October 14, 2025 • 53 mins
Tanker and dry-bulk operators are positioned to weather freight-market volatility into next year. Supply-demand dynamics favor tankers, while dry bulk is having a better-than-expected 2H on higher thermal-coal demand. That was underscored at a Bloomberg Intelligence event in London, where BI senior analyst Lee Klaskow sat down with Scorpio Tankers President Robert Bugbee and Star Bulk President Hamish Norton for this Talking Transports episode. Geopolitical events pose significant headline risks for both markets. Tanker demand looks promising on increased production from OPEC+ and the backpedaling of various US regions’ environmental and emissions regulations. The supply picture also appears more supportive for dry bulkers, with steadily rising port congestion and about 20% of operational vessels nearing 15-year inspections. We also discuss USTR fees, emissions and supply-demand dynamics.
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Episode Transcript
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Speaker 1 (00:00):
Hi everyone, this is Lee Klaskow when We're Talking Transports.
Welcome Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee
Klaskal SENI your freight transportation logistics analysts at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. A quick public service announcement
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(00:20):
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I'm always happy to connect. You can find me on
the Bloomberg terminal, LinkedIn, or on x at Logistics.
Speaker 2 (00:38):
Lee.
Speaker 1 (00:38):
Now we're going to do something a little different. Today's
episode has been taken from my fireside chats with Scorpio
Tankers president Robert Bugby and Starbucks president Hamish Norton. You'll
hear us discuss the state and outlook for the tanker
and dry book markets. Bloomberg Intelligence hosted a shipping event
at our London offices in September. The event was in
(01:01):
conjunction with London International Shipping Week. I hope you enjoy
these conversations as much as I did.
Speaker 3 (01:08):
And so we.
Speaker 1 (01:09):
Have our first fireside chat with Robert Bugby. So, for
those who know in KNC Robert Bugby, he's a president
of a Scorpio Tankers. It's a publicly traded company ticker STNG.
It's got a market cap around three billion. So you've
been in the business for a while, for about forty years.
Speaker 3 (01:31):
That's that? Is that correct?
Speaker 1 (01:32):
Yeah, you look like at least twenty five years, but
forty years.
Speaker 3 (01:36):
It's great.
Speaker 4 (01:37):
What feels the lattery will get you everywhere. Thank you.
Speaker 5 (01:39):
I will still answer the question I think I heard.
Speaker 1 (01:42):
Okay, So what's different in today's cycle versus over your
forty year career.
Speaker 5 (01:51):
I think what's different in this cycle is that the
the there's been very little equity raised during a very
strong market for the last four years in tankers, so
that's been quite quite unusual. So we really haven't had
any new tanker companies of any significance. None of the
(02:16):
major companies have had to raise equity in these last
four years. In fact, nearly all the major players have
been at a deleverage through this cycle. That's fairly unusual,
and most have been very disciplined on.
Speaker 4 (02:39):
Order books.
Speaker 5 (02:40):
There's really little ordering really in the public companies. That's
different in the last cycles we particularly the one in
the one before that is that as the market moved upwards,
we suddenly got to this sort of new paradigm and
this is going to last forever, and this will be different.
And analysts were giving credit for if a company ordered
(03:03):
vessels in two and a half years for delivery, they
would be given credits in their forward multiples for those
ordered vessels, and so you and the other thing was
that the fleet was new, the product anchor market was
almost brand new at that time, so you were just
adding and adding and adding. So as soon as you
had any form of demand disruption, which you obviously had
(03:25):
in two thousand and eight, there was no way out.
Nothing was getting scrapped. So what you have now is, ironically,
is that the market has kind of climbed that to
one to a Wall Street phrase, climb the wall to worry.
We haven't got We had very little ordering in fact
this year, despite it being a strong year, and we've
(03:47):
got a.
Speaker 4 (03:50):
Old fleet.
Speaker 5 (03:52):
So that if there is is that there's a flip
down anywhere, you'll start to get sort of scrapping pretty quickly.
Speaker 4 (04:00):
Read to rebalance. That's really what's different.
Speaker 1 (04:03):
And so how do you differentiate Scorpio versus your peers.
What's your competitive advantage?
Speaker 3 (04:10):
I guess over your peers.
Speaker 5 (04:14):
We have, you know, I think the newest public company
products inking fleet.
Speaker 4 (04:17):
That's one.
Speaker 5 (04:19):
So we have very little. We have no requirement to
spend capital and renewal. At the moment, we're not forced
to renew that fleet, and soon our peers are going
to have to renew their fleets before.
Speaker 4 (04:32):
We have to.
Speaker 5 (04:34):
Our other competitive advantages, I think our shareholder base, you know,
our top you haven't gone much below twenty four, but
our top shareholders apart from the Norwegian Sovereign Fund or
all US institutions, and they have a very different view
to high payout dividend structures.
Speaker 4 (04:54):
They kind of hate them.
Speaker 5 (04:56):
So our advantage is that that long only group looking
for the longer term. So therefore you're not forced to
do something that's abnormal to a normal public company, which
is just to pay out a lot of your cash
flowing dividends. In the good times, we've been able to
(05:19):
you know, their fleet in support of US deal leveragings.
And you know, I would think somewhere around Christmas there's
a very high probability will be net that zero, which
should be, which would be fantastic, as Scorpio ever done
that before. We were pretty close coming out of COVID.
Speaker 4 (05:40):
Yeah, we were ninety one debt. No, we don't come
anywhere here.
Speaker 5 (05:45):
Okay, it's a it's a rarity for any any shipping company.
And then this is what's different, and you know, but
but shareholders are still the same shareholders, you know.
Speaker 4 (05:58):
Never going to be satisfied.
Speaker 5 (05:59):
They're always want you to do more, do better with
their money, which is that's the game of a public company.
The other thing that's different these days is you know,
the actual let's say the lenders themselves that they're they're
not used to getting money paid back. I mean so
(06:22):
unused that sometimes they complain about it, which is extraordinary
if you think about it, that only two years ago
they were probably terrified that most of their accounts or
three years ago with COVID, we're actually going to be
able to pay them back. And those are the differences.
Otherwise it's pretty broadly the same.
Speaker 1 (06:44):
So you mentioned the order book and now it's pretty
pretty low from historical standpoint.
Speaker 5 (06:49):
No, I didn't say that it was low historically. What
I said was there's been very little ordering this year,
despite the fact that it's been a strong market in
tankers and the companies have the word with orto with draw,
and that there is a high degree of older vessels.
The actual order book itself in total is you know,
(07:09):
it's quite reasonable.
Speaker 4 (07:10):
What what what makes it not a.
Speaker 5 (07:12):
High order book or not a low order book is that,
you know, you have more than double digits on order,
but that is over a long period three years, so
on an each year basis, it's not much counterbalanced by
the old fleet.
Speaker 3 (07:30):
So we'll call it Goldielocks order book.
Speaker 5 (07:32):
Just no Goldilocks. We're really greedy in the tack of
mark Goldilocks order book with this like nothing much on
order at all, Like coming out of COVID that was that.
Speaker 4 (07:43):
Was a Goldilocks.
Speaker 3 (07:43):
And how is Scorpio approaching ordering new vessels?
Speaker 5 (07:47):
We haven't ordered one for a long time now. It's
you know, as I said, the fleet is new, it's
you know, we have the critical mass. You know, it's nice,
it's a nice place to be at the moment relative
to the headline risks out there. I mean, one thing
that's different at the moment is we were either very naive,
(08:11):
probably very unnaive in the two thousands boom that things
could become wrong in credit markets. But on the way up,
everyone was very in the world was at peace, economies
were growing, everything was fantastic. In your introduction, you said, look,
you know, China is slowing. You know, there's risk of
you know, terrified at what's going to happen in Europe.
(08:33):
You know over these next months, whether it's the France, UK, etc.
Speaker 4 (08:39):
America.
Speaker 5 (08:40):
Here's the FED trying to make a decision in this
next next few days about whether they're going to cut
interest rates because they're worried that US unemployment is rising
and the economy is slowing, or whether they're going to
keep interest rates the same or raise them because they're
terrified of tarists leading to inflation. Neither of them are
(09:00):
a good look to actual real economic stability and growth.
We've got a very unpredictable headline risks. You know, we've
got two you know, pretty major war things going on
in the world.
Speaker 4 (09:18):
We've got.
Speaker 5 (09:20):
A lot of disruption, a lot of things that are
being thrown right out there. You know, you wouldn't naturally
think that, you know, the US and Canada would be
at log aheads with each other. You wouldn't sort of
think that, you know, the US could sort of push
India all the way to Russia and China in.
Speaker 4 (09:41):
Such an overt way.
Speaker 5 (09:43):
That's that's well, that'll be interesting how that one gets
sorted out. And you know, there are a whole bunch
of other things. So how we're approaching this that's different
to before is that we're recognizing that we're only great
cash flows, but we we are very very conscious that
we have some things out there that could be very
(10:05):
bad for the tanker market that we can't control or
even predict. So that's why we're maintaining strength.
Speaker 1 (10:14):
In terms of the geopolitical things out there. What was
more a bigger impact for the tankers. Was it Russia's
war with Ukraine or what's going on in the Middle
East and the Red Sea?
Speaker 5 (10:26):
Well, I'm not sure we know what the impact is.
Speaker 4 (10:29):
Yeah, we really don't.
Speaker 1 (10:31):
I mean, did it change like trade patterns and yeah,
but that's pluses and minuses.
Speaker 5 (10:37):
I mean, it's forced to think that just if they
made peace tomorrow in Russia, that everything would go back.
Speaker 4 (10:42):
You know, that would be harmful.
Speaker 5 (10:44):
It's forced to think that if you had peace in
the Middle East, everything would be harmful. Now, first of all,
you know these developed into wars and risk. It's not
good that people are starting to increase their spending on
you know, disposable miss and drones as opposed to economic growth.
So your headline demand is being is generally affected by
(11:07):
war and disruption. Your situation. Now if we you know
where if Russia stopped then it started exporting again, et cetera,
et cetera. Probably that shadow fleet just wouldn't have a home.
It would go to scrap. So yes, your ton mile
may change slightly, but your supply will be drastically reduced.
(11:31):
If you look at Israeli and Gaza, it's you know,
it's a.
Speaker 4 (11:37):
Risk out there.
Speaker 5 (11:38):
We don't know whether it's going to spread into the
other areas, whether some of the kingdoms are being put
under pressure right now from their population, and their population
starts to just you know unwind and we get into
you know, quite a big threat later. But piece is
just better. It's better for economic growth.
Speaker 1 (12:01):
You know, I would agree with that, right, So so
the so when you're talking about your ships are the Scorpio,
I'm assuming they're totally avoiding this West canal since since.
Speaker 4 (12:18):
The yeah visions.
Speaker 1 (12:20):
Yeah, and so what what has that done to you know,
your fleet and kind of like you know, eating up
of the capacity.
Speaker 3 (12:29):
For Scorpio.
Speaker 5 (12:30):
You know that that initially was a positive, as I said,
now that's kind of being taken absorbed in the disruption.
I think is is actually on a fundamental level negative.
You know, you may get if you suddenly got peace
in Israel and peace in Gods and Israel and peace
in Russia and Ukraine. You might get a momentary sell
(12:54):
off in tanker stocks, the knee jerk reaction from a
hedge fund. But to me that that's a by signal
at that point because you've eliminated right to the massive
uncertainties out there.
Speaker 1 (13:10):
You know I mentioned earlier, you know the fees on
Chinese built or operated chips.
Speaker 3 (13:15):
Is that can impact Scorpio at all? Sorry, the USTR
fees on Chinese built or Chinese operated ships.
Speaker 4 (13:25):
I don't really want to I don't think any of
this is certain. I'm not certain.
Speaker 3 (13:29):
Okay, So you think that might not even happen.
Speaker 5 (13:33):
I mean, they're even taking tariffs to the Supreme Court. Scene, right,
we really don't know what is going to happen in
the In the US, there's been a lot of talk,
but not really much certainty.
Speaker 1 (13:46):
Okay, And you know what we've seen also in the
US is that kind of step back of you know,
mission regulations. But obviously the other shipping industry is going
full steam ahead with trying to get to zero. How
is a scorpio handling that or what's what's well scopios?
Speaker 5 (14:03):
So I always tried to be you know, ahead right
from it's you know, birth as a public company with
focusing on ecoships very quickly in its adoption. You know,
the first thing we're handling it is afleet is relatively new,
so you know, news ships consume less fuel, so that's
(14:23):
the first step. Then you know, there are various other
things you can do to cut down fuel, which we've adopted.
We're fully compliant with the twenty thirty regulations. We're obviously
not compliant with the twenty fifty regulations, but I'm not
sure that any of the existing fleet were lost or
(14:44):
twenty fifty anyway, And when it comes to the alternative
fuels or the less non more renewable fuels. Here is
that we're waiting and watching because there's not yet the
infrastructure to supply.
Speaker 4 (15:05):
Many of them.
Speaker 5 (15:07):
So when you're going to do your fuel, for example,
it's it's okay if you've got a contract with hotel
and they're supplying everything, and like a A to B movement,
it's hard to do trampionship or spot fixing. And the
product market is very much a traded arbitrage market market,
so it's not yet the infrastructures developed to make that call.
(15:32):
And when we see what there's going to be, then
we'll adapt to that at that time. But if you
look at it as the whole again, this is another uncertainty.
Speaker 4 (15:41):
So you know Europe. Europe is.
Speaker 5 (15:46):
Trying to go full bore on this environmental regulations, et cetera.
The United States have got you know, splits in the
States already in their in their recent voting, they're really
split extremely along Democratic Republican lines. We then look at
the US is obviously, you know, trying to do as
(16:09):
much as they can in carbon right, They're trying to
improve coal, their own coal exports and production crude.
Speaker 4 (16:18):
As well gas as well.
Speaker 5 (16:20):
And then you know, the largest population in the world
in China is benefiting tremendously from low crude oil prices.
The second largest population in the India is benefiting, and
the growing economy is desperate to have low oil prices.
Speaker 4 (16:39):
So you've got and you know, one of the.
Speaker 5 (16:42):
Key things that Trump is trying to do is keep
gasoline prices down in the United States for the consumer.
So you've got this tremendous irony that you've got these
huge economic and population blocks that are kind of going backwards,
you know, or very fast in reverse. And you have
(17:05):
Europe sort of trying to do the transition, but it
doesn't look as if they can afford to do a transition.
Speaker 3 (17:14):
And that's obviously good for the product well or maybe not.
Speaker 5 (17:18):
It calls into question the you know, the you know,
whether or not you know, oil is dead or gasoline
is dead. I don't see that coming in this right now.
Speaker 3 (17:35):
Yeah, especially not out of the US.
Speaker 1 (17:37):
So where are the growth markets if there are, for
the product anchor market the growth markets.
Speaker 5 (17:44):
The theme of growth in the product markets is related
to the difference in where refineries are and countries tomorrow.
So an easy one is that we've seen the tremendous
growth in Middle Eastern refinery ability, in Indian finery ability,
which is effectively very close two three days from the
Middle East oil. So here, if you wind it back,
(18:07):
they didn't have any refineries, so they produce oil. When
Ope said, when Middley said, are we're going to produce
million barrels of oil, they'd have a little bit for
domestic and then you could guarantee the rest would be
exported on a ship. Now you know that million barrels
increase isn't all exported on a crude oil ship. It's
(18:27):
put into a refinery and a lot of it is
used to export it on a product ship because of
the shift there, So you're getting And then if we
take the countries like Australia, that's a different thing where
they've closed down their refineries because they don't want to
for environmental reasons, don't want to import a refined crude,
(18:48):
so they've turned them into product import tournaments. So though,
and then you in Europe and the United States, they've
had to close inefficient refineries and then sorry, and then
we're seeing it's a busy market now right, it's really
good and the the the aspect related to you know,
(19:16):
if we just take in general, look who's growing crew
it has to be shipped. You know, you have Nigeria
and West Africa, you have Guyana. I mean that's pretty
much all for expert and you have you know, Brazil
as well. So in terms of the actual that's the theme.
(19:37):
So you have obviously headlined immand growth, which is let's
say you should be revising upwards headline headline immand growth
because of the changes of environmental priorities in the world
in total, and you would change it up if you
were positive on economic growth, and that's what's what's driving
(20:03):
things at the moment and.
Speaker 1 (20:04):
Will increase refinery capabilities in China. But it'll be a
good thing or a bad thing for the product anchor market.
Speaker 5 (20:10):
I think it's good historically. You know, if you've ever
grown products, when you grow product in a refinery area,
it's not to the detriment to the product market. It's
always been to the positive because no one refinery complex
can produce or produce fine products exactly to their sales requirements.
Speaker 4 (20:34):
So that's where you get arbitrage, right.
Speaker 1 (20:38):
You know, we were talking earlier about emissions. You know,
if you're looking longer term than twenty fifty mandates, not
where a scorpio is going, but where do you do
you what do you think the solution is?
Speaker 3 (20:50):
What do you personally think the solution.
Speaker 5 (20:52):
Is going to end up being the way above my
intellectual Oh?
Speaker 4 (20:57):
Please capacity?
Speaker 5 (20:59):
Okay, No, it's just too We got dealing with too
much in front of us right now to start worrying
about where that is. Is much better to you know,
to watch and see how it actually develops. You know,
we could be all change if you know, I think
America does matter in this, and you know, if you
(21:22):
have two or three Republican terms with the presidency and
a majority then in the Houses, then that's going to.
Speaker 4 (21:35):
Be very different.
Speaker 5 (21:36):
If the Republicans lose the election, that's just the United States.
Speaker 1 (21:43):
Right, So just changing gears a little bit. Is there
much M and A in the space this scorpio out there?
I mean, does it make sense for you guys to
grow through that or just given where the market is,
you don't see much consolidation.
Speaker 5 (22:02):
I do with Scopya at the moment, is that it
makes sense for us to pay down our debt. There's
no there's nothing out there that we should be. You know,
our stock is trading under the acid value, it's moving
up strongly, but we don't have a currency in our
stock at the moment, and there's no public company in
(22:27):
the product space that would be that has a fleet
there's better than ours, So you would, you know, you'd
be spending money in uncertain times to acquire you know,
less of less quality as they were. So no, I
mean I think that you know, we're really happy and
(22:50):
just learning a lot of cash and and looking at
life from that point at the moment, but there is
emin a activity in the space. I mean, I'm as
sure as you know I can be that there will
be a merger between Hafnear and TORM, which I think
(23:10):
is super constructive. I think that the tanker industry really
needs to have bigger market cap companies, more liquidity, more
companies that have access to the index funds, more companies
that have access to the bigger long only funds. If
we look at the trading in the tanker industry, I mean,
(23:34):
on any given day, with exception of Frontline, Scorpio virtually
trades all of the other tanker companies in terms of
its liquidity, and that's not healthy. Overall for the industry you.
Speaker 1 (23:47):
Mentioned if I heard, you're right that scop history and
below its asset, Like, what's what's the market getting wrong?
Speaker 5 (23:53):
Where are they giving going to campaign about the market?
Speaker 4 (23:56):
Don't get it that they're there.
Speaker 5 (24:00):
You know, they were sort of, I don't know whatever
it is, distracted by the shiny object of high dividends,
and now they're.
Speaker 4 (24:10):
Kind of figuring that.
Speaker 5 (24:11):
Hold on a minute, why would we pay a discount
to a fleet that's you know, the newest in the thing,
paying a regular dividend and has a fantastic balance sheet
in uncertain times as you've seen what's happening with those
long only is coming into our stock. If you look
at the transition in the last nine months, it's it's tremendous.
(24:32):
You know, the hedge funds have moved away, very little retail.
You can literally see in the first twenty five shareholders
seventy percent of the stock is held between a very
good long only is where our strategy is very compatible
with them. So they I'd never complain whether whether the
(24:59):
market has something wrong or right, that they see it
as they see it in the time.
Speaker 1 (25:06):
And what would you need to see it a start?
I guess ordering new ships increasing your fleets.
Speaker 5 (25:13):
I don't think it has anything to do with the well,
I guess it does have something to the stock price,
because you could, you know, once we've achieved net debt,
you could you could always buy back stock if you
had a dislocation.
Speaker 4 (25:26):
In any of you there.
Speaker 5 (25:27):
But new building is about a bunch of things that
need to be sorted out. It's love to see some
more transparency in the world. You know, it's maybe like
a broken record, but you know there's a high degree
of risk out there that's being ignored by If you
(25:49):
ask me what the stock market has got wrong at
the moment, it's not scorpio tankers. It's the you know,
absolute complacency and confidence that it's moving up. I mean,
you're seeing hedge funds now chasing retail because retail were
bolder in the beginning of the year, and then you
had hedge funds pulled back and go no, no, no, you know,
(26:11):
tid ofs so bad and we can't possibly do this
in retail said no, I think, well we'll buy, and
now the hedge funds have to chase again. It's not
necessarily the best of reasons to do that. So I
think we just have to be a little humble at
the moment and just wait for some parity.
Speaker 1 (26:34):
All right, well, Robert, that that's our time to thank
you very much.
Speaker 3 (26:38):
Appreciate it, appreciate, thank you.
Speaker 4 (26:41):
It's great anytime.
Speaker 1 (26:43):
So on stage with me right now is Hamish Norton,
president of Star Bulk Tikerr SBLK. It's got a market
cap around two point two billion dollars. Hamish, thanks for joining.
Speaker 2 (26:53):
Us, my pleasure.
Speaker 1 (26:54):
So tell us about you know, we heard about the
product anchor market, so tell us about the.
Speaker 3 (26:59):
Dry balk mark.
Speaker 2 (27:00):
Okay, so let me give an introduction to the dry
balk market. It is almost it is the most perfect
market that I know of which means there are no
leading indicators. So I don't know anybody who is able
to predict the course of the dry bulk market. Our
experience is that if you have a balance sheet that
(27:22):
allows you to go through the cycle and not have
to raise equity and distress, that you'll make money. But
how and when you'll make money is very hard to predict,
impossible to predict. So the dry bulk market is doing
pretty well right now. I think it's doing better than
(27:43):
people expected. But I refer you to the beginning of
what I was saying, which is that nobody is really
ever able to predict this market.
Speaker 1 (27:53):
So what was the biggest change versus in the beginning
of the year, what people were thinking with what.
Speaker 3 (27:57):
Kind of transpired.
Speaker 2 (27:59):
So at the beginning of the year, for example, China
was not buying a lot of grain because they had
big stockpiles of grain, And they were not buying a
lot of coal because they had increased domestic production of
coal and it was outpacing the growth in coal generated electricity.
(28:20):
Second half of the year, they cut domestic production of
coal and thermal coal produced electricity group and so they
had to import more coal, and they started importing grains
as well because the stockpiles got eaten up, and India
(28:44):
was also importing more coal. And you know, then there's
a concept in dry bulk of ocean imbalance. All the
best cards are in the Atlantic, all the best discharge
(29:05):
ports are in the Pacific, so ships tend to move
from the Atlantic to the Pacific. Sometimes there's a greater
imbalance where there's more of a need in the Atlantic
for ships to take cargoes to the Pacific. If you
anticipate that, and you take a little bit of a
hit getting your ship to the Atlantic sooner you can
make more money on the next cargo. We did project that.
(29:33):
Maybe that was pure chance, but we did get our
ships to the Atlantic quicker by taking basically worse worse charters,
and that was good. There is a situation that often
occurs where when you have a lot of dry ball movements,
(29:58):
you get port congestion. And the port congestion is good
because it puts the ships out of service as they're
lining up to discharge or load in a port, and
so there are effectively fewer ships to carry out the business.
Port congestion in the by the end of the first
(30:19):
half of the year was all the way back to
sort of a normal level, so it could only go
up from there, and you know, it's gone up a
little bit, not a lot, and you know then there's
a very interesting phenomenon. There were a lot of ships
(30:43):
dryball ships delivered between two thousand and nine and twenty twelve.
These were the ships that were ordered in two thousand
and seven. In two thousand and seven, the earliest new
building you could get was at a shipyard that did
not then exist. The shipyard had to be built. Then
that shipyard had to build your ship. And a lot
(31:04):
of these shipyards were built and they delivered ships, and
they were terrible ships. But these ships are now coming
to what is known as their third special survey. So
every year twenty percent of the fleet goes through a
dry docking. Well this year there's more than twenty percent
(31:28):
because those ships that were built in twenty twelve are
coming up on their third special survey, and you know
it's going to continue for a few years.
Speaker 1 (31:42):
I'm going to ask similar questions I asked Robert earlier.
But so, with all the geopolitical risks out there, whether
it's Russia's war Ukraine or the Red Sea, how has
that impacted you know, the dry bulk industry and starbulk specifically.
Speaker 2 (31:55):
Yeah, well, so the Red Sea is helpful. You know,
Robert thought that it was no longer helpful for product tankers.
I think it's still helpful for dry ball rates. Not
all the dry ball ships are avoiding the Red Sea.
(32:19):
I think more of the tankers are avoiding the Red Sea,
except those in the shadow fleet that might have deals
with hulusies.
Speaker 3 (32:28):
So that the dry bulkers that are using this sue
as are.
Speaker 2 (32:31):
They are not public companies. There are people who are
willing to take more risks than we're willing to take,
and you know, more risks frankly, with the safety of
their crew. We had three ships at the beginning of
this Red Sea closure that were on charter to go
through the Red Sea. They carried out their charter because
(32:55):
it wasn't a war zone, so we didn't actually have
the right to not carry out the charter. Those ships
were shot at. Nobody was injured, no serious damage. Well,
there was one ship that had a missile go through
the top into the hole, blew up, knocked the hatch
(33:17):
covers off, but that was bad. Yeah, it was terrifying.
The ship was relatively easily repaired, thank heaven, and the
crew were fine, except you know, terrified. And then we
stopped and we have we've not gone back through since,
and you know, we'll see when that reverses. If the
(33:41):
war with between Russia and Ukraine ends, we think that
will be good for the market. There will be reconstruction.
It takes a lot of dry bulk to build the
rebuild the real estate that's been destroyed. You know, it
can be quite significant.
Speaker 1 (34:01):
And what was the biggest impact I guess with the
Russia war with Ukraine, just given how there's both big
exporters of egg.
Speaker 2 (34:11):
Well, I mean trade flows, you know, I think ten
miles were more or less unaffected because there were obviously
Ukraine and to some extent Russia had trouble shipping their grain.
(34:32):
The people who bought the Ukrainian grain had to buy
from somewhere else. There was less grain traded in aggregate,
but the trip lengths for the grain that was traded
were longer, so it was not a big effect net.
It was a bigger effect on the shipping insurance market.
(34:54):
We had three ships trapped in Ukraine when the war started.
We got two of them out one that was in
Nikolaiev we did not get out, and after a year
it was a constructive total loss, and we got the
insurance proceeds which were about twenty million dollars above the
(35:16):
market value of the ship. And that's the that's nothing
wrong with that. That's how marine insurance works. You have
to make sure your ships are insured for enough, but
you can insure them for a little extra.
Speaker 1 (35:31):
Also, what you know, we really didn't talk about that
in the earlier conversation. But like, you know, the insurance market,
how much is insurance rates gone up? Just given the
what it seems like increased geopolitical risks to the fleet.
Speaker 2 (35:44):
Insurance rates are up. But I have to say I'm
not an expert in the marine insurance market.
Speaker 1 (35:52):
So okay, so you know what what is you know
your outlook for the dry bulk market? You know you
said there's no leading indicators, so so.
Speaker 2 (36:00):
Take everything I say with a large grain of salt.
We're optimistic for the second half of twenty twenty five
and going into twenty twenty six. You know, we do
see China importing more coal and more grain. We see
(36:21):
India importing more coal.
Speaker 3 (36:24):
This thermal coal met coal.
Speaker 2 (36:26):
It's basically thermal met coal is a pretty small it's
not a big trade. And iron ore is doing well.
First of all, China is importing kind of as much
iron ore as ever, which is maybe a surprise, but
(36:51):
you know, cutting back on steel production, they've they've actually
cut back on the electric mini mills. They're getting more
iron ore from Brazil, which is three times the distance
that you know that iron ore travels from Australia. Brazil
(37:11):
is producing more iron ore China is taking it. It
doesn't look like Australia is being pushed out yet. But
in the fourth quarter there's a new mine opening in Guinea,
the Simundum mine, which by sometime in two thousand and
(37:32):
six is supposed to get up to ninety million tons
a year and eventually one hundred and twenty million tons
a year. That's a big deal, and it's half owned
by China. Chinese companies they're going to take that iron ore.
Probably that will offset Australian iron ore. So even if
(37:54):
iron ore imports don't grow or even drop, if you
get more of your iron ore from three times as
far away, that's a big help for dry ball shipping.
It's ton miles that matter, not tons. And you know,
box Site, also coming from Guinea, is becoming a big cargo.
(38:19):
It's becoming it's a cape size cargo. You know, you
used to be that box Site was thought to be
a so called minor bulk. It's it's getting up there
with you know, it's it's it's probably the fourth major
bulk after grain at this point.
Speaker 1 (38:39):
And so you know, the supply demand dynamics isn't as
positive in the dry bulk industry as it is.
Speaker 3 (38:44):
Maybe in the tanker market.
Speaker 1 (38:46):
I think Clarkson's has supply growth out pacing demand this
year next year. Yeah, what are you guys doing with
your in terms of ordering new ships? How are you
approaching the new ship market?
Speaker 2 (38:59):
Yeah, well the order book is about ten and a
half percent of the fleet. You know, we think that
fleet growth will be you know, order of three percent
net of net of scrapping, which is more than clarkson
(39:22):
is predicting for for you know, demand growth. But you know,
for for example, that the effect of the special surveys
of the two thousand and nine through twenty twelve built
ships is we think going to account for say one
(39:45):
percent of capacity for several years. So you know, there
there are there are mitigating factors, and you know the
first half of this year was relatively depressing. Second half
(40:05):
is looking good. So is Clarkson's right, It's hard to know. Yeah,
you only really know what's happened to the dry ball
market sort of in the rear view mirror. Once it's happened,
rates are better than they should be if Clarkson's is right.
Speaker 3 (40:26):
So you know, so are you ordering new ships now?
Speaker 2 (40:30):
We are not. We are not ordering new ships the shipyards.
First of all, dry ball ships are really cheap and
simple relative to tankers, relative to container ships. They're just
basically hulls with holds with hatch covers at the top.
(40:50):
Maybe nine holes in a cape, five holds in a Supermax.
You take the hatch cover off, you dump in the cargo,
or you put the hatch cover back on. Nothing really
sophisticated except the engine. A US shipyard just parenthetically has
trouble getting the steel to make a dry ball carrier
(41:14):
for less than the market price of a new building
dryball carrier. So the shipyards don't want to build dry
ball carriers unless they are empty, don't have any orders. Well,
they have orders. They have orders for LNG carriers, for
container ships, to some extent for tankers. They're fat and happy,
(41:37):
and they don't want to cut price to get dry
ball orders. Our experience tells us that when the shipyards
are not willing to cut price and stretch to get
dry ball orders, it's not a good time to buy
dry ball ships. Also, you know, we don't know what
(42:01):
kind of ship to order in terms of the fuel.
If we ordered a ship that burned fuel oil only
and could in theory burned biofuel. You know, we don't
think you'll be able to get biofuel when everybody needs it.
You can get biofuel today because nobody needs it. But
(42:24):
the ingredients for making biofuel for ships are you know,
use cooking oil, animal fat. You know, the the quantity
of biofuel ingredients is so minuscule compared to the amount
(42:44):
of fuel that ships burn that I you know, we
think that by the time you'll need biofuel, it basically
won't be available at all.
Speaker 1 (42:53):
So how do you think the shipping industry is going
to get to twenty fifty emission standards by the IMO?
Speaker 2 (43:00):
It's going to be very hard. You know, there's there's
I think it's realistic, not unless people are prepared to
go nuclear. Nuclear propulsion is demonstrated to work. The US
Navy has a seventy some year record of no accidents.
(43:21):
You know, some people have suggested using nuclear power to
create hydrogen electrolytically from water, use the hydrogen to make ammonia,
use the ammonia to fuel the ship. The losses involved
(43:43):
in taking that nuclear electricity and creating hydrogen and then
using the hydrogen to create ammonia and then burning the
ammonia in an engine on board the ship are eighty
percent of the energy. So you need five times the
nuclear electricity that you would have needed if the reactor
had been on board the ship. Nuclear electricity is not free,
(44:07):
and if you multiply the price by five, it's going
to be expensive. So I think ammonia can be made
and used insufficient quantity, but it's going to be extremely expensive.
I think so called emethanol and E LNG are also possible,
(44:32):
but the chemical engineering is much more complex. Those will
be much more expensive, I think than ammonia.
Speaker 1 (44:40):
Right, And so obviously the ship owners have to buy
these new, more expensive ships.
Speaker 3 (44:45):
And how do you charge for that?
Speaker 2 (44:49):
Well, at the moment you can't. You'll be able to
charge for it when there is a sufficient financial penalty
that the ammonia is cheaper than fuel oil net of
the penalty, and the penalty has to be rigorously enforced.
(45:10):
And you know, the the discussions at the I m
OH have been around the concept that the I m
O will collect these in effect taxes and it's a
lot of money, and it's you know, the IMO has
never collected money, and you know, I don't know how
(45:35):
they're going to prevent corruption. You know, in the process.
We have nothing to do with corruption at the I
m oh, it's corruption on the way to the I
m oh, it's it's a it's a difficult problem.
Speaker 1 (45:50):
And so if you, if you were a betting person,
would would how do you think the industry is it's
gonna what do you think the industry is going to
do it?
Speaker 2 (46:02):
I have no idea what we really want this to
go through. Frankly, Uh, you know we are you know,
Scorpio is a big company. Starbuck is a big company.
You know, we're basically just about the biggest dry ball
company in the public markets. We can afford a compliance department,
(46:23):
We can afford people to deal with very complex regulations
in a way that our peers cannot. But you know,
I have my doubts that this will work. But you know,
(46:44):
knock on wood, they'll figure out a way to make
it work.
Speaker 3 (46:47):
And how Starbuck being more efficient? I guess with with
the assets that.
Speaker 2 (46:51):
You have, well, we're doing a lot. Actually, we're putting
on basically fuel saving devices, which are are basically ducts
just before the propeller that give the water a spin.
Opposite the spin of the propeller, so that water comes
(47:12):
out more sort of straight back instead of twisting. That
can save five percent of the fuel. We're going with
more expensive paints, which actually can save another five to
ten percent of the fuel.
Speaker 3 (47:31):
What do the paints do.
Speaker 2 (47:32):
The paints keep fouling down and they reduce friction with
the water, and it's a pretty big effect, as it
should be because the paints are incredibly expensive. And then
we are experimenting with hull cleaning robots that allow us
(47:54):
to keep the fouling from forming. You don't keep your
hull clean, you can wake up one day and find
you're burning forty percent more fuel. I mean, it's a
huge effect. And if you don't clean the fouling off,
by the time you're burning ten percent more fuel, it
(48:14):
has time to grow roots into your paint and then
you have to redo the expensive paint job, which is yeah,
it's so we're then and then robots robots well, I
mean you know, they don't they don't have arms and legs,
they have wheels. And then we're using some very sophisticated
(48:35):
software as a service that optimizes our root based upon
fuel price, charter rate, wind waves, wind direction wave spectrum.
Speaker 3 (48:50):
It is a AI. Can we get AI in this country?
Get another turn?
Speaker 2 (48:54):
It is basically AI. Yeah, and the company that we
use is insent and Cisco, so near all the AI people.
Speaker 4 (49:03):
Yeah.
Speaker 1 (49:05):
So I guess in closing CAD you just you know,
the consensus has you guys growing your ebit pretty pretty well.
Speaker 3 (49:16):
Next year.
Speaker 1 (49:16):
I think it was sixteen percent I'm sorry, up sixty
two percent next year and up sixteen percent twenty twenty seven.
But that's from a down year this year. What has
to happen for I guess expectations to be exceeded over
the next eighteen months.
Speaker 2 (49:33):
Well, you know, things have to go well, you know,
it's it's an impossible market to predict. What we're doing
is we're getting rid of our leverage, just like Scorpio.
We're paying down two hundred and fifty million of debt
a year. Our debt is already less than the scrap
value of our fleet. You know, if if you have
(49:58):
a strong enough balance sheet in this business, you'll make money.
The way to lose money is to have to issue
equity and distress. And you know, ask me how I
know that? How do you know that dams yeah, in
twenty sixteen. Our capes that in two thousand and eight
(50:21):
earn two hundred and fifty thousand dollars a day and
today earned you know, twenty three to thirty thousand dollars
a day depending on the ship. Earned eight hundred dollars
a day for the month of February. Yes, so you
know it was it was bad, all right.
Speaker 1 (50:39):
And just before I let you go, can you talk
about consolidation in the market.
Speaker 3 (50:44):
Is there any going on?
Speaker 2 (50:46):
There's nothing going on. We think there should be. We
think it benefits everybody. Frankly, our market cap of two
point two billion is too small for many investors. You know.
I think what you need to have in this market
it's the ability to allow an investor to invest about
five hundred million. Nobody's going to do that with a
(51:09):
company with a two point two billion market cap. I
think we need a five billion market cap dryball company.
And it's hard to get that to happen because, just
like Scorpio, our share trades at less than the net
liquidation value of the hard assets. You know, I think
(51:31):
the problem is that institutional investors don't have the bandwidth
or the money basically to pay for research into such
a small universe. That's why they should be using BI
(51:52):
exactly exactly. But you know, if we had shipping companies
with a five billion dollar market cap, I think more
investors would do their research and conclude that the stock
is really cheap. And you know, in terms of consolidation,
basically everybody wants to keep their job. Yeah, you even
(52:13):
board members you know, can make enough money to make
a difference.
Speaker 1 (52:18):
I want to thank Robert and Hamish for their time
and insights. I also want to thank you for tuning in.
If you liked the episode, please subscribe and leave a review.
We've lined up a number of great guests for the podcast,
so please check back to hear conversations with C suite executives, shippers,
and regulators three two one. I also want to thank
you for tuning in. If you like the episode, please
(52:40):
subscribe and leave a review. We've lined up a number
of great guests for the podcast, so check back to
hear 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 out our
work on the Bloomberg terminal at Bigo and on social media.
This is Lee Klaska cuning off and thanks for talking
(53:01):
transports with me. Talk to you next time.
Hi everyone, this is Lee Klaskow when We're Talking Transports.
Welcome Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee
Klaskal SENI your freight transportation logistics analysts at Bloomberg Intelligence,
Bloomberg's in house research arm of almost five hundred analysts
and strategists around the globe. A quick public service announcement
before we dive in. Your support is instrumental to keep
(00:20):
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I'm always happy to connect. You can find me on
the Bloomberg terminal, LinkedIn, or on x at Logistics.
Speaker 2 (00:38):
Lee.
Speaker 1 (00:38):
Now we're going to do something a little different. Today's
episode has been taken from my fireside chats with Scorpio
Tankers president Robert Bugby and Starbucks president Hamish Norton. You'll
hear us discuss the state and outlook for the tanker
and dry book markets. Bloomberg Intelligence hosted a shipping event
at our London offices in September. The event was in
(01:01):
conjunction with London International Shipping Week. I hope you enjoy
these conversations as much as I did.
Speaker 3 (01:08):
And so we.
Speaker 1 (01:09):
Have our first fireside chat with Robert Bugby. So, for
those who know in KNC Robert Bugby, he's a president
of a Scorpio Tankers. It's a publicly traded company ticker STNG.
It's got a market cap around three billion. So you've
been in the business for a while, for about forty years.
Speaker 3 (01:31):
That's that? Is that correct?
Speaker 1 (01:32):
Yeah, you look like at least twenty five years, but
forty years.
Speaker 3 (01:36):
It's great.
Speaker 4 (01:37):
What feels the lattery will get you everywhere. Thank you.
Speaker 5 (01:39):
I will still answer the question I think I heard.
Speaker 1 (01:42):
Okay, So what's different in today's cycle versus over your
forty year career.
Speaker 5 (01:51):
I think what's different in this cycle is that the
the there's been very little equity raised during a very
strong market for the last four years in tankers, so
that's been quite quite unusual. So we really haven't had
any new tanker companies of any significance. None of the
(02:16):
major companies have had to raise equity in these last
four years. In fact, nearly all the major players have
been at a deleverage through this cycle. That's fairly unusual,
and most have been very disciplined on.
Speaker 4 (02:39):
Order books.
Speaker 5 (02:40):
There's really little ordering really in the public companies. That's
different in the last cycles we particularly the one in
the one before that is that as the market moved upwards,
we suddenly got to this sort of new paradigm and
this is going to last forever, and this will be different.
And analysts were giving credit for if a company ordered
(03:03):
vessels in two and a half years for delivery, they
would be given credits in their forward multiples for those
ordered vessels, and so you and the other thing was
that the fleet was new, the product anchor market was
almost brand new at that time, so you were just
adding and adding and adding. So as soon as you
had any form of demand disruption, which you obviously had
(03:25):
in two thousand and eight, there was no way out.
Nothing was getting scrapped. So what you have now is, ironically,
is that the market has kind of climbed that to
one to a Wall Street phrase, climb the wall to worry.
We haven't got We had very little ordering in fact
this year, despite it being a strong year, and we've
(03:47):
got a.
Speaker 4 (03:50):
Old fleet.
Speaker 5 (03:52):
So that if there is is that there's a flip
down anywhere, you'll start to get sort of scrapping pretty quickly.
Speaker 4 (04:00):
Read to rebalance. That's really what's different.
Speaker 1 (04:03):
And so how do you differentiate Scorpio versus your peers.
What's your competitive advantage?
Speaker 3 (04:10):
I guess over your peers.
Speaker 5 (04:14):
We have, you know, I think the newest public company
products inking fleet.
Speaker 4 (04:17):
That's one.
Speaker 5 (04:19):
So we have very little. We have no requirement to
spend capital and renewal. At the moment, we're not forced
to renew that fleet, and soon our peers are going
to have to renew their fleets before.
Speaker 4 (04:32):
We have to.
Speaker 5 (04:34):
Our other competitive advantages, I think our shareholder base, you know,
our top you haven't gone much below twenty four, but
our top shareholders apart from the Norwegian Sovereign Fund or
all US institutions, and they have a very different view
to high payout dividend structures.
Speaker 4 (04:54):
They kind of hate them.
Speaker 5 (04:56):
So our advantage is that that long only group looking
for the longer term. So therefore you're not forced to
do something that's abnormal to a normal public company, which
is just to pay out a lot of your cash
flowing dividends. In the good times, we've been able to
(05:19):
you know, their fleet in support of US deal leveragings.
And you know, I would think somewhere around Christmas there's
a very high probability will be net that zero, which
should be, which would be fantastic, as Scorpio ever done
that before. We were pretty close coming out of COVID.
Speaker 4 (05:40):
Yeah, we were ninety one debt. No, we don't come
anywhere here.
Speaker 5 (05:45):
Okay, it's a it's a rarity for any any shipping company.
And then this is what's different, and you know, but
but shareholders are still the same shareholders, you know.
Speaker 4 (05:58):
Never going to be satisfied.
Speaker 5 (05:59):
They're always want you to do more, do better with
their money, which is that's the game of a public company.
The other thing that's different these days is you know,
the actual let's say the lenders themselves that they're they're
not used to getting money paid back. I mean so
(06:22):
unused that sometimes they complain about it, which is extraordinary
if you think about it, that only two years ago
they were probably terrified that most of their accounts or
three years ago with COVID, we're actually going to be
able to pay them back. And those are the differences.
Otherwise it's pretty broadly the same.
Speaker 1 (06:44):
So you mentioned the order book and now it's pretty
pretty low from historical standpoint.
Speaker 5 (06:49):
No, I didn't say that it was low historically. What
I said was there's been very little ordering this year,
despite the fact that it's been a strong market in
tankers and the companies have the word with orto with draw,
and that there is a high degree of older vessels.
The actual order book itself in total is you know,
(07:09):
it's quite reasonable.
Speaker 4 (07:10):
What what what makes it not a.
Speaker 5 (07:12):
High order book or not a low order book is that,
you know, you have more than double digits on order,
but that is over a long period three years, so
on an each year basis, it's not much counterbalanced by
the old fleet.
Speaker 3 (07:30):
So we'll call it Goldielocks order book.
Speaker 5 (07:32):
Just no Goldilocks. We're really greedy in the tack of
mark Goldilocks order book with this like nothing much on
order at all, Like coming out of COVID that was that.
Speaker 4 (07:43):
Was a Goldilocks.
Speaker 3 (07:43):
And how is Scorpio approaching ordering new vessels?
Speaker 5 (07:47):
We haven't ordered one for a long time now. It's
you know, as I said, the fleet is new, it's
you know, we have the critical mass. You know, it's nice,
it's a nice place to be at the moment relative
to the headline risks out there. I mean, one thing
that's different at the moment is we were either very naive,
(08:11):
probably very unnaive in the two thousands boom that things
could become wrong in credit markets. But on the way up,
everyone was very in the world was at peace, economies
were growing, everything was fantastic. In your introduction, you said, look,
you know, China is slowing. You know, there's risk of
you know, terrified at what's going to happen in Europe.
(08:33):
You know over these next months, whether it's the France, UK, etc.
Speaker 4 (08:39):
America.
Speaker 5 (08:40):
Here's the FED trying to make a decision in this
next next few days about whether they're going to cut
interest rates because they're worried that US unemployment is rising
and the economy is slowing, or whether they're going to
keep interest rates the same or raise them because they're
terrified of tarists leading to inflation. Neither of them are
(09:00):
a good look to actual real economic stability and growth.
We've got a very unpredictable headline risks. You know, we've
got two you know, pretty major war things going on
in the world.
Speaker 4 (09:18):
We've got.
Speaker 5 (09:20):
A lot of disruption, a lot of things that are
being thrown right out there. You know, you wouldn't naturally
think that, you know, the US and Canada would be
at log aheads with each other. You wouldn't sort of
think that, you know, the US could sort of push
India all the way to Russia and China in.
Speaker 4 (09:41):
Such an overt way.
Speaker 5 (09:43):
That's that's well, that'll be interesting how that one gets
sorted out. And you know, there are a whole bunch
of other things. So how we're approaching this that's different
to before is that we're recognizing that we're only great
cash flows, but we we are very very conscious that
we have some things out there that could be very
(10:05):
bad for the tanker market that we can't control or
even predict. So that's why we're maintaining strength.
Speaker 1 (10:14):
In terms of the geopolitical things out there. What was
more a bigger impact for the tankers. Was it Russia's
war with Ukraine or what's going on in the Middle
East and the Red Sea?
Speaker 5 (10:26):
Well, I'm not sure we know what the impact is.
Speaker 4 (10:29):
Yeah, we really don't.
Speaker 1 (10:31):
I mean, did it change like trade patterns and yeah,
but that's pluses and minuses.
Speaker 5 (10:37):
I mean, it's forced to think that just if they
made peace tomorrow in Russia, that everything would go back.
Speaker 4 (10:42):
You know, that would be harmful.
Speaker 5 (10:44):
It's forced to think that if you had peace in
the Middle East, everything would be harmful. Now, first of all,
you know these developed into wars and risk. It's not
good that people are starting to increase their spending on
you know, disposable miss and drones as opposed to economic growth.
So your headline demand is being is generally affected by
(11:07):
war and disruption. Your situation. Now if we you know
where if Russia stopped then it started exporting again, et cetera,
et cetera. Probably that shadow fleet just wouldn't have a home.
It would go to scrap. So yes, your ton mile
may change slightly, but your supply will be drastically reduced.
(11:31):
If you look at Israeli and Gaza, it's you know,
it's a.
Speaker 4 (11:37):
Risk out there.
Speaker 5 (11:38):
We don't know whether it's going to spread into the
other areas, whether some of the kingdoms are being put
under pressure right now from their population, and their population
starts to just you know unwind and we get into
you know, quite a big threat later. But piece is
just better. It's better for economic growth.
Speaker 1 (12:01):
You know, I would agree with that, right, So so
the so when you're talking about your ships are the Scorpio,
I'm assuming they're totally avoiding this West canal since since.
Speaker 4 (12:18):
The yeah visions.
Speaker 1 (12:20):
Yeah, and so what what has that done to you know,
your fleet and kind of like you know, eating up
of the capacity.
Speaker 3 (12:29):
For Scorpio.
Speaker 5 (12:30):
You know that that initially was a positive, as I said,
now that's kind of being taken absorbed in the disruption.
I think is is actually on a fundamental level negative.
You know, you may get if you suddenly got peace
in Israel and peace in Gods and Israel and peace
in Russia and Ukraine. You might get a momentary sell
(12:54):
off in tanker stocks, the knee jerk reaction from a
hedge fund. But to me that that's a by signal
at that point because you've eliminated right to the massive
uncertainties out there.
Speaker 1 (13:10):
You know I mentioned earlier, you know the fees on
Chinese built or operated chips.
Speaker 3 (13:15):
Is that can impact Scorpio at all? Sorry, the USTR
fees on Chinese built or Chinese operated ships.
Speaker 4 (13:25):
I don't really want to I don't think any of
this is certain. I'm not certain.
Speaker 3 (13:29):
Okay, So you think that might not even happen.
Speaker 5 (13:33):
I mean, they're even taking tariffs to the Supreme Court. Scene, right,
we really don't know what is going to happen in
the In the US, there's been a lot of talk,
but not really much certainty.
Speaker 1 (13:46):
Okay, And you know what we've seen also in the
US is that kind of step back of you know,
mission regulations. But obviously the other shipping industry is going
full steam ahead with trying to get to zero. How
is a scorpio handling that or what's what's well scopios?
Speaker 5 (14:03):
So I always tried to be you know, ahead right
from it's you know, birth as a public company with
focusing on ecoships very quickly in its adoption. You know,
the first thing we're handling it is afleet is relatively new,
so you know, news ships consume less fuel, so that's
(14:23):
the first step. Then you know, there are various other
things you can do to cut down fuel, which we've adopted.
We're fully compliant with the twenty thirty regulations. We're obviously
not compliant with the twenty fifty regulations, but I'm not
sure that any of the existing fleet were lost or
(14:44):
twenty fifty anyway, And when it comes to the alternative
fuels or the less non more renewable fuels. Here is
that we're waiting and watching because there's not yet the
infrastructure to supply.
Speaker 4 (15:05):
Many of them.
Speaker 5 (15:07):
So when you're going to do your fuel, for example,
it's it's okay if you've got a contract with hotel
and they're supplying everything, and like a A to B movement,
it's hard to do trampionship or spot fixing. And the
product market is very much a traded arbitrage market market,
so it's not yet the infrastructures developed to make that call.
(15:32):
And when we see what there's going to be, then
we'll adapt to that at that time. But if you
look at it as the whole again, this is another uncertainty.
Speaker 4 (15:41):
So you know Europe. Europe is.
Speaker 5 (15:46):
Trying to go full bore on this environmental regulations, et cetera.
The United States have got you know, splits in the
States already in their in their recent voting, they're really
split extremely along Democratic Republican lines. We then look at
the US is obviously, you know, trying to do as
(16:09):
much as they can in carbon right, They're trying to
improve coal, their own coal exports and production crude.
Speaker 4 (16:18):
As well gas as well.
Speaker 5 (16:20):
And then you know, the largest population in the world
in China is benefiting tremendously from low crude oil prices.
The second largest population in the India is benefiting, and
the growing economy is desperate to have low oil prices.
Speaker 4 (16:39):
So you've got and you know, one of the.
Speaker 5 (16:42):
Key things that Trump is trying to do is keep
gasoline prices down in the United States for the consumer.
So you've got this tremendous irony that you've got these
huge economic and population blocks that are kind of going backwards,
you know, or very fast in reverse. And you have
(17:05):
Europe sort of trying to do the transition, but it
doesn't look as if they can afford to do a transition.
Speaker 3 (17:14):
And that's obviously good for the product well or maybe not.
Speaker 5 (17:18):
It calls into question the you know, the you know,
whether or not you know, oil is dead or gasoline
is dead. I don't see that coming in this right now.
Speaker 3 (17:35):
Yeah, especially not out of the US.
Speaker 1 (17:37):
So where are the growth markets if there are, for
the product anchor market the growth markets.
Speaker 5 (17:44):
The theme of growth in the product markets is related
to the difference in where refineries are and countries tomorrow.
So an easy one is that we've seen the tremendous
growth in Middle Eastern refinery ability, in Indian finery ability,
which is effectively very close two three days from the
Middle East oil. So here, if you wind it back,
(18:07):
they didn't have any refineries, so they produce oil. When
Ope said, when Middley said, are we're going to produce
million barrels of oil, they'd have a little bit for
domestic and then you could guarantee the rest would be
exported on a ship. Now you know that million barrels
increase isn't all exported on a crude oil ship. It's
(18:27):
put into a refinery and a lot of it is
used to export it on a product ship because of
the shift there, So you're getting And then if we
take the countries like Australia, that's a different thing where
they've closed down their refineries because they don't want to
for environmental reasons, don't want to import a refined crude,
(18:48):
so they've turned them into product import tournaments. So though,
and then you in Europe and the United States, they've
had to close inefficient refineries and then sorry, and then
we're seeing it's a busy market now right, it's really
good and the the the aspect related to you know,
(19:16):
if we just take in general, look who's growing crew
it has to be shipped. You know, you have Nigeria
and West Africa, you have Guyana. I mean that's pretty
much all for expert and you have you know, Brazil
as well. So in terms of the actual that's the theme.
(19:37):
So you have obviously headlined immand growth, which is let's
say you should be revising upwards headline headline immand growth
because of the changes of environmental priorities in the world
in total, and you would change it up if you
were positive on economic growth, and that's what's what's driving
(20:03):
things at the moment and.
Speaker 1 (20:04):
Will increase refinery capabilities in China. But it'll be a
good thing or a bad thing for the product anchor market.
Speaker 5 (20:10):
I think it's good historically. You know, if you've ever
grown products, when you grow product in a refinery area,
it's not to the detriment to the product market. It's
always been to the positive because no one refinery complex
can produce or produce fine products exactly to their sales requirements.
Speaker 4 (20:34):
So that's where you get arbitrage, right.
Speaker 1 (20:38):
You know, we were talking earlier about emissions. You know,
if you're looking longer term than twenty fifty mandates, not
where a scorpio is going, but where do you do
you what do you think the solution is?
Speaker 3 (20:50):
What do you personally think the solution.
Speaker 5 (20:52):
Is going to end up being the way above my
intellectual Oh?
Speaker 4 (20:57):
Please capacity?
Speaker 5 (20:59):
Okay, No, it's just too We got dealing with too
much in front of us right now to start worrying
about where that is. Is much better to you know,
to watch and see how it actually develops. You know,
we could be all change if you know, I think
America does matter in this, and you know, if you
(21:22):
have two or three Republican terms with the presidency and
a majority then in the Houses, then that's going to.
Speaker 4 (21:35):
Be very different.
Speaker 5 (21:36):
If the Republicans lose the election, that's just the United States.
Speaker 1 (21:43):
Right, So just changing gears a little bit. Is there
much M and A in the space this scorpio out there?
I mean, does it make sense for you guys to
grow through that or just given where the market is,
you don't see much consolidation.
Speaker 5 (22:02):
I do with Scopya at the moment, is that it
makes sense for us to pay down our debt. There's
no there's nothing out there that we should be. You know,
our stock is trading under the acid value, it's moving
up strongly, but we don't have a currency in our
stock at the moment, and there's no public company in
(22:27):
the product space that would be that has a fleet
there's better than ours, So you would, you know, you'd
be spending money in uncertain times to acquire you know,
less of less quality as they were. So no, I
mean I think that you know, we're really happy and
(22:50):
just learning a lot of cash and and looking at
life from that point at the moment, but there is
emin a activity in the space. I mean, I'm as
sure as you know I can be that there will
be a merger between Hafnear and TORM, which I think
(23:10):
is super constructive. I think that the tanker industry really
needs to have bigger market cap companies, more liquidity, more
companies that have access to the index funds, more companies
that have access to the bigger long only funds. If
we look at the trading in the tanker industry, I mean,
(23:34):
on any given day, with exception of Frontline, Scorpio virtually
trades all of the other tanker companies in terms of
its liquidity, and that's not healthy. Overall for the industry you.
Speaker 1 (23:47):
Mentioned if I heard, you're right that scop history and
below its asset, Like, what's what's the market getting wrong?
Speaker 5 (23:53):
Where are they giving going to campaign about the market?
Speaker 4 (23:56):
Don't get it that they're there.
Speaker 5 (24:00):
You know, they were sort of, I don't know whatever
it is, distracted by the shiny object of high dividends,
and now they're.
Speaker 4 (24:10):
Kind of figuring that.
Speaker 5 (24:11):
Hold on a minute, why would we pay a discount
to a fleet that's you know, the newest in the thing,
paying a regular dividend and has a fantastic balance sheet
in uncertain times as you've seen what's happening with those
long only is coming into our stock. If you look
at the transition in the last nine months, it's it's tremendous.
(24:32):
You know, the hedge funds have moved away, very little retail.
You can literally see in the first twenty five shareholders
seventy percent of the stock is held between a very
good long only is where our strategy is very compatible
with them. So they I'd never complain whether whether the
(24:59):
market has something wrong or right, that they see it
as they see it in the time.
Speaker 1 (25:06):
And what would you need to see it a start?
I guess ordering new ships increasing your fleets.
Speaker 5 (25:13):
I don't think it has anything to do with the well,
I guess it does have something to the stock price,
because you could, you know, once we've achieved net debt,
you could you could always buy back stock if you
had a dislocation.
Speaker 4 (25:26):
In any of you there.
Speaker 5 (25:27):
But new building is about a bunch of things that
need to be sorted out. It's love to see some
more transparency in the world. You know, it's maybe like
a broken record, but you know there's a high degree
of risk out there that's being ignored by If you
(25:49):
ask me what the stock market has got wrong at
the moment, it's not scorpio tankers. It's the you know,
absolute complacency and confidence that it's moving up. I mean,
you're seeing hedge funds now chasing retail because retail were
bolder in the beginning of the year, and then you
had hedge funds pulled back and go no, no, no, you know,
(26:11):
tid ofs so bad and we can't possibly do this
in retail said no, I think, well we'll buy, and
now the hedge funds have to chase again. It's not
necessarily the best of reasons to do that. So I
think we just have to be a little humble at
the moment and just wait for some parity.
Speaker 1 (26:34):
All right, well, Robert, that that's our time to thank
you very much.
Speaker 3 (26:38):
Appreciate it, appreciate, thank you.
Speaker 4 (26:41):
It's great anytime.
Speaker 1 (26:43):
So on stage with me right now is Hamish Norton,
president of Star Bulk Tikerr SBLK. It's got a market
cap around two point two billion dollars. Hamish, thanks for joining.
Speaker 2 (26:53):
Us, my pleasure.
Speaker 1 (26:54):
So tell us about you know, we heard about the
product anchor market, so tell us about the.
Speaker 3 (26:59):
Dry balk mark.
Speaker 2 (27:00):
Okay, so let me give an introduction to the dry
balk market. It is almost it is the most perfect
market that I know of which means there are no
leading indicators. So I don't know anybody who is able
to predict the course of the dry bulk market. Our
experience is that if you have a balance sheet that
(27:22):
allows you to go through the cycle and not have
to raise equity and distress, that you'll make money. But
how and when you'll make money is very hard to predict,
impossible to predict. So the dry bulk market is doing
pretty well right now. I think it's doing better than
(27:43):
people expected. But I refer you to the beginning of
what I was saying, which is that nobody is really
ever able to predict this market.
Speaker 1 (27:53):
So what was the biggest change versus in the beginning
of the year, what people were thinking with what.
Speaker 3 (27:57):
Kind of transpired.
Speaker 2 (27:59):
So at the beginning of the year, for example, China
was not buying a lot of grain because they had
big stockpiles of grain, And they were not buying a
lot of coal because they had increased domestic production of
coal and it was outpacing the growth in coal generated electricity.
(28:20):
Second half of the year, they cut domestic production of
coal and thermal coal produced electricity group and so they
had to import more coal, and they started importing grains
as well because the stockpiles got eaten up, and India
(28:44):
was also importing more coal. And you know, then there's
a concept in dry bulk of ocean imbalance. All the
best cards are in the Atlantic, all the best discharge
(29:05):
ports are in the Pacific, so ships tend to move
from the Atlantic to the Pacific. Sometimes there's a greater
imbalance where there's more of a need in the Atlantic
for ships to take cargoes to the Pacific. If you
anticipate that, and you take a little bit of a
hit getting your ship to the Atlantic sooner you can
make more money on the next cargo. We did project that.
(29:33):
Maybe that was pure chance, but we did get our
ships to the Atlantic quicker by taking basically worse worse charters,
and that was good. There is a situation that often
occurs where when you have a lot of dry ball movements,
(29:58):
you get port congestion. And the port congestion is good
because it puts the ships out of service as they're
lining up to discharge or load in a port, and
so there are effectively fewer ships to carry out the business.
Port congestion in the by the end of the first
(30:19):
half of the year was all the way back to
sort of a normal level, so it could only go
up from there, and you know, it's gone up a
little bit, not a lot, and you know then there's
a very interesting phenomenon. There were a lot of ships
(30:43):
dryball ships delivered between two thousand and nine and twenty twelve.
These were the ships that were ordered in two thousand
and seven. In two thousand and seven, the earliest new
building you could get was at a shipyard that did
not then exist. The shipyard had to be built. Then
that shipyard had to build your ship. And a lot
(31:04):
of these shipyards were built and they delivered ships, and
they were terrible ships. But these ships are now coming
to what is known as their third special survey. So
every year twenty percent of the fleet goes through a
dry docking. Well this year there's more than twenty percent
(31:28):
because those ships that were built in twenty twelve are
coming up on their third special survey, and you know
it's going to continue for a few years.
Speaker 1 (31:42):
I'm going to ask similar questions I asked Robert earlier.
But so, with all the geopolitical risks out there, whether
it's Russia's war Ukraine or the Red Sea, how has
that impacted you know, the dry bulk industry and starbulk specifically.
Speaker 2 (31:55):
Yeah, well, so the Red Sea is helpful. You know,
Robert thought that it was no longer helpful for product tankers.
I think it's still helpful for dry ball rates. Not
all the dry ball ships are avoiding the Red Sea.
(32:19):
I think more of the tankers are avoiding the Red Sea,
except those in the shadow fleet that might have deals
with hulusies.
Speaker 3 (32:28):
So that the dry bulkers that are using this sue
as are.
Speaker 2 (32:31):
They are not public companies. There are people who are
willing to take more risks than we're willing to take,
and you know, more risks frankly, with the safety of
their crew. We had three ships at the beginning of
this Red Sea closure that were on charter to go
through the Red Sea. They carried out their charter because
(32:55):
it wasn't a war zone, so we didn't actually have
the right to not carry out the charter. Those ships
were shot at. Nobody was injured, no serious damage. Well,
there was one ship that had a missile go through
the top into the hole, blew up, knocked the hatch
(33:17):
covers off, but that was bad. Yeah, it was terrifying.
The ship was relatively easily repaired, thank heaven, and the
crew were fine, except you know, terrified. And then we
stopped and we have we've not gone back through since,
and you know, we'll see when that reverses. If the
(33:41):
war with between Russia and Ukraine ends, we think that
will be good for the market. There will be reconstruction.
It takes a lot of dry bulk to build the
rebuild the real estate that's been destroyed. You know, it
can be quite significant.
Speaker 1 (34:01):
And what was the biggest impact I guess with the
Russia war with Ukraine, just given how there's both big
exporters of egg.
Speaker 2 (34:11):
Well, I mean trade flows, you know, I think ten
miles were more or less unaffected because there were obviously
Ukraine and to some extent Russia had trouble shipping their grain.
(34:32):
The people who bought the Ukrainian grain had to buy
from somewhere else. There was less grain traded in aggregate,
but the trip lengths for the grain that was traded
were longer, so it was not a big effect net.
It was a bigger effect on the shipping insurance market.
(34:54):
We had three ships trapped in Ukraine when the war started.
We got two of them out one that was in
Nikolaiev we did not get out, and after a year
it was a constructive total loss, and we got the
insurance proceeds which were about twenty million dollars above the
(35:16):
market value of the ship. And that's the that's nothing
wrong with that. That's how marine insurance works. You have
to make sure your ships are insured for enough, but
you can insure them for a little extra.
Speaker 1 (35:31):
Also, what you know, we really didn't talk about that
in the earlier conversation. But like, you know, the insurance market,
how much is insurance rates gone up? Just given the
what it seems like increased geopolitical risks to the fleet.
Speaker 2 (35:44):
Insurance rates are up. But I have to say I'm
not an expert in the marine insurance market.
Speaker 1 (35:52):
So okay, so you know what what is you know
your outlook for the dry bulk market? You know you
said there's no leading indicators, so so.
Speaker 2 (36:00):
Take everything I say with a large grain of salt.
We're optimistic for the second half of twenty twenty five
and going into twenty twenty six. You know, we do
see China importing more coal and more grain. We see
(36:21):
India importing more coal.
Speaker 3 (36:24):
This thermal coal met coal.
Speaker 2 (36:26):
It's basically thermal met coal is a pretty small it's
not a big trade. And iron ore is doing well.
First of all, China is importing kind of as much
iron ore as ever, which is maybe a surprise, but
(36:51):
you know, cutting back on steel production, they've they've actually
cut back on the electric mini mills. They're getting more
iron ore from Brazil, which is three times the distance
that you know that iron ore travels from Australia. Brazil
(37:11):
is producing more iron ore China is taking it. It
doesn't look like Australia is being pushed out yet. But
in the fourth quarter there's a new mine opening in Guinea,
the Simundum mine, which by sometime in two thousand and
(37:32):
six is supposed to get up to ninety million tons
a year and eventually one hundred and twenty million tons
a year. That's a big deal, and it's half owned
by China. Chinese companies they're going to take that iron ore.
Probably that will offset Australian iron ore. So even if
(37:54):
iron ore imports don't grow or even drop, if you
get more of your iron ore from three times as
far away, that's a big help for dry ball shipping.
It's ton miles that matter, not tons. And you know,
box Site, also coming from Guinea, is becoming a big cargo.
(38:19):
It's becoming it's a cape size cargo. You know, you
used to be that box Site was thought to be
a so called minor bulk. It's it's getting up there
with you know, it's it's it's probably the fourth major
bulk after grain at this point.
Speaker 1 (38:39):
And so you know, the supply demand dynamics isn't as
positive in the dry bulk industry as it is.
Speaker 3 (38:44):
Maybe in the tanker market.
Speaker 1 (38:46):
I think Clarkson's has supply growth out pacing demand this
year next year. Yeah, what are you guys doing with
your in terms of ordering new ships? How are you
approaching the new ship market?
Speaker 2 (38:59):
Yeah, well the order book is about ten and a
half percent of the fleet. You know, we think that
fleet growth will be you know, order of three percent
net of net of scrapping, which is more than clarkson
(39:22):
is predicting for for you know, demand growth. But you know,
for for example, that the effect of the special surveys
of the two thousand and nine through twenty twelve built
ships is we think going to account for say one
(39:45):
percent of capacity for several years. So you know, there
there are there are mitigating factors, and you know the
first half of this year was relatively depressing. Second half
(40:05):
is looking good. So is Clarkson's right, It's hard to know. Yeah,
you only really know what's happened to the dry ball
market sort of in the rear view mirror. Once it's happened,
rates are better than they should be if Clarkson's is right.
Speaker 3 (40:26):
So you know, so are you ordering new ships now?
Speaker 2 (40:30):
We are not. We are not ordering new ships the shipyards.
First of all, dry ball ships are really cheap and
simple relative to tankers, relative to container ships. They're just
basically hulls with holds with hatch covers at the top.
(40:50):
Maybe nine holes in a cape, five holds in a Supermax.
You take the hatch cover off, you dump in the cargo,
or you put the hatch cover back on. Nothing really
sophisticated except the engine. A US shipyard just parenthetically has
trouble getting the steel to make a dry ball carrier
(41:14):
for less than the market price of a new building
dryball carrier. So the shipyards don't want to build dry
ball carriers unless they are empty, don't have any orders. Well,
they have orders. They have orders for LNG carriers, for
container ships, to some extent for tankers. They're fat and happy,
(41:37):
and they don't want to cut price to get dry
ball orders. Our experience tells us that when the shipyards
are not willing to cut price and stretch to get
dry ball orders, it's not a good time to buy
dry ball ships. Also, you know, we don't know what
(42:01):
kind of ship to order in terms of the fuel.
If we ordered a ship that burned fuel oil only
and could in theory burned biofuel. You know, we don't
think you'll be able to get biofuel when everybody needs it.
You can get biofuel today because nobody needs it. But
(42:24):
the ingredients for making biofuel for ships are you know,
use cooking oil, animal fat. You know, the the quantity
of biofuel ingredients is so minuscule compared to the amount
(42:44):
of fuel that ships burn that I you know, we
think that by the time you'll need biofuel, it basically
won't be available at all.
Speaker 1 (42:53):
So how do you think the shipping industry is going
to get to twenty fifty emission standards by the IMO?
Speaker 2 (43:00):
It's going to be very hard. You know, there's there's
I think it's realistic, not unless people are prepared to
go nuclear. Nuclear propulsion is demonstrated to work. The US
Navy has a seventy some year record of no accidents.
(43:21):
You know, some people have suggested using nuclear power to
create hydrogen electrolytically from water, use the hydrogen to make ammonia,
use the ammonia to fuel the ship. The losses involved
(43:43):
in taking that nuclear electricity and creating hydrogen and then
using the hydrogen to create ammonia and then burning the
ammonia in an engine on board the ship are eighty
percent of the energy. So you need five times the
nuclear electricity that you would have needed if the reactor
had been on board the ship. Nuclear electricity is not free,
(44:07):
and if you multiply the price by five, it's going
to be expensive. So I think ammonia can be made
and used insufficient quantity, but it's going to be extremely expensive.
I think so called emethanol and E LNG are also possible,
(44:32):
but the chemical engineering is much more complex. Those will
be much more expensive, I think than ammonia.
Speaker 1 (44:40):
Right, And so obviously the ship owners have to buy
these new, more expensive ships.
Speaker 3 (44:45):
And how do you charge for that?
Speaker 2 (44:49):
Well, at the moment you can't. You'll be able to
charge for it when there is a sufficient financial penalty
that the ammonia is cheaper than fuel oil net of
the penalty, and the penalty has to be rigorously enforced.
(45:10):
And you know, the the discussions at the I m
OH have been around the concept that the I m
O will collect these in effect taxes and it's a
lot of money, and it's you know, the IMO has
never collected money, and you know, I don't know how
(45:35):
they're going to prevent corruption. You know, in the process.
We have nothing to do with corruption at the I
m oh, it's corruption on the way to the I
m oh, it's it's a it's a difficult problem.
Speaker 1 (45:50):
And so if you, if you were a betting person,
would would how do you think the industry is it's
gonna what do you think the industry is going to
do it?
Speaker 2 (46:02):
I have no idea what we really want this to
go through. Frankly, Uh, you know we are you know,
Scorpio is a big company. Starbuck is a big company.
You know, we're basically just about the biggest dry ball
company in the public markets. We can afford a compliance department,
(46:23):
We can afford people to deal with very complex regulations
in a way that our peers cannot. But you know,
I have my doubts that this will work. But you know,
(46:44):
knock on wood, they'll figure out a way to make
it work.
Speaker 3 (46:47):
And how Starbuck being more efficient? I guess with with
the assets that.
Speaker 2 (46:51):
You have, well, we're doing a lot. Actually, we're putting
on basically fuel saving devices, which are are basically ducts
just before the propeller that give the water a spin.
Opposite the spin of the propeller, so that water comes
(47:12):
out more sort of straight back instead of twisting. That
can save five percent of the fuel. We're going with
more expensive paints, which actually can save another five to
ten percent of the fuel.
Speaker 3 (47:31):
What do the paints do.
Speaker 2 (47:32):
The paints keep fouling down and they reduce friction with
the water, and it's a pretty big effect, as it
should be because the paints are incredibly expensive. And then
we are experimenting with hull cleaning robots that allow us
(47:54):
to keep the fouling from forming. You don't keep your
hull clean, you can wake up one day and find
you're burning forty percent more fuel. I mean, it's a
huge effect. And if you don't clean the fouling off,
by the time you're burning ten percent more fuel, it
(48:14):
has time to grow roots into your paint and then
you have to redo the expensive paint job, which is yeah,
it's so we're then and then robots robots well, I
mean you know, they don't they don't have arms and legs,
they have wheels. And then we're using some very sophisticated
(48:35):
software as a service that optimizes our root based upon
fuel price, charter rate, wind waves, wind direction wave spectrum.
Speaker 3 (48:50):
It is a AI. Can we get AI in this country?
Get another turn?
Speaker 2 (48:54):
It is basically AI. Yeah, and the company that we
use is insent and Cisco, so near all the AI people.
Speaker 4 (49:03):
Yeah.
Speaker 1 (49:05):
So I guess in closing CAD you just you know,
the consensus has you guys growing your ebit pretty pretty well.
Speaker 3 (49:16):
Next year.
Speaker 1 (49:16):
I think it was sixteen percent I'm sorry, up sixty
two percent next year and up sixteen percent twenty twenty seven.
But that's from a down year this year. What has
to happen for I guess expectations to be exceeded over
the next eighteen months.
Speaker 2 (49:33):
Well, you know, things have to go well, you know,
it's it's an impossible market to predict. What we're doing
is we're getting rid of our leverage, just like Scorpio.
We're paying down two hundred and fifty million of debt
a year. Our debt is already less than the scrap
value of our fleet. You know, if if you have
(49:58):
a strong enough balance sheet in this business, you'll make money.
The way to lose money is to have to issue
equity and distress. And you know, ask me how I
know that? How do you know that dams yeah, in
twenty sixteen. Our capes that in two thousand and eight
(50:21):
earn two hundred and fifty thousand dollars a day and
today earned you know, twenty three to thirty thousand dollars
a day depending on the ship. Earned eight hundred dollars
a day for the month of February. Yes, so you
know it was it was bad, all right.
Speaker 1 (50:39):
And just before I let you go, can you talk
about consolidation in the market.
Speaker 3 (50:44):
Is there any going on?
Speaker 2 (50:46):
There's nothing going on. We think there should be. We
think it benefits everybody. Frankly, our market cap of two
point two billion is too small for many investors. You know.
I think what you need to have in this market
it's the ability to allow an investor to invest about
five hundred million. Nobody's going to do that with a
(51:09):
company with a two point two billion market cap. I
think we need a five billion market cap dryball company.
And it's hard to get that to happen because, just
like Scorpio, our share trades at less than the net
liquidation value of the hard assets. You know, I think
(51:31):
the problem is that institutional investors don't have the bandwidth
or the money basically to pay for research into such
a small universe. That's why they should be using BI
(51:52):
exactly exactly. But you know, if we had shipping companies
with a five billion dollar market cap, I think more
investors would do their research and conclude that the stock
is really cheap. And you know, in terms of consolidation,
basically everybody wants to keep their job. Yeah, you even
(52:13):
board members you know, can make enough money to make
a difference.
Speaker 1 (52:18):
I want to thank Robert and Hamish for their time
and insights. I also want to thank you for tuning in.
If you liked the episode, please subscribe and leave a review.
We've lined up a number of great guests for the podcast,
so please check back to hear conversations with C suite executives, shippers,
and regulators three two one. I also want to thank
you for tuning in. If you like the episode, please
(52:40):
subscribe and leave a review. We've lined up a number
of great guests for the podcast, so check back to
hear 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 out our
work on the Bloomberg terminal at Bigo and on social media.
This is Lee Klaska cuning off and thanks for talking
(53:01):
transports with me. Talk to you next time.
Host
Lee Klaskow
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