Geopolitics, supply chain disruptions, regulations, market outlook and uncertainties were themes that dominated the final session of the TradeWinds Shipowners Forum at Posidonia on Tuesday, featuring a host of top shipowner names.
The session nevertheless opened from the investors’ side with remarks from Andrian Dacy, the head of J.P. Morgan Asset Management’s Global Transportation Group, calling for caution despite all the profits the industry is currently enjoying. “There are clouds on the horizon and make no mistake, they will arrive,” he told the panelists.
John Coustas president and CEO of Greek containership owner Danaos, said the industry will “fortunately or unfortunately” benefit from the current situation, comparing the market to real estate, where it is all about location, location, location, but in shipping it is “disruption, disruption, disruption, and we’ve got a lot of it from every aspect, I think the most that I can remember at least in my lifetime,” he pointed out.
In addition to covid and current geopolitical uncertainties, Coustas pointed to environmental rules, which for him, no one knows how they’re going to play out, and a dramatic increase in fuel costs. “One thing is sure, they’re going to be negative in terms of supply,” he said.
Evangelos Marinakis, chairman and founder of Capital Maritime & Trading Corp, said he believes the worst is behind the tanker sector, with China opening towards the end of the year, especially for the larger vessels, but also reflected on the container sector, saying that comparing rock bottom rates with sky-high rates is a mistake. “I’m not saying that what we have seen in the spot market is realistic and would continue forever, but on the other hand, some period rates of five, seven, or ten years I think are realistic and it’s something we hope will continue.”
For Harry Vafias, CEO of Stealth Maritime, it’s the first time since 2008 that all shipping segments, with the exception of VLCCs, are performing well. “We are at the point where all different factors point to a better market that will stay for some time,” he remarked.
Angeliki Frangou, chairman and CEO of Greek shipowning giant Navios, said she was optimistic about the dry bulk and tanker markets, but for different reasons. The war in Ukraine is a positive factor for ton-miles. “There are multiple commodities and the disruption is huge. That adds to ton-miles which is very positive for our industry,” while on the tanker’s side, she observed a general increase in oil consumption contributing to a more positive outlook.
The Ukraine invasion and sanctions on Russia were also key topics put on the table for discussion, and panelistswere asked whether they would move Russian cargo.
“The sanctions are not clear-cut, there are a lot of grey areas. This only creates problems,” stressed Vafias, adding that his company does not have a rule not to take Russian cargo, “but the checks sometimes take days and the advice from our lawyers is not always black and white and that is a problem.”
“It’s nice to have an announcement that our fleet would not carry Russian oil. Maybe many would appreciate it and maybe as a promotion for publicity of our companies, but I think this is bull***t, as simple as that,” encapsulated Capital’s Marinakis.
He maintained that sanctioning Russian oil, which is then sold to Chinese and Indian buyers at a discounted price, is the wrong move. “They are buying this oil and exporting (products) to Europe at sky-high prices, and we pay for it. So at the end of the day, we penalise ourselves.”
From Dacy’s point of view, there is a struggle of values where there is currently a political will to pay the higher price against the Russian aggression, but it brings uncertainty, pointing to Ukrainian grain and a potential rise in agricultural prices, which could have not just an economic but a political impact. “I wonder what the political will is at that point to support sanctions. I think we can see a lot of political challenges on the horizon and how long will values ultimately outweigh economic and just necessity realities,” he warned.
Although Coustas and Danaos don’t have trade with Russia, he asserted that sanctions have been designed with a political message without looking into the actual effect of the cost. He reminded that the disruption in the way that has been created by the sanctions has only increased the price of oil, earning Russia at least double what it was earning pre-war. “I don’t understand what kind of penalty is that.”
Looking ahead to newbuilds, fleet improvement, and alternative fuels, Navios’ Frangou said that for shipping it’s a gradual and continuous process. “You have to improve your fleet, you have to have more modern vessels, more fuel-efficient vessels. And don’t forget, that until we find the actual fuel that we will be using, we need to take gradual steps of improving and looking ahead on a step-by-step process.”
For Marinakis, it’s important to go for the new vessels that can face regulations in the near future with LNG as the fuel of choice for now. “We see that LNG will be the fuel for the next 10 to 15 years. Of course, there are a lot of discussions regarding the vessels that can use ammonia, methanol, and hydrogen. This is something that remains to be seen how it will be developed not just by engine makers but also the infrastructure that is needed in order for these fuels to be used.”
Danaos ordered four methanol-ready boxships in South Korea earlier this year. “It’s a bet we had to take,” Coustas said, arguing that “if you don’t take a bet, you don’t do anything and Greek shipping has learned to take bets whenever it was required.”
For him, there is still uncertainty regarding potential future fuels. “It’s not up to us to manufacture them, but in any case, despite what politicians are pushing us to do, it’s pointless to push shipping to become green when there is no green energy,” Coustas concluded, highlighting nuclear power as one of the potential options.