March 11, 2025 • 38 mins
Dry-bulk rates are well below their pandemic peaks and are now hovering around operating costs for many fleets. The outlook will be challenging this year as supply growth is expected to outpace demand by 230 bps, based on a forecast by Clarksons. In this Talking Transports episode, Jan Dieleman, president of Cargill Ocean Transportation, joins Lee Klaskow, Bloomberg Intelligence senior transportation and logistics analyst, to share his insights about what’s on the horizon for its fleet of about 700 chartered vessels. Cargill is on the long path to reach the IMO’s goal of zero emissions by 2050 through innovations and testing biofuels and wind, as well as taking delivery of five dual-fuel methanol ships this year. Dieleman also talks tariffs, regulations, discusses Red Sea voyages and his long career moving dry- and wet-bulk cargos around the world.
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Episode Transcript
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Speaker 1 (00:07):
Hi everyone, this is Lee Klaskow. We're Talking Transports. Welcome
to Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee Klascow,
Senior Freight Transportation Logistics analyst at Bloomberg Intelligence, Bloomberg's in
house research arm of almost five hundred analysts and strategists
around the globe. Before diving in a little public service announcement,
your support is instrumental to keep bringing great guests and
(00:29):
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So please, if you enjoy this podcast, share it, like
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ideas for any future episodes, or just want to talk transports,
please sit me up on the Bloomberg terminal, on LinkedIn
or on Twitter at Logistics Lee. Now on to our episode.
We're delighted to have Yon Dileman, President of Cargo Ocean
(00:52):
Transportation with us today. It's a position he's held since
twenty sixteen. Jan has had a long and successful career
since he joined the company in nineteen ninety nine as
a management trainee in Amsterdam. Johan is also chair of
the Global Maritime Forum, non executive board member of right
Ship Advisory Board, member of Lloyd's Register and a member
(01:14):
of the Board of Advisors for London International Shipping Week.
Twenty twenty five, John graduated from the University of Mastrich
with a master's degree in Economics, Marketing and organization. Yan
Welcome to the podcast. Thanks for joining us today, Thanks.
Speaker 2 (01:31):
For having me.
Speaker 1 (01:32):
So, you know Cargill Ocean Transportation. I think a lot
of people listening might know what cargol is. Could you
talk about you know, the division that you lead.
Speaker 2 (01:42):
Yeah, it's an interesting division that I'm actually leading. We'll
have the privilege of leading, and we are quite I
would say you special in our industry because we are
both a charter so you can call it a USU
Littal freight, but we also a operator real freight, so
we move quite substantial volumes around the world every year.
(02:03):
I would say north of two hundred million tons. You
can call that a fleet of close to seven hundred
ships at all time. And part of what we do
is for the internal product lines is you can imagine,
so you're being corn and those kinds of products, but
we're also doing a lot of products for other customers
outside cargo, but also outside the industries that we as
(02:26):
cargo are operating in because freight is a big network
of all kinds of commodities being shipped around the world,
and we play a substantial part in that.
Speaker 1 (02:36):
So can you talk about the fleet that you operate?
How many ships do you have? Kind of what's the
makeup of the fleet.
Speaker 2 (02:42):
Yeah, So the majority where we're focusing on is dry
book that is about ninety percent of what we do.
Then we have about ten percent that is in product carriers,
so that's in liquid form. If you look in the
dry book, we're basically present in every single segment, so
all the way for from cape sizes all the way
(03:02):
through camp sell maxes, ultramaxes and even into some local coasters.
So we are very very spread out. And as I
said earlier, we were running roughly your fleet over around
seven hundred ships, of which a part is very short term,
can be as short as just one voyage of ten days,
fifteen days, all the way up to long term time
(03:24):
charters of up to ten years.
Speaker 1 (03:27):
Okay, and then I guess on the longer term, like
the fleet, like I guess, how many do you own
versus your charter?
Speaker 2 (03:34):
Again, Yeah, so we don't really own the assets. So
what we normally tend to do is take long term leases.
So we're working very closely with owners. We do have
some programs around bare boats, which is a specific way
of leasing. So although I would say we don't own
(03:55):
these ships, if you have a commitment of running these
ships for ten years, it's kind of similar than in.
Speaker 1 (04:00):
Them, right, gotcha? And so can you talk about the
markets that you served? You you mentioned they're the traditional
markets you think of when you think of cargo, like soybean.
Are there some markets that are I guess doing better
than others from your vantage point?
Speaker 2 (04:17):
Yeah, So I think most people will appreciate that that
shipping in general and dry book is not any different.
It's a very cyclical business. You have these times where
there's shortages, there's a lot of product moving. Then you
tend to have a period when there's an overbuilding of
ships and then there's too many ships as the cargo
(04:37):
and the famous boom and bus scenario is something that
I have seen quite a few times over my career.
So at any time there's always a story and that's
that's what I like in freight because, as you say,
there's always a product that is being transported. Right, So
if you want to do well in the ocean transportation sphere,
(04:59):
you need to underst and the products that you ship.
So today, for instance, there's a lot of focus on
on soya beans from Brazil because that's the time of
the year when the crop gets moved. Then at times
that moves into into uh into North America. Then of
course you have a product like I would or which
is a huge product that shipped around the world, and
(05:20):
you have all kinds of events happening all the time,
like weather events, we have congestions or so there's always
a story, I would say behind these commodities. I do
think it's fair to say that at the moment, coming
off the whole COVID period that was very strong for commodities,
we're clearly in a situation where most markets of the
(05:44):
products that we are shipping are over supplied at the moment.
Speaker 1 (05:48):
Gotcha, And so you know, you mentioned that, you know,
there's always there's always stories and about about the industry,
and the last couple of years, there's been a plenty
of geopolitical events that have impacted shipping in the dry
book industry. Can you can you talk about, you know,
how those geopolitical events, whether it's you know, Russia's war
with Ukraine, whether it's the closure of the Suez Canal,
(06:12):
how that's impacting your business.
Speaker 2 (06:14):
Yeah, so so that is a glo a global business,
right and and and to be honest with you, there
is always something happening in the world, and so we
are used to geopolitical tension. Of course, it's fair to
say that if you look at the recent years, that
is that is clearly stepped up a bit from a
wrong period where it was it was less the case.
What you tend to see with those geopolitical events is
(06:36):
that it creates volatility, absolutely, and because people are also
trying to figure out when these things pop up, what
does it actually mean, right, so there's a lot of
anticipation what that could mean. And what you also see
a lot of these geopolitical events actually are not in
favor of efficient supply chain. So normally you get inefficiencies
(06:59):
as a result of these geopolitical events that you have
taken place, and normally that results into longer turn miles.
So it might be that you have to avoid an
area like the Red Sea, or it might be that
certain flows are changing from one origin to another origin.
So there's a lot of things that normally tend to
happen as a kind of first and sometimes even a
(07:19):
secondary or a third kind of level of reaction. So
these things are something that we are used to, and
that's why I think it's important in this industry to
be edgile and to make sure that you can pivot quickly. Right.
Speaker 1 (07:34):
And so a lot of these geopolitical issues, whether it's
you know, Russia's war Ukraine or again the closure of
the Swet Canal, you know, they've been kind of good
if you you know, if you're chartering out your ships,
or you know, if you're moving freight for other people,
how does that impact cargo Because you're obviously moving your
(07:54):
own stuff, but you're also moving other people's stuff. You know,
it's been helping rate. Obviously, borring those issues, rates will
probably be a lot lower right now. So can you
talk about how that impacts your company? Is it a
good thing when rates are high or a bad thing
when rates are high?
Speaker 2 (08:12):
I think I think good good is as an interesting perspective, right.
I think what we're trying to do is that we
in a sense, we are a freight trading business. So
what you're really trying to understand is is our rate
going up or rates going down? And then accordingly we
can also position ourselves right so we can play with
(08:32):
long time starters, we can take more coverage at any time.
There is quite a large derivative market as well in
dry freight, which you can also use. So for us,
it's difficult to say if high is better than low.
It's really are we able to anticipate what the next
move is is the most important part for us. And
(08:53):
we also need to work with our customers of course,
because they have supply chains to run, so we're trying
to advise them on what we think is going to happen,
or what some of the impacts are, or things that
are in your market right here, right now. And in
that sense, it's a continuous conversation, and it's difficult to
say what's better to be at high levels or low
(09:14):
levels because what I said earlier, we're not an owner,
but we're also not just an end user. We are
buying that space in the middle of which I think
makes it a bit different.
Speaker 1 (09:24):
Right and then I'm assuming you're not operating ships through
the twst Canal right now, So what we've this is
a fluid situation, right.
Speaker 2 (09:34):
So what we have been doing, like most people is
deviate as much as possible. So we're avoiding the Red
Sea as much as we can. That has been the
case for quite a period of time by now. But
the reality is there is also flows that if you
don't go through the Red Sea, these flows are not
able to go into the world market. And I think
(09:54):
a good example of that is Ukrainian exports of agriproducts.
If you if you want to export products out of
that region, you don't really have a choice then going
through the Red Sea, because otherwise you would not be
able to compete in the world of the eastern side
of the world. Right. So there is some of these
things that that we do look at. It's a case
(10:16):
by case, I would assessment. But we have been having
some ships through the Red Sea and through the sewers
over the would say the last probably twelve months. But
it's clearly not business as usual.
Speaker 1 (10:28):
So you know, I haven't talked to many companies that
are actually using this to as or Red Sea right now.
Most of the companies that I spoke to, at least
publicly say they've been avoiding it. So what does that
mean do you guys charge like a premium because the
risk premium that's involved is your insurance much more expensive
(10:50):
because of you know where you're where you're going.
Speaker 2 (10:54):
Yeah, so you know what what you're trying to do
is first of all, as you say, right, and I
think most people say, you're trying to avoid. So I
think the first thing is trying to avoid. But then
you are going to have these kinds of choices to make,
like Okay, are we going to help the Ukraine export
into certain regions or are we just going to shut
that off? And I think we've been around for a
(11:15):
long time to say, okay, let's let's try where we
can move food where it's possible, and then it becomes
a question on is there a way that you can
actually make that work. So what we are doing in
those cases is we're working clearly with owners that have
done this before, so it's it's people that have expertise
in those kinds of trades. Yes, of course, insurance premiums
(11:39):
are high because don't forget that if you are exporting
out of the Ukraine, you're actually passing two war zones
in the insurance world, right, So it is very expensive
to do that and that's why it is. It is
case by case. This is not a standard flow that
is going continuously, and then you work with all the
(12:01):
all the navy and everything around there to ensure that
you have safe passage. The good thing is, I think
if you look back over the last three four, maybe
even five weeks, we haven't seen really any attacks in
the region, and if you look at the sewer's transitions,
they're actually starting to edge up on different type.
Speaker 1 (12:19):
Let's hope the see as you know, finally opens to
everybody and you know there's a little more peace in
that that region of the world, you know. So obviously
when we're talking about dryball demand, China is a major
importer of commodities around the globe, whether it's you know,
dry or wet commodities. Can you talk about you know,
(12:43):
demand out of China and you know, maybe are there
certain commodities that are doing better than others when it
comes to being imported into China.
Speaker 2 (12:53):
Yeah, So, as you say, what, China is extremely important
for the freight market in general, not only big it's
a huge import, it's also a huge ship builder. It's
a huge financial force in ship lending. So if you
take it all together. It's a very important part of
the maritime equation if you look at the demand side.
(13:14):
I think what I always find fascinating in the job
that I am in is that you somehow get a
bit of a front row seat on what is happening
happening economically. And we have seen the slowdown in China,
and that for US probably started already fourteen fifteen months
ago before a lot of people were actually talking about it.
(13:35):
We started seeing that iron ore stocks were moving up,
steel prices were not doing well. So yes, we have
a front row seat, but sometimes you also get very
interesting things, right that all of a sudden there's a
push of Chinese exports on still, So even if the
economy might not be doing well in China, sometimes the
(13:58):
result of that is actually that you see more exports
and that is sometimes actually creating more freight demand than
what you would expect. So it is a very complicated equation,
and China is something that we look at day in,
day out because it's a huge factor in the whole
freight pocket.
Speaker 1 (14:14):
So like looking across Pacific from China, you know is
the US. And obviously now a day goes by when
there's not news out of the government when it comes
to trade or trade related issues.
Speaker 3 (14:29):
With the risk of tariffs, the threats of tariffs, the
introduction of tariffs, the removal of tariffs, the delays of tariffs.
HAPA sat impacted the drybak market.
Speaker 1 (14:40):
Did you guys see like a pre buy you know,
early on and kind of I'd love to hear your
thoughts about, you know, how the tariff is going to
impact the drybalk space.
Speaker 2 (14:50):
Yeah, so so Teif's is nothing new in in principle right,
that has been around for a long time in many
places in the world. I think what is really the
impact it is the change in terriffs is something that
is driving a lot of volatility. I think is what
we said before. I don't think anybody here has a
crystal ball on what's next or what the exact consequences are.
(15:12):
So we haven't really seen people trying to outsmart somehow
the TERRORFF discussion. Neither have we. We are sitting here,
We see what happens and we just see how we
can react in the best way. In general, terriffs are
a little bit like sanctions. I would say they create
inefficiencies somehow, which on the one hand, can be disruptive
(15:36):
and actually positive on freight rates at times. But then
again it's all the question are we overall shipping more
or less? Because if terrors mean that you're shipping less,
then that clearly will have a negative impact on my Yeah,
and so.
Speaker 1 (15:50):
You know, terror's tender lead to trade wars. If China
decides to import a lot less, you know, US agg
is that good or bad for drybok rates? Like, would
they be substituting that with soybean from soybeans from Brazil?
Is that that that would be a good thing for
the drybock market in terms of rates.
Speaker 2 (16:11):
Right, well, exactly, And then that's why I think it's
it's it's it's very dangerous to say terrorts are good
to terrots are bad. I think it really depends if
you are going to see a switch of origins that
could be positive or negative. In trait. We have a
term that is called the ton mild demand, So it
basically means not just the tones that you ship, but
also how far away do they actually have to travel.
(16:34):
So if there's a difference between US to China or
Brazil to China, that is also having an impact. It's
not just a one for one equation, and then you
might have shutain oversupplied the regions in the world at times.
So it's really a fluid situation. But in general, I
would say, as I said earlier, it creates inefficiencies. Inefficiencies
(16:55):
normally tend to go to higher freight rates up to
the point that you are actually destroying or destructing demand, right, gotcha.
You know, we.
Speaker 1 (17:04):
Started the tariff discussion with talking about the US government.
There's also you know, some I guess ideas being floated
around about penalizing Chinese built ships that that that you
know call ports in the US, you know, with fees
of up to one point five million dollars per sport.
(17:27):
What do you think of that? Like that that's gota.
How is that going to impact the dry ball market
if that actually becomes law.
Speaker 2 (17:34):
Yeah, so I think this is very new, so we
are still assessing I think, what the potential impact of
that could be. But also depends very much per segment.
I think you have segments in in in the freight
market where there is a high percentage of Chinese built ships,
and if you go into the dry bilk you're getting
(17:55):
close to fifty percent of the fleet is Chinese built.
When you go to other said classes, it can be
fifteen twenty percent, and I think containeders is more like
twoty five percent, So it really depends, I would say.
And also also of the dry bill flows to US
is a relatively small percentage of world trade, so that's
(18:17):
also something you have to look at. But clearly it
will create as I said earlier, this is one of
these things again that will create inefficiencies that probably will
create some more dedicated kind of fleets going back and
forth in a certain region, which ultimately probably will lead
to a higher freight rate.
Speaker 1 (18:36):
Right, And we can't talk about regulations without talking about emissions.
You know, the industry is very focused on reducing those
dimissions getting to zero. Can you talk about what Cargol
is doing to kind of meet those goals, you know,
whether it's alternative fuels or whatever.
Speaker 2 (18:56):
You guys are.
Speaker 1 (18:58):
Either testing, playing around where they're actually implementing.
Speaker 2 (19:01):
Yeah, so it's an interesting question because we've been on
the emissions journey actually twenty seventeen, and I still vividly
remember that we had a discussion here in our leadership
team and we just couldn't believe that the whole world
was talking emissions, and everybody thought that shipping was going
to get excluded, so we felt something had to happen.
(19:22):
We didn't know what exactly was going to happen. We
knew that it was a hard to bait the industry,
but we also knew that we actually didn't know a lot.
And I think that was a really good starting point
for us. And one of the first things we did
in the very beginning is starting to look at our
emissions and trying to actually understand our current footprint and
where the emissions coming from, what are the sources, what
(19:43):
are some of the things you could do, And that's
been very, very helpful. And we also started to very
early on make our numbers actually public and say, you
know what, this is what we have. We are committed
to haransjucing this. We don't be honest know how we're
going to do it, but want to give it a go.
And it's been a tremendous journey for us. We didn't
(20:04):
do it alone because I think this is one of
these topics that you have to collaborate. You have to
work with other inner players, because otherwise you're just going
to spin your wheels and not going to go anywhere.
So we worked with partners like the Global Maritime Forum,
we worked with partners like the Musk Institute, and we
started to learn. And as we started to learn, we
(20:24):
started to implement some of the things and trying to innovate,
and we've been innovating a lot of energy efficiency. Things
to think about is different pains. You can have some
different generators, even simple things like laedal its on board
of ships, which is not standard. So we really started
to look at that and sometimes prey finance that with
(20:45):
owners because in those days, I think a lot of
the owners were a little bit skeptical. I would say
to invest themselves, and we said, okay, if that's difficult
for you, we are willing to take the lead on that.
And we went all the way into to things like wind,
which has been something that we've been actually testing a lot,
and at the moment we have three different wind types
(21:06):
and wind is free and every tone of fuel that
you can save is not only good for emissions, but
it's also good for economics. So we really looked at
that part. And then of course we know that over time,
if you really want to get to zero close to zero,
you have to also start looking at different shield types
because it's the only way that you get there. And
(21:28):
we started experimenting very early on. I would say we've
dropping biofuels, which was something the industry wasn't used to,
and then we started dipping in some of the new technologies.
And at the moment we have five ships on order
which are due or fuel for methanol and the plan
would be to try to see if you can get
green methanol in those ships at some point. So we're
(21:50):
really trying to take an innovating role and a little
bit overall where we're trying to showcase the industry of
what's possible. I think the only problem is if you
really want to scale this as an industry, you have
to go somehow. Regulation also following, and up to now
we've you've seen the first steps into that direction. In Europe,
there's quite some regulation around emissions already and the IMO
(22:14):
was clearly looking at a regulation as we speak.
Speaker 1 (22:16):
So do you think the goals what is it zero
emissions by twenty fifties?
Speaker 2 (22:21):
Is that?
Speaker 1 (22:22):
Do you think that's reasonable?
Speaker 2 (22:24):
Because you know it, you know.
Speaker 1 (22:25):
These are as, you know, very expensive assets that have
long lives. Uh, you know, twenty plus years. So what
are your thoughts about reaching those goals. Do you think
those goals or reasonable?
Speaker 2 (22:40):
Why? I think it would not be fair to say
that that's a slam dunk, that is easy, it's it's
gonna it's it's a it's it's a very ambitious and
and and and complicated journey to get there. I am
an optimist though in general probably, and I think if
you really get the industry going with regulation that is
(23:00):
actually helping to get towards that point, I think we
can get very very far. Now. I do think that
we have to be a little bit careful talking about
the maritime industry as one, because there's very different pockets
in there, and all these pockets, in my mind, will
not be going at the same speed. Because if you're
talking at the definition of the maritime industry in the IMO,
(23:23):
it goes all the way from cruise ships to container ships,
bocus tankers and large ships, and also ships that are
tramping in West or East Africa. So I think we
also need to be a little bit careful just to
not have one brush to paint all these asset classes.
But I do think with the right regulation in place,
(23:43):
I think we can get very very close to those
things if we're all pulling.
Speaker 1 (23:48):
Our weight, right, and you imagine Europe has kind of
been leading the you know, the regulations on a mission globally.
Are there any reals at a Europe that you think
that are are good and makes sense and you'd like
to see them implemented in other regions to try to
(24:09):
get the industry to that goal.
Speaker 2 (24:11):
Yeah, I think there is a cool census, I would say,
and maybe that's a big word, but if you are
talking about regulation, then there needs to be somehow a
two step approach to this, and one is working with
a fuel standard, and that is what Europe has introduced.
It's called a few EU Maritime. But the expectation is
(24:34):
that your reducial remissions over the years, and if you don't,
there's a penalty system. There is some compliance that you
can trade, et cetera, et cetera, which I think is needed.
It's also needed from a regulatory point of view, because
what you said earlier, these are expensive assets and you
need some regulatory clarity before you're going to invest in
new technology because why would you invest in new technology
(24:57):
if it's not going to be backed by regulation? Right? So,
you get that chicken and the act going. So I
think that's an important part. And then what you have
in Europe is shipping is also since last year part
of the European the Mission Scheme, so the ETS scheme,
which basically says that you get a penalty for the
use of fossil fuels like you have on land. That's
(25:20):
also extended to see I think the IMO is looking
at something similar with I think a distinct difference that
actually some of the collecting of that fund would actually
flow back into the industry and actually support some of
these new technologies. And I think if you get a
mechanism like that, I think you can really really accelerate
(25:40):
the investment in this area, which is going to make
it easier, as you said earlier on to get close
or to the goals for twenty fifty.
Speaker 1 (25:50):
You mentioned earlier about when can you talk about what
you know what that entails, because I think in most
people's minds were thinking about sales and you know ships
of your time.
Speaker 2 (26:03):
Yeah, No, it is fascinating and it is to some
extent going a little bit back to the future. I
would say, so we are looking at at the concert
which is officially called wind assisted propulsion, and that is
actually trying to combine I would say the best of
two worlds, right, And I don't think in twenty twenty
five we want to be depending in our supply chains
(26:24):
on the wind being there, yes or no. I think
we pass that point and so we're still having of
course ships, revengines and stuff. But I think the wind
assist of propulsion is actually helping to reduce the amount
of fuel that you use, and it is very efficient
on certain roots. When you have a lot of wind,
as you can imagine think about North Atlantic. There's a
(26:46):
lot of things you can do, and then the wind
the system propulsion comes in. The systems come in very
very different shapes and forms. So we have the really
big ones, and we have one of them on the water,
which is in this case bar technology, which is a
wind wing which is nearly stretching up forty meters, So
(27:06):
that's significant. Two kind of wings on that ship, which
is expensive, but of course you also get a lot
of savings. And then you have also a lot of
smaller systems which are used and can be probably easier managed.
But then on the other hand you also have less savings.
So we're really trying to find the optimum. And I
think what is important in this case with win the
(27:29):
system propulsion is it is very important because as you
go to these more expensive fuels, because let's don't fool ourselves,
these new fuels are probably two or three times more
expensive than current fuels, every time that you can save
in that new environment is tremendously important because you make
the problem bigger, smaller. And on the other hand, the
(27:50):
economics to get the investments actually paid off also make
a lot more sense at these kinds of levels, as
you can imagine.
Speaker 1 (27:56):
Right, So, like with the ship that you're operating with
the wings, is it paying for itself or is it
just it's it's a new technology that it's it's kind
of expensive, and it's it's being tested out, and you
know maybe over time those costs will will decrease and
and and and the productivity will increase.
Speaker 2 (28:15):
Well, it's it's it's clearly a prototype, right, It's it's
it's something that was never done. So it's it's trying.
It's learning. It's from these learning making adjustments and and
and and what I always like to think about is
you're creating this this kind of spinning wheel where you
have innovation on innovation, and I think that is what
we need. But it's clear that that the first prototypes
(28:37):
of of of these kinds of new technologies are not
economically viable, that they shouldn't be, but we're really trying
to find a pathway. How can you scale them so
they become cheaper, and how can we also just make
sure that we we find the route roots and all
these kinds of things as well, because it's a it's
a complicated equation, so and and we're learning every day.
(28:59):
I do think, as a said earlier with this, especially
with these more expensive fuels on the horizon, I think
the combination of wind with all kinds of other energy
saving devices makes an awful lot of sense.
Speaker 1 (29:11):
Great And and are there any other regulations that are
on your radar that you're kind of paying attention to,
whether the regional regulations or globally.
Speaker 2 (29:19):
Well, I think shipping is it's a global business, so
you have regulatory changes all the time. I do think
that by far the most important regulation that we're watching
very very closely is exactly what we just talked about
around the emissions. So the International Maritime Organization is working
on legislation to getting us towards the twenty to fifty goal.
(29:43):
And that is a regulation that is not something that
is going to change every time. That is really going
to be there for the medium to longer term, which
I think is extremely important if you think about how
is your business going to run or look like in
ten years, what kind of assets are going to make
sense in the next ten to fifteen years, And in
that sense, it's very different than a change in terrorists
(30:04):
that can be unwound the next day. Again, So that
is really something that I think is important, and I
think a lot of people underestimate the change where this
industry is going through because we are coming from a period,
a long period of time where we had a single
regulator and a single fuel and nowadays we have multiple
regulators and multiple fuel and that makes the equation a
(30:27):
lot more complicated.
Speaker 1 (30:28):
Right, absolutely, So if you're gonna look into your crystal
ball and figure out, you know, the rest of twenty
twenty five, where do you see demanding rates going for
the drybock market.
Speaker 2 (30:40):
Yeah, I've learned in my twenty five years plus incommodities
and the big partnershipping that the crystal ball doesn't work,
So that is the disclaim would I would put straight
out there. I do think we've come off in the
beginning of the year of a very depressed market, rates
very very low, most of the asset size is very
(31:03):
close to to operating costs. So I do think when
you look at China that looks a little bit better.
To be honest, I don't know what's going to happen
with with terrorifts and sanctioned so that's the big wild card.
I do believe that the second half of the year
has a chance of being better than the first half
of the year, but I don't think, barring a mega event,
(31:29):
we're going to see anything close to the to the
COVID levels that we've seen over the last couple of years.
Speaker 1 (31:37):
Gotcha, So in the beginning of the conversation, I mentioned that,
you know, you join the company as as a trainee,
so what what I know? It was a long time ago,
so hopefully you're going to remember.
Speaker 2 (31:49):
Uh what what?
Speaker 1 (31:50):
What kind of made you gravitate to the shipping industry.
Speaker 2 (31:54):
Yeah, it's an interesting story. When I aim of university,
when I started with cargo freight was not on my
radar at all. Shipping market wasn't on my radar at all,
and I was in commodities the first couple of years,
and I got in touch with some of the freight
colleagues because we needed trade support to move things around.
(32:16):
And at some point I was asked to join the
freight department. And at that time I was thinking, if
I want to be a good commodity trader, a good
physical commodity trader, I better understand Fred. So why don't
I They spend just two three years there, get some
of this knowledge under my belt and move on. And
I moved into this business in two thousand and two,
(32:38):
and the eight years there I never looked back. We
had China booming, we had all kinds of commodities deregulating,
we had trade markets completely exploding, and we had a
ton of fun. And this was the time that that
shipping started really kind of getting into me. Because it's
a global market, there's a lot of people contact. Still
(32:59):
I have to say it's still a very network kind
of business. And then I went to the energy businesses
for six years, which I really enjoyed. But when that
came back, I think it was for me the perfect
time because shipping is actually for the big part energy
as well, White because if you look at how much
actually these ships are using in terms of energy, it's
(33:22):
kind of the two worlds coming together and with the
whole energy transition on top of it. It's really an
industry that it's gotten very, very close to my heart.
Speaker 1 (33:32):
Yeah, and you mentioned it's a people business and I
know on your when it made the introduction you are
a member of the board of advisors for London International
Shipping Week twenty twenty five. That's a big conference in September.
Bloomberg's actually having an event that week, so hopefully I'll
be able to see you in person and anyone else
(33:54):
that's listening, you know, have that on your radar. You
should check out the London International Shipping Week website for
all the details. That was a shameless plug, but you know,
could you talk about you know, I guess are there
any books that you that you've read recently? Is something
I like to ask my guests, either if it's on
leadership or in the industry that's kind of close to
(34:17):
your heart that really resonated with you.
Speaker 2 (34:20):
Yeah, And I have to say I'm an on and
off reader. I like to read when when I'm traveling
all when when I have a bit of a break
and that. There's two books I would say I've recently
read which I thought were interesting. One of them is
called A Billion Dollar Loser. You probably know the book
that is around the ad Alnoyman and we work. It's
(34:42):
a fascinating story of how fast growing business can also
calm down very very very fast. So I think that's
always a good reminder to read some of these stories.
I find that fascinating. Another one I read, which I
would definitely recommend people as well, is it's called Supremacy,
(35:03):
and it's all around aicht GPT and and the race
that will change the world, as they say, And that
really gives a bit of a background on all the
players and the history and some of the dynamics around
what's all happening in the AI space. So not so
much about the use cases and the product, but really
how we got there, and it's fascinating to see how
(35:25):
the technologies and some of these personalities are interacting. So
for me, it was a very interesting book.
Speaker 1 (35:30):
Yeah, I just got back from TPM and Long Beach
earlier in the week and AI was frightened center are
is cargo transportation utilizing AI or machine learning, and and
how are you how are you leveraging that technology?
Speaker 2 (35:46):
If you are, there's no way of escaping AI, right,
I think that that's what we all see. So I
think what we're trying to do is we spent the
last couple of years a lot on the digital roadmap.
It's interesting because when I was talking to you around
the whole sustainability drive, the whole emissions drive that we
started to identify in twenty seventeen, in that same meeting,
(36:09):
we also had a long discussion on digital that was
going to disrupt the maritime industry and and up to
last year, I would say that that's been very underwhelming.
Those days we were talking about Uber for shipping and
all these things which never really happened, to be honest
with you, And so that disruption was a lot less
and actually the DICO went a lot faster than that
(36:30):
we thought. I would have never thought that we would
have zero carbon fuel capable vessels on the water in
twenty twenty four, and we're there. So that was an
interesting one. I do think we're had to point out
where the digital is really going to accelerate, and AI
is absolutely going to play a role in there. We
spent a lot of time on getting out data in order.
(36:50):
As you can imagine, we have. We're sitting on a
lot of data, having seven on the chips, many many boards,
many many customers, many products that we ship, etc. Said
and now we're starting to do with baby steps, I
would say, starting to apply AI and trying to learn
also making sure that we understand it. Eighty or ninety
(37:13):
percent accuracy is sometimes okay in certain things that's maybe
not okay. So we're really trying to go step by
step on the journey. But it's clearly something that we're embracing,
and I think we're also having the organization very energized
about and nothing that's important. Great.
Speaker 1 (37:28):
Well, well, John, I really want to thank you for
your insights and your time today. This is a great conversation.
Speaker 2 (37:33):
Thanks for having me, and I want to thank you
for tuning in.
Speaker 1 (37:36):
If you liked the episode, please subscribe and leave a review.
We have lined up a number of great guests for
the podcast, so please check back to your conversations with
C suite executives, shippers, regulators, and decision makers within the
freight markets. Also, if you want to learn more about
the freight transportation markets. Check our work on the Bloomberg
Terminal at big and on social media. Thanks everyone, and
(37:57):
take care and let's keep those supply chains moving.
Hi everyone, this is Lee Klaskow. We're Talking Transports. Welcome
to Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee Klascow,
Senior Freight Transportation Logistics analyst at Bloomberg Intelligence, Bloomberg's in
house research arm of almost five hundred analysts and strategists
around the globe. Before diving in a little public service announcement,
your support is instrumental to keep bringing great guests and
(00:29):
conversations to you, our listeners. So and we need your support.
So please, if you enjoy this podcast, share it, like
it and leave a comment. Also, if you have any
ideas for any future episodes, or just want to talk transports,
please sit me up on the Bloomberg terminal, on LinkedIn
or on Twitter at Logistics Lee. Now on to our episode.
We're delighted to have Yon Dileman, President of Cargo Ocean
(00:52):
Transportation with us today. It's a position he's held since
twenty sixteen. Jan has had a long and successful career
since he joined the company in nineteen ninety nine as
a management trainee in Amsterdam. Johan is also chair of
the Global Maritime Forum, non executive board member of right
Ship Advisory Board, member of Lloyd's Register and a member
(01:14):
of the Board of Advisors for London International Shipping Week.
Twenty twenty five, John graduated from the University of Mastrich
with a master's degree in Economics, Marketing and organization. Yan
Welcome to the podcast. Thanks for joining us today, Thanks.
Speaker 2 (01:31):
For having me.
Speaker 1 (01:32):
So, you know Cargill Ocean Transportation. I think a lot
of people listening might know what cargol is. Could you
talk about you know, the division that you lead.
Speaker 2 (01:42):
Yeah, it's an interesting division that I'm actually leading. We'll
have the privilege of leading, and we are quite I
would say you special in our industry because we are
both a charter so you can call it a USU
Littal freight, but we also a operator real freight, so
we move quite substantial volumes around the world every year.
(02:03):
I would say north of two hundred million tons. You
can call that a fleet of close to seven hundred
ships at all time. And part of what we do
is for the internal product lines is you can imagine,
so you're being corn and those kinds of products, but
we're also doing a lot of products for other customers
outside cargo, but also outside the industries that we as
(02:26):
cargo are operating in because freight is a big network
of all kinds of commodities being shipped around the world,
and we play a substantial part in that.
Speaker 1 (02:36):
So can you talk about the fleet that you operate?
How many ships do you have? Kind of what's the
makeup of the fleet.
Speaker 2 (02:42):
Yeah, So the majority where we're focusing on is dry
book that is about ninety percent of what we do.
Then we have about ten percent that is in product carriers,
so that's in liquid form. If you look in the
dry book, we're basically present in every single segment, so
all the way for from cape sizes all the way
(03:02):
through camp sell maxes, ultramaxes and even into some local coasters.
So we are very very spread out. And as I
said earlier, we were running roughly your fleet over around
seven hundred ships, of which a part is very short term,
can be as short as just one voyage of ten days,
fifteen days, all the way up to long term time
(03:24):
charters of up to ten years.
Speaker 1 (03:27):
Okay, and then I guess on the longer term, like
the fleet, like I guess, how many do you own
versus your charter?
Speaker 2 (03:34):
Again, Yeah, so we don't really own the assets. So
what we normally tend to do is take long term leases.
So we're working very closely with owners. We do have
some programs around bare boats, which is a specific way
of leasing. So although I would say we don't own
(03:55):
these ships, if you have a commitment of running these
ships for ten years, it's kind of similar than in.
Speaker 1 (04:00):
Them, right, gotcha? And so can you talk about the
markets that you served? You you mentioned they're the traditional
markets you think of when you think of cargo, like soybean.
Are there some markets that are I guess doing better
than others from your vantage point?
Speaker 2 (04:17):
Yeah, So I think most people will appreciate that that
shipping in general and dry book is not any different.
It's a very cyclical business. You have these times where
there's shortages, there's a lot of product moving. Then you
tend to have a period when there's an overbuilding of
ships and then there's too many ships as the cargo
(04:37):
and the famous boom and bus scenario is something that
I have seen quite a few times over my career.
So at any time there's always a story and that's
that's what I like in freight because, as you say,
there's always a product that is being transported. Right, So
if you want to do well in the ocean transportation sphere,
(04:59):
you need to underst and the products that you ship.
So today, for instance, there's a lot of focus on
on soya beans from Brazil because that's the time of
the year when the crop gets moved. Then at times
that moves into into uh into North America. Then of
course you have a product like I would or which
is a huge product that shipped around the world, and
(05:20):
you have all kinds of events happening all the time,
like weather events, we have congestions or so there's always
a story, I would say behind these commodities. I do
think it's fair to say that at the moment, coming
off the whole COVID period that was very strong for commodities,
we're clearly in a situation where most markets of the
(05:44):
products that we are shipping are over supplied at the moment.
Speaker 1 (05:48):
Gotcha, And so you know, you mentioned that, you know,
there's always there's always stories and about about the industry,
and the last couple of years, there's been a plenty
of geopolitical events that have impacted shipping in the dry
book industry. Can you can you talk about, you know,
how those geopolitical events, whether it's you know, Russia's war
with Ukraine, whether it's the closure of the Suez Canal,
(06:12):
how that's impacting your business.
Speaker 2 (06:14):
Yeah, so so that is a glo a global business,
right and and and to be honest with you, there
is always something happening in the world, and so we
are used to geopolitical tension. Of course, it's fair to
say that if you look at the recent years, that
is that is clearly stepped up a bit from a
wrong period where it was it was less the case.
What you tend to see with those geopolitical events is
(06:36):
that it creates volatility, absolutely, and because people are also
trying to figure out when these things pop up, what
does it actually mean, right, so there's a lot of
anticipation what that could mean. And what you also see
a lot of these geopolitical events actually are not in
favor of efficient supply chain. So normally you get inefficiencies
(06:59):
as a result of these geopolitical events that you have
taken place, and normally that results into longer turn miles.
So it might be that you have to avoid an
area like the Red Sea, or it might be that
certain flows are changing from one origin to another origin.
So there's a lot of things that normally tend to
happen as a kind of first and sometimes even a
(07:19):
secondary or a third kind of level of reaction. So
these things are something that we are used to, and
that's why I think it's important in this industry to
be edgile and to make sure that you can pivot quickly. Right.
Speaker 1 (07:34):
And so a lot of these geopolitical issues, whether it's
you know, Russia's war Ukraine or again the closure of
the Swet Canal, you know, they've been kind of good
if you you know, if you're chartering out your ships,
or you know, if you're moving freight for other people,
how does that impact cargo Because you're obviously moving your
(07:54):
own stuff, but you're also moving other people's stuff. You know,
it's been helping rate. Obviously, borring those issues, rates will
probably be a lot lower right now. So can you
talk about how that impacts your company? Is it a
good thing when rates are high or a bad thing
when rates are high?
Speaker 2 (08:12):
I think I think good good is as an interesting perspective, right.
I think what we're trying to do is that we
in a sense, we are a freight trading business. So
what you're really trying to understand is is our rate
going up or rates going down? And then accordingly we
can also position ourselves right so we can play with
(08:32):
long time starters, we can take more coverage at any time.
There is quite a large derivative market as well in
dry freight, which you can also use. So for us,
it's difficult to say if high is better than low.
It's really are we able to anticipate what the next
move is is the most important part for us. And
(08:53):
we also need to work with our customers of course,
because they have supply chains to run, so we're trying
to advise them on what we think is going to happen,
or what some of the impacts are, or things that
are in your market right here, right now. And in
that sense, it's a continuous conversation, and it's difficult to
say what's better to be at high levels or low
(09:14):
levels because what I said earlier, we're not an owner,
but we're also not just an end user. We are
buying that space in the middle of which I think
makes it a bit different.
Speaker 1 (09:24):
Right and then I'm assuming you're not operating ships through
the twst Canal right now, So what we've this is
a fluid situation, right.
Speaker 2 (09:34):
So what we have been doing, like most people is
deviate as much as possible. So we're avoiding the Red
Sea as much as we can. That has been the
case for quite a period of time by now. But
the reality is there is also flows that if you
don't go through the Red Sea, these flows are not
able to go into the world market. And I think
(09:54):
a good example of that is Ukrainian exports of agriproducts.
If you if you want to export products out of
that region, you don't really have a choice then going
through the Red Sea, because otherwise you would not be
able to compete in the world of the eastern side
of the world. Right. So there is some of these
things that that we do look at. It's a case
(10:16):
by case, I would assessment. But we have been having
some ships through the Red Sea and through the sewers
over the would say the last probably twelve months. But
it's clearly not business as usual.
Speaker 1 (10:28):
So you know, I haven't talked to many companies that
are actually using this to as or Red Sea right now.
Most of the companies that I spoke to, at least
publicly say they've been avoiding it. So what does that
mean do you guys charge like a premium because the
risk premium that's involved is your insurance much more expensive
(10:50):
because of you know where you're where you're going.
Speaker 2 (10:54):
Yeah, so you know what what you're trying to do
is first of all, as you say, right, and I
think most people say, you're trying to avoid. So I
think the first thing is trying to avoid. But then
you are going to have these kinds of choices to make,
like Okay, are we going to help the Ukraine export
into certain regions or are we just going to shut
that off? And I think we've been around for a
(11:15):
long time to say, okay, let's let's try where we
can move food where it's possible, and then it becomes
a question on is there a way that you can
actually make that work. So what we are doing in
those cases is we're working clearly with owners that have
done this before, so it's it's people that have expertise
in those kinds of trades. Yes, of course, insurance premiums
(11:39):
are high because don't forget that if you are exporting
out of the Ukraine, you're actually passing two war zones
in the insurance world, right, So it is very expensive
to do that and that's why it is. It is
case by case. This is not a standard flow that
is going continuously, and then you work with all the
(12:01):
all the navy and everything around there to ensure that
you have safe passage. The good thing is, I think
if you look back over the last three four, maybe
even five weeks, we haven't seen really any attacks in
the region, and if you look at the sewer's transitions,
they're actually starting to edge up on different type.
Speaker 1 (12:19):
Let's hope the see as you know, finally opens to
everybody and you know there's a little more peace in
that that region of the world, you know. So obviously
when we're talking about dryball demand, China is a major
importer of commodities around the globe, whether it's you know,
dry or wet commodities. Can you talk about you know,
(12:43):
demand out of China and you know, maybe are there
certain commodities that are doing better than others when it
comes to being imported into China.
Speaker 2 (12:53):
Yeah, So, as you say, what, China is extremely important
for the freight market in general, not only big it's
a huge import, it's also a huge ship builder. It's
a huge financial force in ship lending. So if you
take it all together. It's a very important part of
the maritime equation if you look at the demand side.
(13:14):
I think what I always find fascinating in the job
that I am in is that you somehow get a
bit of a front row seat on what is happening
happening economically. And we have seen the slowdown in China,
and that for US probably started already fourteen fifteen months
ago before a lot of people were actually talking about it.
(13:35):
We started seeing that iron ore stocks were moving up,
steel prices were not doing well. So yes, we have
a front row seat, but sometimes you also get very
interesting things, right that all of a sudden there's a
push of Chinese exports on still, So even if the
economy might not be doing well in China, sometimes the
(13:58):
result of that is actually that you see more exports
and that is sometimes actually creating more freight demand than
what you would expect. So it is a very complicated equation,
and China is something that we look at day in,
day out because it's a huge factor in the whole
freight pocket.
Speaker 1 (14:14):
So like looking across Pacific from China, you know is
the US. And obviously now a day goes by when
there's not news out of the government when it comes
to trade or trade related issues.
Speaker 3 (14:29):
With the risk of tariffs, the threats of tariffs, the
introduction of tariffs, the removal of tariffs, the delays of tariffs.
HAPA sat impacted the drybak market.
Speaker 1 (14:40):
Did you guys see like a pre buy you know,
early on and kind of I'd love to hear your
thoughts about, you know, how the tariff is going to
impact the drybalk space.
Speaker 2 (14:50):
Yeah, so so Teif's is nothing new in in principle right,
that has been around for a long time in many
places in the world. I think what is really the
impact it is the change in terriffs is something that
is driving a lot of volatility. I think is what
we said before. I don't think anybody here has a
crystal ball on what's next or what the exact consequences are.
(15:12):
So we haven't really seen people trying to outsmart somehow
the TERRORFF discussion. Neither have we. We are sitting here,
We see what happens and we just see how we
can react in the best way. In general, terriffs are
a little bit like sanctions. I would say they create
inefficiencies somehow, which on the one hand, can be disruptive
(15:36):
and actually positive on freight rates at times. But then
again it's all the question are we overall shipping more
or less? Because if terrors mean that you're shipping less,
then that clearly will have a negative impact on my Yeah,
and so.
Speaker 1 (15:50):
You know, terror's tender lead to trade wars. If China
decides to import a lot less, you know, US agg
is that good or bad for drybok rates? Like, would
they be substituting that with soybean from soybeans from Brazil?
Is that that that would be a good thing for
the drybock market in terms of rates.
Speaker 2 (16:11):
Right, well, exactly, And then that's why I think it's
it's it's it's very dangerous to say terrorts are good
to terrots are bad. I think it really depends if
you are going to see a switch of origins that
could be positive or negative. In trait. We have a
term that is called the ton mild demand, So it
basically means not just the tones that you ship, but
also how far away do they actually have to travel.
(16:34):
So if there's a difference between US to China or
Brazil to China, that is also having an impact. It's
not just a one for one equation, and then you
might have shutain oversupplied the regions in the world at times.
So it's really a fluid situation. But in general, I
would say, as I said earlier, it creates inefficiencies. Inefficiencies
(16:55):
normally tend to go to higher freight rates up to
the point that you are actually destroying or destructing demand, right, gotcha.
You know, we.
Speaker 1 (17:04):
Started the tariff discussion with talking about the US government.
There's also you know, some I guess ideas being floated
around about penalizing Chinese built ships that that that you
know call ports in the US, you know, with fees
of up to one point five million dollars per sport.
(17:27):
What do you think of that? Like that that's gota.
How is that going to impact the dry ball market
if that actually becomes law.
Speaker 2 (17:34):
Yeah, so I think this is very new, so we
are still assessing I think, what the potential impact of
that could be. But also depends very much per segment.
I think you have segments in in in the freight
market where there is a high percentage of Chinese built ships,
and if you go into the dry bilk you're getting
(17:55):
close to fifty percent of the fleet is Chinese built.
When you go to other said classes, it can be
fifteen twenty percent, and I think containeders is more like
twoty five percent, So it really depends, I would say.
And also also of the dry bill flows to US
is a relatively small percentage of world trade, so that's
(18:17):
also something you have to look at. But clearly it
will create as I said earlier, this is one of
these things again that will create inefficiencies that probably will
create some more dedicated kind of fleets going back and
forth in a certain region, which ultimately probably will lead
to a higher freight rate.
Speaker 1 (18:36):
Right, And we can't talk about regulations without talking about emissions.
You know, the industry is very focused on reducing those
dimissions getting to zero. Can you talk about what Cargol
is doing to kind of meet those goals, you know,
whether it's alternative fuels or whatever.
Speaker 2 (18:56):
You guys are.
Speaker 1 (18:58):
Either testing, playing around where they're actually implementing.
Speaker 2 (19:01):
Yeah, so it's an interesting question because we've been on
the emissions journey actually twenty seventeen, and I still vividly
remember that we had a discussion here in our leadership
team and we just couldn't believe that the whole world
was talking emissions, and everybody thought that shipping was going
to get excluded, so we felt something had to happen.
(19:22):
We didn't know what exactly was going to happen. We
knew that it was a hard to bait the industry,
but we also knew that we actually didn't know a lot.
And I think that was a really good starting point
for us. And one of the first things we did
in the very beginning is starting to look at our
emissions and trying to actually understand our current footprint and
where the emissions coming from, what are the sources, what
(19:43):
are some of the things you could do, And that's
been very, very helpful. And we also started to very
early on make our numbers actually public and say, you
know what, this is what we have. We are committed
to haransjucing this. We don't be honest know how we're
going to do it, but want to give it a go.
And it's been a tremendous journey for us. We didn't
(20:04):
do it alone because I think this is one of
these topics that you have to collaborate. You have to
work with other inner players, because otherwise you're just going
to spin your wheels and not going to go anywhere.
So we worked with partners like the Global Maritime Forum,
we worked with partners like the Musk Institute, and we
started to learn. And as we started to learn, we
(20:24):
started to implement some of the things and trying to innovate,
and we've been innovating a lot of energy efficiency. Things
to think about is different pains. You can have some
different generators, even simple things like laedal its on board
of ships, which is not standard. So we really started
to look at that and sometimes prey finance that with
(20:45):
owners because in those days, I think a lot of
the owners were a little bit skeptical. I would say
to invest themselves, and we said, okay, if that's difficult
for you, we are willing to take the lead on that.
And we went all the way into to things like wind,
which has been something that we've been actually testing a lot,
and at the moment we have three different wind types
(21:06):
and wind is free and every tone of fuel that
you can save is not only good for emissions, but
it's also good for economics. So we really looked at
that part. And then of course we know that over time,
if you really want to get to zero close to zero,
you have to also start looking at different shield types
because it's the only way that you get there. And
(21:28):
we started experimenting very early on. I would say we've
dropping biofuels, which was something the industry wasn't used to,
and then we started dipping in some of the new technologies.
And at the moment we have five ships on order
which are due or fuel for methanol and the plan
would be to try to see if you can get
green methanol in those ships at some point. So we're
(21:50):
really trying to take an innovating role and a little
bit overall where we're trying to showcase the industry of
what's possible. I think the only problem is if you
really want to scale this as an industry, you have
to go somehow. Regulation also following, and up to now
we've you've seen the first steps into that direction. In Europe,
there's quite some regulation around emissions already and the IMO
(22:14):
was clearly looking at a regulation as we speak.
Speaker 1 (22:16):
So do you think the goals what is it zero
emissions by twenty fifties?
Speaker 2 (22:21):
Is that?
Speaker 1 (22:22):
Do you think that's reasonable?
Speaker 2 (22:24):
Because you know it, you know.
Speaker 1 (22:25):
These are as, you know, very expensive assets that have
long lives. Uh, you know, twenty plus years. So what
are your thoughts about reaching those goals. Do you think
those goals or reasonable?
Speaker 2 (22:40):
Why? I think it would not be fair to say
that that's a slam dunk, that is easy, it's it's
gonna it's it's a it's it's a very ambitious and
and and and complicated journey to get there. I am
an optimist though in general probably, and I think if
you really get the industry going with regulation that is
(23:00):
actually helping to get towards that point, I think we
can get very very far. Now. I do think that
we have to be a little bit careful talking about
the maritime industry as one, because there's very different pockets
in there, and all these pockets, in my mind, will
not be going at the same speed. Because if you're
talking at the definition of the maritime industry in the IMO,
(23:23):
it goes all the way from cruise ships to container ships,
bocus tankers and large ships, and also ships that are
tramping in West or East Africa. So I think we
also need to be a little bit careful just to
not have one brush to paint all these asset classes.
But I do think with the right regulation in place,
(23:43):
I think we can get very very close to those
things if we're all pulling.
Speaker 1 (23:48):
Our weight, right, and you imagine Europe has kind of
been leading the you know, the regulations on a mission globally.
Are there any reals at a Europe that you think
that are are good and makes sense and you'd like
to see them implemented in other regions to try to
(24:09):
get the industry to that goal.
Speaker 2 (24:11):
Yeah, I think there is a cool census, I would say,
and maybe that's a big word, but if you are
talking about regulation, then there needs to be somehow a
two step approach to this, and one is working with
a fuel standard, and that is what Europe has introduced.
It's called a few EU Maritime. But the expectation is
(24:34):
that your reducial remissions over the years, and if you don't,
there's a penalty system. There is some compliance that you
can trade, et cetera, et cetera, which I think is needed.
It's also needed from a regulatory point of view, because
what you said earlier, these are expensive assets and you
need some regulatory clarity before you're going to invest in
new technology because why would you invest in new technology
(24:57):
if it's not going to be backed by regulation? Right? So,
you get that chicken and the act going. So I
think that's an important part. And then what you have
in Europe is shipping is also since last year part
of the European the Mission Scheme, so the ETS scheme,
which basically says that you get a penalty for the
use of fossil fuels like you have on land. That's
(25:20):
also extended to see I think the IMO is looking
at something similar with I think a distinct difference that
actually some of the collecting of that fund would actually
flow back into the industry and actually support some of
these new technologies. And I think if you get a
mechanism like that, I think you can really really accelerate
(25:40):
the investment in this area, which is going to make
it easier, as you said earlier on to get close
or to the goals for twenty fifty.
Speaker 1 (25:50):
You mentioned earlier about when can you talk about what
you know what that entails, because I think in most
people's minds were thinking about sales and you know ships
of your time.
Speaker 2 (26:03):
Yeah, No, it is fascinating and it is to some
extent going a little bit back to the future. I
would say, so we are looking at at the concert
which is officially called wind assisted propulsion, and that is
actually trying to combine I would say the best of
two worlds, right, And I don't think in twenty twenty
five we want to be depending in our supply chains
(26:24):
on the wind being there, yes or no. I think
we pass that point and so we're still having of
course ships, revengines and stuff. But I think the wind
assist of propulsion is actually helping to reduce the amount
of fuel that you use, and it is very efficient
on certain roots. When you have a lot of wind,
as you can imagine think about North Atlantic. There's a
(26:46):
lot of things you can do, and then the wind
the system propulsion comes in. The systems come in very
very different shapes and forms. So we have the really
big ones, and we have one of them on the water,
which is in this case bar technology, which is a
wind wing which is nearly stretching up forty meters, So
(27:06):
that's significant. Two kind of wings on that ship, which
is expensive, but of course you also get a lot
of savings. And then you have also a lot of
smaller systems which are used and can be probably easier managed.
But then on the other hand you also have less savings.
So we're really trying to find the optimum. And I
think what is important in this case with win the
(27:29):
system propulsion is it is very important because as you
go to these more expensive fuels, because let's don't fool ourselves,
these new fuels are probably two or three times more
expensive than current fuels, every time that you can save
in that new environment is tremendously important because you make
the problem bigger, smaller. And on the other hand, the
(27:50):
economics to get the investments actually paid off also make
a lot more sense at these kinds of levels, as
you can imagine.
Speaker 1 (27:56):
Right, So, like with the ship that you're operating with
the wings, is it paying for itself or is it
just it's it's a new technology that it's it's kind
of expensive, and it's it's being tested out, and you
know maybe over time those costs will will decrease and
and and and the productivity will increase.
Speaker 2 (28:15):
Well, it's it's it's clearly a prototype, right, It's it's
it's something that was never done. So it's it's trying.
It's learning. It's from these learning making adjustments and and
and and what I always like to think about is
you're creating this this kind of spinning wheel where you
have innovation on innovation, and I think that is what
we need. But it's clear that that the first prototypes
(28:37):
of of of these kinds of new technologies are not
economically viable, that they shouldn't be, but we're really trying
to find a pathway. How can you scale them so
they become cheaper, and how can we also just make
sure that we we find the route roots and all
these kinds of things as well, because it's a it's
a complicated equation, so and and we're learning every day.
(28:59):
I do think, as a said earlier with this, especially
with these more expensive fuels on the horizon, I think
the combination of wind with all kinds of other energy
saving devices makes an awful lot of sense.
Speaker 1 (29:11):
Great And and are there any other regulations that are
on your radar that you're kind of paying attention to,
whether the regional regulations or globally.
Speaker 2 (29:19):
Well, I think shipping is it's a global business, so
you have regulatory changes all the time. I do think
that by far the most important regulation that we're watching
very very closely is exactly what we just talked about
around the emissions. So the International Maritime Organization is working
on legislation to getting us towards the twenty to fifty goal.
(29:43):
And that is a regulation that is not something that
is going to change every time. That is really going
to be there for the medium to longer term, which
I think is extremely important if you think about how
is your business going to run or look like in
ten years, what kind of assets are going to make
sense in the next ten to fifteen years, And in
that sense, it's very different than a change in terrorists
(30:04):
that can be unwound the next day. Again, So that
is really something that I think is important, and I
think a lot of people underestimate the change where this
industry is going through because we are coming from a period,
a long period of time where we had a single
regulator and a single fuel and nowadays we have multiple
regulators and multiple fuel and that makes the equation a
(30:27):
lot more complicated.
Speaker 1 (30:28):
Right, absolutely, So if you're gonna look into your crystal
ball and figure out, you know, the rest of twenty
twenty five, where do you see demanding rates going for
the drybock market.
Speaker 2 (30:40):
Yeah, I've learned in my twenty five years plus incommodities
and the big partnershipping that the crystal ball doesn't work,
So that is the disclaim would I would put straight
out there. I do think we've come off in the
beginning of the year of a very depressed market, rates
very very low, most of the asset size is very
(31:03):
close to to operating costs. So I do think when
you look at China that looks a little bit better.
To be honest, I don't know what's going to happen
with with terrorifts and sanctioned so that's the big wild card.
I do believe that the second half of the year
has a chance of being better than the first half
of the year, but I don't think, barring a mega event,
(31:29):
we're going to see anything close to the to the
COVID levels that we've seen over the last couple of years.
Speaker 1 (31:37):
Gotcha, So in the beginning of the conversation, I mentioned that,
you know, you join the company as as a trainee,
so what what I know? It was a long time ago,
so hopefully you're going to remember.
Speaker 2 (31:49):
Uh what what?
Speaker 1 (31:50):
What kind of made you gravitate to the shipping industry.
Speaker 2 (31:54):
Yeah, it's an interesting story. When I aim of university,
when I started with cargo freight was not on my
radar at all. Shipping market wasn't on my radar at all,
and I was in commodities the first couple of years,
and I got in touch with some of the freight
colleagues because we needed trade support to move things around.
(32:16):
And at some point I was asked to join the
freight department. And at that time I was thinking, if
I want to be a good commodity trader, a good
physical commodity trader, I better understand Fred. So why don't
I They spend just two three years there, get some
of this knowledge under my belt and move on. And
I moved into this business in two thousand and two,
(32:38):
and the eight years there I never looked back. We
had China booming, we had all kinds of commodities deregulating,
we had trade markets completely exploding, and we had a
ton of fun. And this was the time that that
shipping started really kind of getting into me. Because it's
a global market, there's a lot of people contact. Still
(32:59):
I have to say it's still a very network kind
of business. And then I went to the energy businesses
for six years, which I really enjoyed. But when that
came back, I think it was for me the perfect
time because shipping is actually for the big part energy
as well, White because if you look at how much
actually these ships are using in terms of energy, it's
(33:22):
kind of the two worlds coming together and with the
whole energy transition on top of it. It's really an
industry that it's gotten very, very close to my heart.
Speaker 1 (33:32):
Yeah, and you mentioned it's a people business and I
know on your when it made the introduction you are
a member of the board of advisors for London International
Shipping Week twenty twenty five. That's a big conference in September.
Bloomberg's actually having an event that week, so hopefully I'll
be able to see you in person and anyone else
(33:54):
that's listening, you know, have that on your radar. You
should check out the London International Shipping Week website for
all the details. That was a shameless plug, but you know,
could you talk about you know, I guess are there
any books that you that you've read recently? Is something
I like to ask my guests, either if it's on
leadership or in the industry that's kind of close to
(34:17):
your heart that really resonated with you.
Speaker 2 (34:20):
Yeah, And I have to say I'm an on and
off reader. I like to read when when I'm traveling
all when when I have a bit of a break
and that. There's two books I would say I've recently
read which I thought were interesting. One of them is
called A Billion Dollar Loser. You probably know the book
that is around the ad Alnoyman and we work. It's
(34:42):
a fascinating story of how fast growing business can also
calm down very very very fast. So I think that's
always a good reminder to read some of these stories.
I find that fascinating. Another one I read, which I
would definitely recommend people as well, is it's called Supremacy,
(35:03):
and it's all around aicht GPT and and the race
that will change the world, as they say, And that
really gives a bit of a background on all the
players and the history and some of the dynamics around
what's all happening in the AI space. So not so
much about the use cases and the product, but really
how we got there, and it's fascinating to see how
(35:25):
the technologies and some of these personalities are interacting. So
for me, it was a very interesting book.
Speaker 1 (35:30):
Yeah, I just got back from TPM and Long Beach
earlier in the week and AI was frightened center are
is cargo transportation utilizing AI or machine learning, and and
how are you how are you leveraging that technology?
Speaker 2 (35:46):
If you are, there's no way of escaping AI, right,
I think that that's what we all see. So I
think what we're trying to do is we spent the
last couple of years a lot on the digital roadmap.
It's interesting because when I was talking to you around
the whole sustainability drive, the whole emissions drive that we
started to identify in twenty seventeen, in that same meeting,
(36:09):
we also had a long discussion on digital that was
going to disrupt the maritime industry and and up to
last year, I would say that that's been very underwhelming.
Those days we were talking about Uber for shipping and
all these things which never really happened, to be honest
with you, And so that disruption was a lot less
and actually the DICO went a lot faster than that
(36:30):
we thought. I would have never thought that we would
have zero carbon fuel capable vessels on the water in
twenty twenty four, and we're there. So that was an
interesting one. I do think we're had to point out
where the digital is really going to accelerate, and AI
is absolutely going to play a role in there. We
spent a lot of time on getting out data in order.
(36:50):
As you can imagine, we have. We're sitting on a
lot of data, having seven on the chips, many many boards,
many many customers, many products that we ship, etc. Said
and now we're starting to do with baby steps, I
would say, starting to apply AI and trying to learn
also making sure that we understand it. Eighty or ninety
(37:13):
percent accuracy is sometimes okay in certain things that's maybe
not okay. So we're really trying to go step by
step on the journey. But it's clearly something that we're embracing,
and I think we're also having the organization very energized
about and nothing that's important. Great.
Speaker 1 (37:28):
Well, well, John, I really want to thank you for
your insights and your time today. This is a great conversation.
Speaker 2 (37:33):
Thanks for having me, and I want to thank you
for tuning in.
Speaker 1 (37:36):
If you liked the episode, please subscribe and leave a review.
We have lined up a number of great guests for
the podcast, so please check back to your conversations with
C suite executives, shippers, regulators, and decision makers within the
freight markets. Also, if you want to learn more about
the freight transportation markets. Check our work on the Bloomberg
Terminal at big and on social media. Thanks everyone, and
(37:57):
take care and let's keep those supply chains moving.
Host
Lee Klaskow
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