It’s Christmas in Airdrie in Scotland, but Mr Prospector’s dreams take a somewhat darker turn.
Last week marked the turning on of the Airdrie Christmas lights in the precinct. What a show it was too! The chairperson of the Airdrie Working Man’s Club mc’d, reminding us all to make sure that if we were sick due to alcohol consumption that we should aim for one of the new recycling bins dotted around town, and that this year’s lights were 100% recycled too, out of his shed from last year, and the year before, and the year before that as well. ‘Airdrie is going green!’ he proclaimed. We were incredibly excited anticipating Kris Akabusi being there to turn on the lights with a loud shout of ‘Awooga!’, but alas it turned out to be his cousin Dave Akabusi, who is appearing as Buttons in Cinderella at the Town Hall. Still, spirits were high, as were many of the local youth who appeared to be entranced by the Airdrie Wind Ensemble, who played seasonal hits from Slipknot with gusto and verve.
I drifted off to sleep that night with a real sense of seasonal optimism. However, my peaceful rest was interrupted by a vivid dream. I was headed for a Capital Link forum, being held in a Premier Inn in Coventry. An elderly lady directed me to a roped-off area at the back of an empty breakfast room, replete with a selection of up-cycled vegan pastries. The banner read ‘Proudly Meat Free since 2025’. I was dreaming of the future it seemed.
There were about 15 people present, all wearing threadbare clothes that had patches where they had been repaired at the elbows, knees, heels and soles. We took our seats for the first presentation which was ‘Dry Bulk Market Outlook – 2031’. The presentation, given by a cheerful elderly gentleman who said that even at the age of 96 he was still enjoying giving incorrect forecasts with panache and style. He showed a bar graph that went up and down like the contours of a burial mound, noting that demand had now ‘reached’ the levels of 1999, posting a 12th straight decline that was gathering pace. Coal shipments had now all but vanished, iron ore was declining faster than the ice caps, but there was a firm outlook for minor bulks, although no particular specific examples were given.
He pointed out the positive outlook for the market, based on a newbuilding order book that was now at its lowest levels for two years, also suggesting that limited capital for owners meant that there was a further squeeze on fleet growth. An upturn in the market was anticipated for 2031 based on this and ‘the likelihood of increased scrapping due to freight rates being practically zero for the fifth straight year’.
Up next was a banker. Another elderly gentleman who showed exactly the same graphs as the last fella. He pointed out that banks were no longer prepared to lend to speculative projects from inexperienced owners. He felt that it was time banks started to act on green issues such as emissions and said that his bank was now only prepared to lend to quality industrial shipping companies. He felt that smaller banks were causing problems by lending cheaply to substandard owners, and that generally the risk/return ratio for lenders was too low as a result of too much fly-by-night competition.
A prominent owner then took the podium. He was an elderly gentleman who showed the same graphs of the first two. He said that his company had worked extremely hard to lower its cost base and now paid its crew with chocolate coins. Repairs on his fleet, regardless of the issue, were now done with a Gorilla Tape, which they kept in a cupboard at the company’s shared office space in Timbuktu. Everything is done on a just in time basis, as in things are done just in time to stop the ship sinking. However, despite there now being hardly any cargo left that his fleet is allowed to carry and his ships being mostly banned from any global port, the company outperformed an unspecified index by 12%. The outlook was optimistic for 2031 if only other owners would all leave him alone to ship what is left. He fully supported the owners’ associations that were lobbying for the banning of any forms of inspection for ships and to make dry docking only necessary if the ship is on fire. During questions he did say that he could not understand the large gap that remained between share price and net asset value and that hopefully sophisticated investors would reward their story in the coming year.
We had a short presentation from an elderly gentleman who worked for a data analytics company that was sponsoring the conference. He presented a fascinating view of how data and predictive algos could transform the way we analyse data and predict future freight rates. He said that the final version should be ready by 2035.
The final presentation was from a shipping lawyer. He was an elderly gentleman who showed the same graphs as the first three. He said that there were a number of regulations that were having an impact on the market. The first was the banning of all non-sustainable/renewable cargoes that were not part of strict international quotas. These quotas were now controlled by the Global Environmental Agency, with prison awaiting anybody found to be in breach. What’s more, in 2031 only ships with zero emissions could carry any cargoes at all.
He noted that the thresholds for non-government shipping companies to tender for any shipping whatsoever was now $1bn in equity. After operating companies had been banned from loading or discharging in Europe, Asia, South America and Africa, it is only owners with large fleets that can carry any cargo at all and most of it was done on ships chartered by NGOs that policed the quotas and paid fixed freight rates. However, there was light at the end of the tunnel in 2031 as lawyers, backed by operators and owners of old ships, were lobbying hard for their right to pollute. It was noted though that Greta Thunberg, head of the GEA, had said ‘You have to be joking. There is zero chance anybody is interested in what you have to say’.
The final act of this nightmarish dream was the cocktail party afterwards. Spelt bread sticks and locally sourced tap water for the 15 guests who had all come on a narrow boat pulled by alpacas, specially chosen as they emit less greenhouse gases and can provide passengers a nice soft scarf from their fur that grew during the journey, thus lowering the carbon footprint as you could wear the scarf instead of turning up the heating. After the tax on aircraft travel was brought in in 2022, the number of shipping meetings, parties, dinners and receptions had fallen by 99.9%, with the 0.1% remaining attributed to just three elderly gentlemen.
Suddenly I awoke, dripping with sweat, shaking with fear of the dystopian vision of shipping in the future. A future with falling demand, no return on capital, continued speculative newbuildings, unsubstantiated optimistic outlooks for the market, no more meetings, cocktail parties, no industry voice of meaning whatsoever in the market, and seemingly nobody young or female. I rubbed my eyes, sat bolt upright and breathed a sigh of relief. Outside of my bedroom window I could make out One Armed Archie hunched over a recycling bin. I was still in Airdrie, it was Christmas 2019 still. It was only a bad dream after all!