A well maintained bulk carrier can operate until 30 years of age without any problem. That’s what Massimo Giovannini, managing partner of the Monaco-based Trans Sea Transport (TST), believes when looking back at what he has experienced in his career in the dry bulk market.
TST group began its activities in 1979 with a large COA to ship monthly parcels of 10,000 mt steel from Italy to US but in the following two decades the original company changed; the new TST grew and evolved in a new direction, entering segments of dry bulk such as grains, cement, wood pulp, woodchips and others.
“Due to a fundamental change in market conditions in 2003, we saw an opportunity to become asset players in the shipping industry and play the cyclical market to our advantage,” Giovannini says, recalling when TST started with a fleet of two owned vessels which has increased nowadays to six units.
“Our strategy,” he outlines, “is based on some specific features: we are active only in the handymax sector, we are used to operate older tonnage – our ships are ranging today from 14 to 20 years old, we operate all of our fleet on the spot market, mainly on the Atlantic basin, and sometimes we charter-in ships. While we are not tonnage providers, we are not scared of operating old ships. All that said let me emphasise that we only select Japanese-built vessels.”
Evidence of this approach is that in 2011 the company scrapped two bulk carriers which were 36 years old.
TST is based in Monaco (along with agent company Sogemm), in Greece where technical manager TST International operates the fleet and in New York which is home commercial agent Triworld Shipping Services. TST is today in a buying mood.
“We have been negotiating the sale of one of our units recently since the investment fund which retains a majority share on several ships decided to exit after a cycle of some seven years,” Giovannini reveals.
The ship on the sales block is the 1997-built bulk carrier Dokos.
At the same time the head of TST is also clear that the company is going to invest in further tonnage.
“We are obviously looking at handymax bulk carriers in the range of 35,000to 56,000 dwt since there were practically no orders for these ships in the last few years, but I’m also considering kamsarmax sizes. I would like to work with the banks for financing the next purchase but the challenge is that, unlike investment funds, they do not lend money for a deal if the loan term exceeds the 15th year of age of the financed vessel,” the owner says.
On the markets, Giovannini sees opportunities, saying: “Thanks in particular to the postponement of the Ballast Water Treatment introduction, aged bulk carriers will have the possibility to obtain good rates in the next three years and shipowners can go back to investing in new tonnage set to be repaid in the next decade. The historical low market rates seen in the period 2015 and 2016 were not sustainable for bulk carriers, yet the high rates reached in 2007 and 2008 were not normal either. The dry bulk market today is again in the hands of physical trades and no longer in the FFAs’ hands.”