doing the job moving containers. Later in the meeting, Mr. Wade said that GRIN “is happy to reward long-suffering shareholders” with dividend payments and prudent management of the balance sheet.
On the other side of the screen (the forum was virtual this year), Ulrik Uhrenfeldt Andersen, the CEO of Golden Ocean (“GOGL” on Nasdaq and in Oslo), which controls 92 ships split between Capesizes and Panamaxes, said: ” Over time, the Capesizes will outperform the smaller vessels.” Currently, daily vessel charters for small bulkers exceed those of the larger vessels; Panamaxes have seen nearly $30,000 per day based on a composite of time charter voyages, while capesizes (also a composite) earn about half that.
With Capital Link’s audience heavily geared toward investors and finance types, much of the conversation turned to future events, with questions about the ongoing war in Ukraine being linked to “decarbonization,” a much-hyped topic, in this part of the conversation.
Star Bulk (Nasdaq: “SBLK” – with a company slogan “Give me a ship and I will move the earth”) CEO Hamish Norton (a former investment banker) emphasized the reduced supply of ships and its importance to dry bulk strength. Mr Norton, who commands a fleet of 128 vessels ranging in size from Supramaxes (52kdwt) to Newcastlemaxes (210kdwt), explained: “A big impact on vessel supply reduction is high bunker prices… it’s something you think intuitively hurts, but actually it helps a lot.” He further explained to the audience: “Everyone individually tries to maximize their profits, huh [you do] by slowing down your ship and using less fuel… it reduces ship supply.”
The impact of the Ukraine crisis goes beyond high fuel prices (linked to the supercharged oil market). Mr. Andersen suggested: “A shorter conflict is probably good for shipping, while a longer conflict is probably a little negative… Coal is likely to be allocated more efficiently because the Russian coal can no longer get to Europe… it’s got that from countries so far away.” to come like Australia, as we have seen…and that is capable of adapting to a prolonged conflict…while the grain, a fairly large part of which comes from Ukraine and Russia, can probably be replaced by others in the short term [ports] but over time we think demand destruction will occur.”
Panelist Stamatis Tsantanis, CEO of Capesize specialist Seanergy (Nasdaq: “SHIP”), expressed optimism, saying that 50 million tons of Russian coal flow into Europe every year, and now “it has to come from longer distances than the Capesize segment set aside to benefit from it.”
The “elephant in the room” nature of the question concerns the impact of the Ukraine war (and its possible unspecified timeframe aftermath) on maritime decarbonization, which has a timeframe measured in decades (and a price tag in $trillions).
Noting the recent disruptions in energy markets and political implications such as sanctions, Mr Polys Hajioannou, the CEO of Safe Bulkers (NYSE: “SB”) said: “I believe there will be a delay… which is good for ours Market … but bad for the environment.” He put the timing of the delay in decarbonization steps at “a year or two”, in response to a question about a previous order of very efficient (EEDI phase 3) and attractively priced and very fuel-efficient newbuilds for bulkers – which will see deliveries beginning later this year from Japanese shipyards.