May 8, 2025 • 39 mins
Geopolitical tensions, shifting trade routes and evolving carrier alliances are redefining the global containerliner landscape. Though demand remains uncertain, a level setting of tariffs could create a surge in demand and lead to renewed congestion and rate volatility. In this Talking Transports podcast, Steve Ferreira, founder and CEO of Ocean Audit, joins Lee Klaskow, Bloomberg Intelligence senior transportation and logistics analyst, to share his insights about the state of the global container industry, which he describes as fragmented, fragile and fine-tuning. Ferreira also discusses tariffs, USTR fees, emissions, rates and how a better offer lead him to a long career in shipping.
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Speaker 1 (00:05):
Hi everyone, this is Lee Clasgow and we're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klascow, senior freight, transportation and logistics analysts 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
(00:27):
great guests on to the podcast like the one we
have today, So.
Speaker 2 (00:32):
Your support is really needed.
Speaker 1 (00:33):
So please if you enjoy the podcast, share it, like it,
and leave a comment. Also, if you have any ideas
for future episodes or just want to talk transports, please
hit me up on the Bloomberg terminal or on LinkedIn
or on Twitter at logistics Lee. Now onto our episode.
We're delighted to have Steve Ferrara, Ocean Audits Founder and CEO,
(00:54):
as our guests on the podcast today. Steve is the
CEO and founder of Ocean Audit, a global leader in
ocean freight auditing and global logistics recovery services. With over
forty two years of experience in the logistics and shipping industry,
Steve is recognized as a thought leader and innovator in
supply chain costs recovery. He has helped Fortune five hundred
companies uncover millions in hitted over charges through proprietary audit techniques.
(01:20):
He's a frequent media commentator and conference speaker, offering deep
insights into maritime trade, container shipping, and global logistics trends.
Speaker 3 (01:30):
Welcome to the podcast, Steve. Thanks so much for joining us, Ollie.
It's such an honor to see you again. You know,
I've been known here for a good number of years
now and I'm so thankful and pleased to be here today.
Thanks for the great time today.
Speaker 2 (01:43):
Yeah, no, it's great to have you on.
Speaker 1 (01:45):
You know, we've bumped into each other over the years
at various conferences. You know, I wanted to have you
on today because there is so much going on in
the shipping industry. So just before we start talking about that,
is there anything you want to add about audit that
I might have left out in the introduction.
Speaker 3 (02:03):
Only that we're specializing and helping the bulletproof glass industry.
I'm joking. I say that tongue in cheek. I love
what I do and it's funny. I get refunds for
clients from major global prey for olders and direct ocean carriers,
and you would think that, you know, there's some adversary
relations there, but you know, I think that what oceand
(02:25):
it really does is it helps make both parties better,
helps make the invoicing accuracy from the vendor better, and
it helps make the beneficial cargo owners process better. So
I joke a little bit about bulletproof glass. People always say,
don't the carriers get mad at you? But actually I
think they really respect the hell out of me.
Speaker 1 (02:42):
Okay, And I have a question, so like what happens
that a shipper will get a refund? Like where are
the mistakes made or the issues that require the shipper
to request a refund.
Speaker 3 (02:56):
The whole industry is so fascinating and frag And when
I talk about the industry, I mean just kind of
the whole freight audit and pay the whole kind of
general audit scope of what's happening, you know, with that
freight audit in general. And I think what happens in
ocean freight, especially in the maritime structurally, is that many
freight auditors will look at four or five different variables.
(03:19):
For example, whether there's an overpayment or a duplicate payment,
and some of these quite quite honestly, are a little
bit sophomoric, right where you don't really necessarily need a
big gun to find out if something is you know,
duplicate paid. I mean, you know, systems should be able
to get those. I think with me and what I'm
seeing in my in my role in the industry is
(03:41):
I've actually cataloged forty two different ways that an ocean
freight invoice can go haywire, meaning forty two different roads
to recovery, where classically I think beneficial cargo owners and
other freight auditors are just looking at four or five
different ways.
Speaker 1 (03:58):
Right, you just name some of some of the I
guess outside of the overpayment and due payment, you know,
just a couple of the more common ways that that
the shippers might be overpaying.
Speaker 3 (04:10):
Sure, I don't think I'm giving away too much of
my Ferrara secret sauce here, but I think one of
the things I see a lot of, as example, is
many clients don't realize that the gate end date when
the cargo is actually received in say Shanghai or in
Yantian or in Bangkok, that has everything to do with
(04:31):
what rate structure will be affixed on the invoice. So,
for example, if the cargo comes in on a Monday
to the company x y Z container facility in Bangkok,
and the new rate is effective Tuesday, well they're going
to get the old rate, right. So I think that
one of the biggest problems is hardly any vendor puts
(04:52):
down on the invoice the date the.
Speaker 4 (04:54):
Cargo was received.
Speaker 3 (04:55):
They put down on the invoice when the when the
cargo sailed, but not when it was received. And a
lot of people will go and ask me, is this malicious?
Is this on purpose? Is this kind of designed to
up through skate? I still don't know the answer after
forty two years.
Speaker 1 (05:12):
Okay, and you know, and again I guess without giving
too much of the secret sauce like how much of
what you do is just you know, in your brain
or is it like a lot of a utilizing technology
to kind of find find these.
Speaker 2 (05:29):
Mistakes?
Speaker 3 (05:29):
If you will, so loaded question. I don't mind explaining
it a little bit, you know. I think one of
the things that's really been interesting. I'll give away a
little bit here to the audience. I think it's a
little premature, but I'm a strong candidate right now for
INK five thousand, right, and so I'm a solopreneur. I
have no employees, and yet I'll probably cross thingers crossed,
(05:52):
likely make the INK five thousand lists when it's announced
this summer. So how does a guy with no employees
make such a prestigious lie with that kind of a
revenue lift. One of the things I did about a
year or two years ago in preparation for how the
industry would change is I built some automation that allows
me to handle thirty to forty clients thirty to forty
(06:14):
audits simultaneously. And no, it's not AI, it's CI. And
you say, what's CI? Well, at TPM I was talking
a little bit about this. I think artificial intelligence, almost
like blockchain, is one of those up and coming things
in the overall container shipping industry. But CI is creative intelligence.
(06:36):
And I think that when you're in an art in
a science type industry like I am, you have to
be able to be in a high production environment, but
you have to use some very good creativity and marketing
right to make these funnels work the right way.
Speaker 4 (06:49):
I've been able to do that.
Speaker 1 (06:51):
All right, So in addition to some of your accomplishments,
you are an author as well.
Speaker 2 (06:57):
Have you written more than one book.
Speaker 3 (07:00):
To hit the best selling USA Today best selling list?
But it was my seminal work was called Navigating B
to B, which actually made it to number three on
Wall Street Journal and number eighty one on USA Today.
And I always tell people one of my cocktail party
allines is that on one week alone, just one week,
(07:22):
my book actually was ranked higher than Oprah Winfrey. So
that's my claim to fame. But Navigating B to B
is a very interesting book. Not to plug it, but
it's basically a compilation of how to achieve entrepreneurship and
success in a B to B logistics environment. So many
(07:45):
of my friends and followers from LinkedIn have been using
it to pick up some tips and tricks on how
to overcome certain, you know, impediments in their own careers.
So it's a book that based on my entrepreneurial journey
as a two x founder.
Speaker 1 (08:03):
Okay, And so one of one of the main like
I said earlier, one of the reasons why I wanted
to have you on is, you know, there's so much
going on in the marine shipping industry at your perspective
would be fantastic, given you.
Speaker 2 (08:14):
Know, your long career.
Speaker 1 (08:15):
You know, how would you characterize the state of the
global containerized shipping industry.
Speaker 3 (08:22):
I think we're in what I call the three f's,
you know, Like my last name is Ferrera, so a
three F like Frank, and I think we I would
characterize it right now Lee as fragmented, fragile, and full
of fine tuning.
Speaker 4 (08:36):
Actually that's four.
Speaker 3 (08:37):
F's, But I think that the fragmentation, the fragility, and
the fine tuning that's going on right now really sums
up what's happening in the trades.
Speaker 1 (08:47):
So I don't know if you're on this part of it,
but you know, how have you know, the tariffs, the
risk of tariffs, the increased protectionists policies that are coming
out of Washington, you know, how do you view that
as impacting the shipping industry Because you know, earlier this
morning on my commute in I was on listening to
Bloomberg Radio like I do every morning, and you know,
(09:08):
they had the president of the Port of la and
he's talking about, you know, a demand coming down thirty
five percent because the towers kind of a what are
shippers telling you what are a liners telling you and
kind of where do you think we're going over the
months to come.
Speaker 3 (09:28):
I see a lot of I've had a lot of
new intel on this over the last twenty four hours,
so I think it's something I feel uniquely qualified to
give some thought, thought bubbles to here. I think that
one of the things we're seeing is a lot of
the bigger, more prolific retailers, Without getting into names, obviously
(09:51):
they've some of them have slowed down the contracting process
with the Ocean vendors, and in turn, I obviously the
throughput of goods being booked for those vendors in origin
in Asia or other parts of the world have also
dropped off.
Speaker 4 (10:08):
However, some of the mid tier retailers.
Speaker 3 (10:11):
Right if you take your top one hundred retailers, let's
say the top one hundred, the top ten, have gone
into this kind of slow down protection, protectionism mode in
a way. And see I think the other mid tier,
from say number twenty five through fifty, they've actually been
a little bit more bolder because they're getting the space
(10:32):
they need. They're actually being invited with a silver tray
right to have just about anything they want from the
Ocean vendors because obviously what's happening. You see pitches of
ghost towns in Seattle Port of Seattle, and the maritime
traffic trackers show very little activity. You know, it's a
shipper's game, right, So I think that the mid tier
(10:57):
retailer taking a little bit more risk to get to
get product out there, but they're also getting taken care of.
The threat or the opportunity or the challenge that I
think we're going to see in the next sixty days
is win and I'm pretty sure it's when you know,
more relaxation comes of the tariffs. I hate to say it,
(11:19):
but I think we're going to see a mini COVID
congestion because what's going to happen is I think we're
going to see the top ten or twenty retailers start
to say, okay, we've got to jump on this. Keep
in mind, you know, many of these have pipeline production, right,
so they're ready to ramp up quickly at the factories
and they're looking for vessel space. It's going to create congestion.
(11:43):
And you know, it wouldn't surprise me to see in
the end of July ten twelve ships out in Long
beach again going back to what we saw in the
years of COVID.
Speaker 1 (11:55):
So I guess are you a little more bullish on
shipping rates then? As you know, obviously global shipping rates
have come down significantly since their July highs. Do you
have any thoughts in where shipping rates are going to go?
Speaker 3 (12:10):
Well, keep in mind, right, we have a lot of
things to think about too. We have the us TR
China vessel, you know, search charges which won't be as
much as you know we might have assumed they might
have been in the TPM days back in February or
early March. And I think right now, obviously you're right,
rates have gone down. However, if my theory is correct
(12:33):
and we start to see a reverberation, so to speak,
of these retailers needing the space, you know, this is
where I think rates come up and they stabilize. Now
we'll probably not see booming rates, right, but we will
see I think more of a stabilization stabilization of them
this summer.
Speaker 1 (12:52):
And you know you mentioned, you know, the US Trade
Representative of the us t R kind of what do
you think the rip effect of that that is going
to be once that goes into place.
Speaker 3 (13:05):
I would have said a few months ago, when I
was sitting down in in La Long Beach and I
had a chance to talk to Lars Jensen from Spoochy Maritime.
I think, you know, Lars, you know, we were thinking that,
or I should say, I want to give him credit.
Lars was thinking that the surcharge could be five six,
seven hundred dollars a container can re call if it's
(13:27):
teu fu, I want to say it was FAU. Now
it turns out that it's looking more like akin to
what a Panama Canal, you know, tariff surcharge might be
of one hundred and forty one hundred and fifty dollars.
I think it's just one of those things that it's
going to be tough. I believe to opt out of
that surcharge. As you probably know ly many clients in
(13:51):
that retail space that I alluded to earlier, If you
look at their Appendix A in their ocean contracts, you
know it'll say no Panama Canal surface to apply, no
SUS fee to apply. I think this us t R
fee is going to be a mandatory fee that shippers
will have to deal with. But I look at it
(14:13):
as almost a non secutor. I think it's it's a fee.
But at the same time, I think many of them
are just deep breathing that it's not more than it
what it what it's going to be.
Speaker 1 (14:24):
Yeah, But like even like you know, you were mentioning earlier,
whether it's five six hundred dollars per container, you know,
when rates are around two thousand dollars, that's a that's
a big that's a big premium two to the cost
for the for the shipper. And it would be you know,
interesting to see why, I mean, you might have a
pretty good insight in this.
Speaker 2 (14:45):
Why would a.
Speaker 1 (14:47):
A retailer want to use a Chinese carrier or or
a carrier that's you know, as opposed to somebody else.
Speaker 3 (14:58):
Well, excellent point, and that brings me back to my
thesis on you know, possible congestions because you know, you
may have ships out there that aren't that full, but
they're Chinese you know, owned and operated, and then you
have other ships that you know are not. So I
think it puts in another dimension, right of this fragility
right you mentioned asked me about the you know, the
(15:19):
state of the shipping industry right now, and I mentioned
that it was fragmented, fragile, and I think fine tuning.
I think this has a lot to do with that.
I think that's a great observation you made. And it's funny.
I we just went through the NFL draft, right, and
you always think of this.
Speaker 4 (15:36):
I'm a big football.
Speaker 3 (15:37):
Fan, and you know, you think of the draft war
rooms that are taking place, you know, when they make
these last minute decisions. Unfortunately, and I say this with
peace and love, you know, to all my brethren and
out there that are my clients and beneficial cargo owners,
a lot of them don't have the benefits of this
war room, right.
Speaker 4 (15:58):
A lot of times.
Speaker 3 (15:59):
It's three and four, you know, young and seasoned professionals
that are making these multimillion dollar decisions for their the company,
and they're hearing a lot of it, of the noise
from experts like ourselves, right and you and me and
Bloomberg and and you know, I think it's really interesting
that a lot of times you have to keep in
(16:20):
mind clients are hearing a lot of the information from
vendors and it's not always you know, an equal one
to one sharing. When you know people are getting information
that way, very few customers, you know, other than you know,
the Walmarts, the targets, you know, the and and the
ilk of that kind have the ability to go home depot,
(16:43):
to go really three dimensional into that kind of that
war room activity for that kind of fine tuning.
Speaker 4 (16:50):
All right.
Speaker 1 (16:50):
More importantly, who's your NFL team that your roots were?
Speaker 3 (16:55):
Well, I believe it or not. I mean, I've been
a Patspian for so many years. I'm not sure about
all what's happening with Bill Belichick legend.
Speaker 4 (17:01):
So I think I'm shifting to a Ravens fan, believe
it or not. Just I like those Ravens.
Speaker 1 (17:06):
Yeah right, I'm a long time Giant fan.
Speaker 2 (17:10):
It's been been a tough couple of years. Actually more
than a couple of years. It has been a tough
many years.
Speaker 1 (17:15):
So you know, in your in your three f's, can
you explain what you meant by fragmented, Because you know,
the shipping industry is becoming more more and more consolidated.
Speaker 2 (17:25):
So I guess what what do you meant? What did
you mean by the fragmented part?
Speaker 3 (17:29):
Well, when I think of fragmented, I think about the
world stage right, and I think about the fact that China,
for example, just made you know, great new contracts with
New Zealand and Australia right for beef trade, which would
have been you know, our heartland, our Kansas, Nebraska, you know,
(17:52):
huge beef exporters. So fragmented in the sense that the
tides are changing, right, people are still moving and they're
making decisions that are good for their company, whereas in
a geopolitical event, right, people are making decisions on what's
good for the country, and sometimes the two don't play
nice together. So I think the fragmentation, you know, is,
(18:15):
for example, it might be great. I talked to a
friend in Australia this morning and you know, he was
talking to me about the ten percent duties for Australian cargo,
ten percent New Zealand, ten percent Singapore. And granted, you know,
there's not much activity right that's coming out of there
that people can pivot to, but it's a good indication
(18:35):
I think of how these war rooms starting to play
the numbers and the fragmentation of trade shifting away more
rapidly than we might have expected. You know, you always
have been told it's really tough to displace a Chinese
factory in Mexico. Well, okay, this is definitely expedited. So
I think that's kind of where I'm looking at the
(18:57):
fact that these geopolitical events are causing this fragmentation at
the same time.
Speaker 1 (19:02):
Gotcha, And I asked with you know, just hitting back
on the three f's, you know, can you talk a
little bit more amount fine tuning? Where else do you
think that the industry is going to do that?
Speaker 4 (19:14):
Yeah?
Speaker 3 (19:14):
Absolutely, And I think a lot of it has to
do with you know, here we are now in a
twenty twenty five where we have a lot of the
vessel alliances with you know, new rotations and new hub
and spoke activities, bringing everything into one big port and
then sending them out on smaller ships or smaller ships
(19:35):
going into one big port, and then one big port
feeding everything into the US. I think that the thing
about the fine tuning is ocean carriers. They must know
something I don't know, right, because I just saw the
other day, you know, one of the one of the
voccs just went in for you know, eight or ten
(19:58):
new new builds. The one thing that's really fascinating is
the cost of leasing container ships is not falling, it's
actually going up, right, And so what's uh that tells me. Right,
That tells me that, you know, their war rooms are terrific, Right,
they don't make these decisions for not you know, just
(20:20):
to have nicer ships. So it's sort of like my
shipping stocks, right, I'm a big shipping stock investor tankers,
you know, bulker is dry, dry, you know, you name it.
I look at everything in that in the shipping industry,
and there's an old adage I think that with container
shipping stocks or tanker stocks is that there's no such
(20:43):
thing as.
Speaker 4 (20:43):
By low sell high.
Speaker 3 (20:45):
There's always a good entry point because it's always going
to be a you know, uh, a tumultuous you know,
price environment. And and so I think that in our industry, right,
the fine tuning that is going on behind the scenes
at the vessel owner activity, it's not that they know
something we don't. It's that they know that these cycles
(21:05):
turn on their own, right.
Speaker 4 (21:07):
Lee, who would have ever thought.
Speaker 3 (21:09):
Right that unlike COVID, Right, a COVID event was a
kind of a physical chemical event. And now we had
a geopolitical event with the tariffs, And who would have
ever thought that the tariffs would have had such big blowback?
And I think that that's one of the things that
we're always have to look forward.
Speaker 4 (21:30):
You know.
Speaker 3 (21:31):
It's almost like I'm a big James Bond movie fan too, right,
So there's you know, Die Another Day, right, that's the
title of I think one of the Bond movies.
Speaker 4 (21:40):
I think it's Live Another Day.
Speaker 3 (21:42):
I think that there's so much the cyclical nature and
shipping that the owners are ready for, you know, the
next five years, the next ten years, and a lot
of this has to do you know with obviously the
types of fuels, the IMO, the emissions, the green energy.
So you know, right now, that's more in the No
one's thinking too much about that because bunker fuel is
(22:03):
pretty cheap right now. But I think that's part of
the answer to the question is that it's interesting how
new build contracts are being signed left and right. Leasing
rates on container ships are very high. They haven't dropped
at all as far as I know, right.
Speaker 2 (22:19):
You know that that's a good segue.
Speaker 1 (22:21):
You know, you mentioned some of the emission stuff. What
are your views on the IMO emission targets twenty fifty
getting to zero? Do you think that's something that is realistic,
assuming that we don't go back to sales.
Speaker 3 (22:38):
Well, again, you're looking at something I think that is
again a bit fragmented. I think if you looked at
you know, twenty twenty through twenty thirty, twenty forty, you
know we're going to still kind of be in the
current technology idiom, you know, scrubbers, slow steaming, maybe LNG,
you know, as propulsion. I think that if you start
(22:59):
to look to twenty thirty and twenty fifty, you know,
we really have to start moving into more zero carbon
type fuels, enhanced hell and ship design. And again, one
thing that's overlooked right is scale scalable infrastructure, you know,
both at landside ports and along the supply chain. Otherwise
(23:19):
the whole thing is a little bit moot. But I
think it's it's still a little premature, you know to say.
You know, like I talked a few minutes ago about
about bunker fuel prices.
Speaker 4 (23:30):
I looked this morning and I think WT West Texas.
Speaker 3 (23:35):
Intermediate crewed was about fifty nine or sixty. And you
know it's Saudi. You know they're you know, with their
pumping or not pumping right now. You know, the cap
ards seat is hey. You know, the bunker fuel is
fairly low. You know, the search charges on bunker you know,
during COVID years twenty twenty one twenty twenty two was
(23:58):
you know, outrageous, and now it's a little bit more
more moderate. So I think anytime you have that kind
of flex, you know, with the fuel cost, uh it,
I don't mind. I don't mean to say it takes
the eye off the ball of an important issue like
the whole IMO thing, but I think it does a bit,
and then it just takes a little bit longer for
you know, the carbon neutral folks to start getting on
(24:23):
their pulpit again, right right, you know.
Speaker 2 (24:26):
Just going back to to the the U S.
Speaker 1 (24:29):
T R you know, fees that they've announced. Do you
think it's gonna do you think it's gonna change the
where people buy their ships outside of China? Like obviously
the Chinese are going to buy Chinese, Chinese made ships
because it supports their ship building industry. I mean, do
(24:50):
you do you see other liners saying, well, you know,
obviously not going to go buy a U. S ship
because we're not really making them. But like maybe I'm
going to spend a little money and buy something out
of South Korea or Japan, so I don't have to,
you know, deal with these sort of fees in the future.
Speaker 3 (25:11):
Well, the nice thing about your about the answer potential
answers to the question is that there are obviously alternatives
in Japan and Korea as opposed to China. The US
shipbuilding obviously is right now out of the question. I
believe that my study show or I read something recently
(25:31):
that you know, a thirty million dollars ship in China
would have been a three hundred million dollars ship in
the US.
Speaker 4 (25:38):
Right.
Speaker 3 (25:39):
But I will say this though, I think that it's interesting,
you know, just is maybe a side. I follow the
market stock markets quite clearly closely, and I know mattson
my MATS line is in a very interesting position.
Speaker 4 (25:55):
I think with their.
Speaker 3 (25:58):
Stock price and is you know, the US, I think
that they could be a potential big winner. On the
on the other hand, you know, their root structure is
a bit limited.
Speaker 4 (26:09):
I will say this.
Speaker 3 (26:10):
I think that if you get a preponderance or a
cadence of ocean rates that are starting to look more stable, right,
not these you know, one thousand dollars and two thousand
dollars rates, And I think that if you start to
see more of a moderate increase, you know, in rates
are in the three thousand and four thousand for more
of a pronounced period.
Speaker 4 (26:29):
I think it gives more confidence to owners.
Speaker 3 (26:31):
To start saying, Okay, we're getting a little bit more
in the freight rate, then we'll contract, you know with
you know, with South Korea yard or Japanese yard. So
not to say it's impossible, right, but at the same time,
I think that one of the things you have to
keep in mind is the leasing the container leasing companies,
the I'm sorry, the charter companies like Global Ship Leaves,
(26:55):
like Denos Naviaris and mm you know, they're also so
you know, ocean liners have the ability to do obviously
long term leases, and so you have to also look
and kind of follow the money where the where the
container ship leasing companies are actually already contracted out for
(27:16):
their hells and their new builds. Some of these contracts
have already been out for years and it's tough to
pull back. So it's a little bit of a shell game,
right in terms of how I think how that ends
up being played.
Speaker 1 (27:27):
Gotcha, Well, the problem is that this is an industry
of booms and busts. So to have stable, respectable rates
for a long period of time is it's pretty hard
to accomplish.
Speaker 3 (27:41):
Well, I think that they when I say they obviously
the vessel operating common carriers that were proliferating and profiting
so highly and so multi dimensionally right during COVID and
the twenty one thousand dollars twenty two thousand dollars ocean rates.
Speaker 4 (27:57):
There's a lot to be said that they.
Speaker 3 (28:02):
Allocated their part of those incredible fees for many two years,
you know, to their war chest for new builds. So
on one hand, it's almost like, hey, we can pay it.
Right where my daughter goes to school, right, I see
a couple of Rolls Royces and a lot of Bentley's right,
and I'm thinking to myself, wow, how can somebody pay
(28:23):
four hundred thousand for that kind of car? And then
you know, you read about the person and well they
just iPod for you know, one hundred million, So you know,
what's a four hundred thousand dollars investment. I don't mean
to make it so trivial, but I think that some
of these things went into play, and they're not so
well pronounced in the media where you say, okay, well
they're really risking, you know, going into bankruptcy. By taking
(28:47):
their financial stability and investing it into new builds. The
fact is is that when those moneies came in in
twenty twenty one and twenty twenty two, they already allocated
a certain amount of those funds to new builds. So
this is almost like it, you know, And there's a
great movie margin Call where you know, they're thinking, Okay,
(29:08):
when is this uh calamity gonna destroy the bank and
the analysts say, well, it already happened two weeks ago, right,
And I love that movie so much because this is
almost part of that is that these decisions are not
being made now. These have been made, you know, for
months and years in the in the foreground background.
Speaker 1 (29:28):
You know, you mentioned TPM, which is a big shipping
conference that the JOC puts on. It's it's a must attend,
especially if you or I are speaking at it. Uh.
Speaker 4 (29:41):
I love that.
Speaker 1 (29:42):
Yeah, So you know, you know a lot of contraction negotiated.
Then what are you hearing like where are contract rates
today relative to where they were last year for a
lot of your your customers?
Speaker 3 (29:59):
You know, I I think that the answer to the
question is that it's in the middle, right. I think
that there's not any necessarily sustainable huge swings, because you
have to keep in mind when you're talking about the
you know, the eighty twenty rule or the twenty eighty rule,
and you're looking at you know, the walmarts and the
home depots, you know, those rates are always going to
(30:20):
be spectacular, despite what the general market might be doing.
And of course, now that you have so many interesting
indices and Nyschek's just came out with theirs, you know,
it's really becomes a little bit easier not to have
this war room to say, hey, am I getting a
good rate? Or am not getting a good rate? Did
our team do a good job negotiating? Did they not
(30:42):
do a good job negotiating the truth of the matter
is that a lot of the contracts and agreements are
sort of on hold on some of the big guys
and some of the intermedia guys. As I mentioned in
my earlier remarks, some of the people that are getting
space now, well, they decided to go for it, right
And when they go for it and they sign a contract,
(31:03):
that doesn't mean they're paying you know, four thousand or
five thousand dollars. You know, certainly the rates don't distinguish
themselves to be at those kind of levels right now,
So I think that the the.
Speaker 4 (31:15):
Traction, right.
Speaker 3 (31:16):
And if I was if I have a left entrepreneurship
and somebody had me run the war room, you know,
at a home depot or you know, Adidas or whoever
it is, by the way, I wouldn't like that role
because I like what I'm doing.
Speaker 4 (31:31):
It's not an indication I want to move into the
BCO side.
Speaker 3 (31:35):
But what I'm saying is I definitely would be looking.
Speaker 4 (31:38):
At a unique type of contract.
Speaker 3 (31:41):
With indices with overrides. You know, if this happens, then
this happens. I think, right what happens is because beneficial
cargo owners are hearing contracting news directly from the horse's mouth,
it sometimes limits their actions unless they're very well informed
and educated about the options. I think I would write
a completely unique type of contract to allow me to
(32:04):
take advantage of the market no matter what it's doing.
And I think unfortunately that's not always the case.
Speaker 1 (32:09):
Ley, Right, And you know you mentioned a couple of
times you know that you're that you're a big watcher
of the markets, and I guess you know you invest
in the markets as well, just broadly speaking, you know,
not to name you know, individual stocks, but you know,
are are you bullish of on the on the liner
(32:30):
stocks or on the tanker stocks and the dry boat stocks?
Speaker 4 (32:34):
Oh?
Speaker 3 (32:35):
Man, I'll tell you you know. I'm I'm out of
dry powder right now. I mean the extra funds to invest.
But if if I get some new cash, I would
be almost willing to put one hundred percent of it
and go on margin on some of the dry bulk
stocks and tanker stocks. I am so bullish on I
(32:57):
think the next five years to ten years, which is
my horizon based on my age in shipping.
Speaker 4 (33:03):
I am so bullish.
Speaker 3 (33:06):
Oh I should I should get I should get. One
caveat part I apologize. Maybe not so much on the
container the pure container stock, right, you know, like a
VOCC that is publicly traded. But as far as like
a ship or leased a leasing company of container ships,
I'm all in.
Speaker 2 (33:27):
That's great, that's great.
Speaker 1 (33:28):
So you know, we mentioned in the beginning you've been
in the industry for over forty years. Can you talk
a little bit of how you found your way into
the marine shipping industry.
Speaker 3 (33:40):
Yeah, that's one of my favorite things to talk about.
I love that I love thinking about that day when
it happened. In nineteen eighty two, I was an early
I got an early offer in my junior year, I
believe it or not, before I even became a senior
to go to work for Time magazine in New York
(34:02):
as a marketing manager. I did a lot of informational
interview and interviewing. I had great mentors, and I actually
lined up a job with Time in Manhattan, and I
thought to myself, Wow, there's nothing better, right, being twenty
one and in Manhattan, And I remember back in nineteen
eighty two, that prospective job paid sixteen thousand dollars, right
(34:24):
is sixteen thousand. It was pretty good back then. And
then my senior year, a little maritime company came to
campus and I said my career counselors said, hey, you
should meet them. You know, they're doing some innovative stuff.
And at the time the company was called Well it
was the original US Lines, Malcolm maclean's company. And so
(34:47):
they come on campus and they said, you know, we
like your style. What's your offer from Time? And I
said sixteen thousand. They said, well we'll do thirty two.
Speaker 4 (34:59):
What sign up?
Speaker 3 (35:01):
So as romantic as I would want it to seem
like me coming into the industry. It was purely like,
what what did I just hear?
Speaker 4 (35:08):
You know?
Speaker 3 (35:09):
And the thing is is that either were eight hundred
people in my class and I was I think number
four hundred. I was exactly in the middle. And so
we had some really super talented folks in my class
at Providence College, and there were people going to Goldman
and you know, Procter and Gamble, and they were all
making less than I would like. I never said, really
(35:30):
what I made. This is like one of the first
time I ever talked about it publicly. But it was
amazing what that did to me. Yeah, and little did
I know that I would stay in the industry and
what kind of role was it At US Lions.
Speaker 4 (35:43):
It was really interesting.
Speaker 3 (35:45):
They said, we're not sure you know what your role
will be until you go through our extensive training program.
Speaker 4 (35:51):
And they were amazing because they would put me.
Speaker 3 (35:55):
I worked on the docks in New York City, you know,
with some of the most strangest and shady characters I'd
ever meet, you know, in the waterfront. You can just
picture where I'm going with that. And they put me
through operations through the equipment yard through you know, managing
the vessel still plan. And at the end they said, hey, look,
(36:15):
you know you're a fine operator, but your personality and
persona is what we want on the street to talk
to Walmart and to you know, Procter and Gamble to
get their cargo on our ships. And so I ended
up with them with them, and then ended up at
Sea Land after US Lions went bankrupt due to their
some bad investments in their eco ships. And then I
(36:37):
was in China and Taiwan for a good number of
years where I cut my teeth over there. So yeah,
I've been really gifted and blessed that the ocean industry
has brought me along to you know the level I am.
Speaker 1 (36:52):
Now, that's great, That's absolutely great.
Speaker 2 (36:55):
And I would like to ask my guests this question.
Speaker 1 (36:58):
You know, obviously, besides your own books, is there a
book about the shipping industry or maybe you know, investing
or entrepreneurship that's kind of close to your heart.
Speaker 3 (37:12):
You know, I think that for me, you know, my
wife is a voracious reader.
Speaker 4 (37:18):
Me not so.
Speaker 3 (37:19):
I mean I think that what I try to do
is pry myself on what's happening in real time I'm
sixty four, so I think that by taking action on
like i'm I'm in tune with one of the best
investment guys in the world on shipping, and he writes
a thesis on, you know, the state of shipping. So
(37:40):
I'm looking more towards that right now as opposed to,
you know, getting into something new. Obviously there's some great
seminal works. The Box comes to my mind in terms
of one of the great books on the container shipping industry.
A big fan of Malcolm MacLean, anything that mentions him
or his journey, I've always kind of mimicked a lot
(38:02):
of my life after what he's done.
Speaker 4 (38:04):
Yeah.
Speaker 1 (38:04):
For for those that don't know, Malcolm MacLean pretty much
invented the intermodal box that we that we have today,
so he's uh, he's credited with really creating the container
liner industry. So uh, that's super Well. Well, Steve, I
really want to thank you for your time. I think
(38:26):
this is a great conversation and you know, I joined.
I really enjoyed hearing your insights about the industry.
Speaker 4 (38:33):
O Leet.
Speaker 3 (38:34):
What an honor to chat with you about some of
the dynamic things that are happening love the reporting that
you're doing at Bloomberg and please keep up the great work.
And again, thank you so much for the time today.
Speaker 2 (38:44):
All right, thank you, and I want to thank you
for tuning in.
Speaker 1 (38:47):
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, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, please
check out our work on the Bloomberg terminal at BIGO
(39:08):
or on social media. This is Lee Clasgal signing off
and thanks for talking transports with me. Bye.
Hi everyone, this is Lee Clasgow and we're Talking Transports.
Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host,
Lee Klascow, senior freight, transportation and logistics analysts 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
(00:27):
great guests on to the podcast like the one we
have today, So.
Speaker 2 (00:32):
Your support is really needed.
Speaker 1 (00:33):
So please if you enjoy the podcast, share it, like it,
and leave a comment. Also, if you have any ideas
for future episodes or just want to talk transports, please
hit me up on the Bloomberg terminal or on LinkedIn
or on Twitter at logistics Lee. Now onto our episode.
We're delighted to have Steve Ferrara, Ocean Audits Founder and CEO,
(00:54):
as our guests on the podcast today. Steve is the
CEO and founder of Ocean Audit, a global leader in
ocean freight auditing and global logistics recovery services. With over
forty two years of experience in the logistics and shipping industry,
Steve is recognized as a thought leader and innovator in
supply chain costs recovery. He has helped Fortune five hundred
companies uncover millions in hitted over charges through proprietary audit techniques.
(01:20):
He's a frequent media commentator and conference speaker, offering deep
insights into maritime trade, container shipping, and global logistics trends.
Speaker 3 (01:30):
Welcome to the podcast, Steve. Thanks so much for joining us, Ollie.
It's such an honor to see you again. You know,
I've been known here for a good number of years
now and I'm so thankful and pleased to be here today.
Thanks for the great time today.
Speaker 2 (01:43):
Yeah, no, it's great to have you on.
Speaker 1 (01:45):
You know, we've bumped into each other over the years
at various conferences. You know, I wanted to have you
on today because there is so much going on in
the shipping industry. So just before we start talking about that,
is there anything you want to add about audit that
I might have left out in the introduction.
Speaker 3 (02:03):
Only that we're specializing and helping the bulletproof glass industry.
I'm joking. I say that tongue in cheek. I love
what I do and it's funny. I get refunds for
clients from major global prey for olders and direct ocean carriers,
and you would think that, you know, there's some adversary
relations there, but you know, I think that what oceand
(02:25):
it really does is it helps make both parties better,
helps make the invoicing accuracy from the vendor better, and
it helps make the beneficial cargo owners process better. So
I joke a little bit about bulletproof glass. People always say,
don't the carriers get mad at you? But actually I
think they really respect the hell out of me.
Speaker 1 (02:42):
Okay, And I have a question, so like what happens
that a shipper will get a refund? Like where are
the mistakes made or the issues that require the shipper
to request a refund.
Speaker 3 (02:56):
The whole industry is so fascinating and frag And when
I talk about the industry, I mean just kind of
the whole freight audit and pay the whole kind of
general audit scope of what's happening, you know, with that
freight audit in general. And I think what happens in
ocean freight, especially in the maritime structurally, is that many
freight auditors will look at four or five different variables.
(03:19):
For example, whether there's an overpayment or a duplicate payment,
and some of these quite quite honestly, are a little
bit sophomoric, right where you don't really necessarily need a
big gun to find out if something is you know,
duplicate paid. I mean, you know, systems should be able
to get those. I think with me and what I'm
seeing in my in my role in the industry is
(03:41):
I've actually cataloged forty two different ways that an ocean
freight invoice can go haywire, meaning forty two different roads
to recovery, where classically I think beneficial cargo owners and
other freight auditors are just looking at four or five
different ways.
Speaker 1 (03:58):
Right, you just name some of some of the I
guess outside of the overpayment and due payment, you know,
just a couple of the more common ways that that
the shippers might be overpaying.
Speaker 3 (04:10):
Sure, I don't think I'm giving away too much of
my Ferrara secret sauce here, but I think one of
the things I see a lot of, as example, is
many clients don't realize that the gate end date when
the cargo is actually received in say Shanghai or in
Yantian or in Bangkok, that has everything to do with
(04:31):
what rate structure will be affixed on the invoice. So,
for example, if the cargo comes in on a Monday
to the company x y Z container facility in Bangkok,
and the new rate is effective Tuesday, well they're going
to get the old rate, right. So I think that
one of the biggest problems is hardly any vendor puts
(04:52):
down on the invoice the date the.
Speaker 4 (04:54):
Cargo was received.
Speaker 3 (04:55):
They put down on the invoice when the when the
cargo sailed, but not when it was received. And a
lot of people will go and ask me, is this malicious?
Is this on purpose? Is this kind of designed to
up through skate? I still don't know the answer after
forty two years.
Speaker 1 (05:12):
Okay, and you know, and again I guess without giving
too much of the secret sauce like how much of
what you do is just you know, in your brain
or is it like a lot of a utilizing technology
to kind of find find these.
Speaker 2 (05:29):
Mistakes?
Speaker 3 (05:29):
If you will, so loaded question. I don't mind explaining
it a little bit, you know. I think one of
the things that's really been interesting. I'll give away a
little bit here to the audience. I think it's a
little premature, but I'm a strong candidate right now for
INK five thousand, right, and so I'm a solopreneur. I
have no employees, and yet I'll probably cross thingers crossed,
(05:52):
likely make the INK five thousand lists when it's announced
this summer. So how does a guy with no employees
make such a prestigious lie with that kind of a
revenue lift. One of the things I did about a
year or two years ago in preparation for how the
industry would change is I built some automation that allows
me to handle thirty to forty clients thirty to forty
(06:14):
audits simultaneously. And no, it's not AI, it's CI. And
you say, what's CI? Well, at TPM I was talking
a little bit about this. I think artificial intelligence, almost
like blockchain, is one of those up and coming things
in the overall container shipping industry. But CI is creative intelligence.
(06:36):
And I think that when you're in an art in
a science type industry like I am, you have to
be able to be in a high production environment, but
you have to use some very good creativity and marketing
right to make these funnels work the right way.
Speaker 4 (06:49):
I've been able to do that.
Speaker 1 (06:51):
All right, So in addition to some of your accomplishments,
you are an author as well.
Speaker 2 (06:57):
Have you written more than one book.
Speaker 3 (07:00):
To hit the best selling USA Today best selling list?
But it was my seminal work was called Navigating B
to B, which actually made it to number three on
Wall Street Journal and number eighty one on USA Today.
And I always tell people one of my cocktail party
allines is that on one week alone, just one week,
(07:22):
my book actually was ranked higher than Oprah Winfrey. So
that's my claim to fame. But Navigating B to B
is a very interesting book. Not to plug it, but
it's basically a compilation of how to achieve entrepreneurship and
success in a B to B logistics environment. So many
(07:45):
of my friends and followers from LinkedIn have been using
it to pick up some tips and tricks on how
to overcome certain, you know, impediments in their own careers.
So it's a book that based on my entrepreneurial journey
as a two x founder.
Speaker 1 (08:03):
Okay, And so one of one of the main like
I said earlier, one of the reasons why I wanted
to have you on is, you know, there's so much
going on in the marine shipping industry at your perspective
would be fantastic, given you.
Speaker 2 (08:14):
Know, your long career.
Speaker 1 (08:15):
You know, how would you characterize the state of the
global containerized shipping industry.
Speaker 3 (08:22):
I think we're in what I call the three f's,
you know, Like my last name is Ferrera, so a
three F like Frank, and I think we I would
characterize it right now Lee as fragmented, fragile, and full
of fine tuning.
Speaker 4 (08:36):
Actually that's four.
Speaker 3 (08:37):
F's, But I think that the fragmentation, the fragility, and
the fine tuning that's going on right now really sums
up what's happening in the trades.
Speaker 1 (08:47):
So I don't know if you're on this part of it,
but you know, how have you know, the tariffs, the
risk of tariffs, the increased protectionists policies that are coming
out of Washington, you know, how do you view that
as impacting the shipping industry Because you know, earlier this
morning on my commute in I was on listening to
Bloomberg Radio like I do every morning, and you know,
(09:08):
they had the president of the Port of la and
he's talking about, you know, a demand coming down thirty
five percent because the towers kind of a what are
shippers telling you what are a liners telling you and
kind of where do you think we're going over the
months to come.
Speaker 3 (09:28):
I see a lot of I've had a lot of
new intel on this over the last twenty four hours,
so I think it's something I feel uniquely qualified to
give some thought, thought bubbles to here. I think that
one of the things we're seeing is a lot of
the bigger, more prolific retailers, Without getting into names, obviously
(09:51):
they've some of them have slowed down the contracting process
with the Ocean vendors, and in turn, I obviously the
throughput of goods being booked for those vendors in origin
in Asia or other parts of the world have also
dropped off.
Speaker 4 (10:08):
However, some of the mid tier retailers.
Speaker 3 (10:11):
Right if you take your top one hundred retailers, let's
say the top one hundred, the top ten, have gone
into this kind of slow down protection, protectionism mode in
a way. And see I think the other mid tier,
from say number twenty five through fifty, they've actually been
a little bit more bolder because they're getting the space
(10:32):
they need. They're actually being invited with a silver tray
right to have just about anything they want from the
Ocean vendors because obviously what's happening. You see pitches of
ghost towns in Seattle Port of Seattle, and the maritime
traffic trackers show very little activity. You know, it's a
shipper's game, right, So I think that the mid tier
(10:57):
retailer taking a little bit more risk to get to
get product out there, but they're also getting taken care of.
The threat or the opportunity or the challenge that I
think we're going to see in the next sixty days
is win and I'm pretty sure it's when you know,
more relaxation comes of the tariffs. I hate to say it,
(11:19):
but I think we're going to see a mini COVID
congestion because what's going to happen is I think we're
going to see the top ten or twenty retailers start
to say, okay, we've got to jump on this. Keep
in mind, you know, many of these have pipeline production, right,
so they're ready to ramp up quickly at the factories
and they're looking for vessel space. It's going to create congestion.
(11:43):
And you know, it wouldn't surprise me to see in
the end of July ten twelve ships out in Long
beach again going back to what we saw in the
years of COVID.
Speaker 1 (11:55):
So I guess are you a little more bullish on
shipping rates then? As you know, obviously global shipping rates
have come down significantly since their July highs. Do you
have any thoughts in where shipping rates are going to go?
Speaker 3 (12:10):
Well, keep in mind, right, we have a lot of
things to think about too. We have the us TR
China vessel, you know, search charges which won't be as
much as you know we might have assumed they might
have been in the TPM days back in February or
early March. And I think right now, obviously you're right,
rates have gone down. However, if my theory is correct
(12:33):
and we start to see a reverberation, so to speak,
of these retailers needing the space, you know, this is
where I think rates come up and they stabilize. Now
we'll probably not see booming rates, right, but we will
see I think more of a stabilization stabilization of them
this summer.
Speaker 1 (12:52):
And you know you mentioned, you know, the US Trade
Representative of the us t R kind of what do
you think the rip effect of that that is going
to be once that goes into place.
Speaker 3 (13:05):
I would have said a few months ago, when I
was sitting down in in La Long Beach and I
had a chance to talk to Lars Jensen from Spoochy Maritime.
I think, you know, Lars, you know, we were thinking that,
or I should say, I want to give him credit.
Lars was thinking that the surcharge could be five six,
seven hundred dollars a container can re call if it's
(13:27):
teu fu, I want to say it was FAU. Now
it turns out that it's looking more like akin to
what a Panama Canal, you know, tariff surcharge might be
of one hundred and forty one hundred and fifty dollars.
I think it's just one of those things that it's
going to be tough. I believe to opt out of
that surcharge. As you probably know ly many clients in
(13:51):
that retail space that I alluded to earlier, If you
look at their Appendix A in their ocean contracts, you
know it'll say no Panama Canal surface to apply, no
SUS fee to apply. I think this us t R
fee is going to be a mandatory fee that shippers
will have to deal with. But I look at it
(14:13):
as almost a non secutor. I think it's it's a fee.
But at the same time, I think many of them
are just deep breathing that it's not more than it
what it what it's going to be.
Speaker 1 (14:24):
Yeah, But like even like you know, you were mentioning earlier,
whether it's five six hundred dollars per container, you know,
when rates are around two thousand dollars, that's a that's
a big that's a big premium two to the cost
for the for the shipper. And it would be you know,
interesting to see why, I mean, you might have a
pretty good insight in this.
Speaker 2 (14:45):
Why would a.
Speaker 1 (14:47):
A retailer want to use a Chinese carrier or or
a carrier that's you know, as opposed to somebody else.
Speaker 3 (14:58):
Well, excellent point, and that brings me back to my
thesis on you know, possible congestions because you know, you
may have ships out there that aren't that full, but
they're Chinese you know, owned and operated, and then you
have other ships that you know are not. So I
think it puts in another dimension, right of this fragility
right you mentioned asked me about the you know, the
(15:19):
state of the shipping industry right now, and I mentioned
that it was fragmented, fragile, and I think fine tuning.
I think this has a lot to do with that.
I think that's a great observation you made. And it's funny.
I we just went through the NFL draft, right, and
you always think of this.
Speaker 4 (15:36):
I'm a big football.
Speaker 3 (15:37):
Fan, and you know, you think of the draft war
rooms that are taking place, you know, when they make
these last minute decisions. Unfortunately, and I say this with
peace and love, you know, to all my brethren and
out there that are my clients and beneficial cargo owners,
a lot of them don't have the benefits of this
war room, right.
Speaker 4 (15:58):
A lot of times.
Speaker 3 (15:59):
It's three and four, you know, young and seasoned professionals
that are making these multimillion dollar decisions for their the company,
and they're hearing a lot of it, of the noise
from experts like ourselves, right and you and me and
Bloomberg and and you know, I think it's really interesting
that a lot of times you have to keep in
(16:20):
mind clients are hearing a lot of the information from
vendors and it's not always you know, an equal one
to one sharing. When you know people are getting information
that way, very few customers, you know, other than you know,
the Walmarts, the targets, you know, the and and the
ilk of that kind have the ability to go home depot,
(16:43):
to go really three dimensional into that kind of that
war room activity for that kind of fine tuning.
Speaker 4 (16:50):
All right.
Speaker 1 (16:50):
More importantly, who's your NFL team that your roots were?
Speaker 3 (16:55):
Well, I believe it or not. I mean, I've been
a Patspian for so many years. I'm not sure about
all what's happening with Bill Belichick legend.
Speaker 4 (17:01):
So I think I'm shifting to a Ravens fan, believe
it or not. Just I like those Ravens.
Speaker 1 (17:06):
Yeah right, I'm a long time Giant fan.
Speaker 2 (17:10):
It's been been a tough couple of years. Actually more
than a couple of years. It has been a tough
many years.
Speaker 1 (17:15):
So you know, in your in your three f's, can
you explain what you meant by fragmented, Because you know,
the shipping industry is becoming more more and more consolidated.
Speaker 2 (17:25):
So I guess what what do you meant? What did
you mean by the fragmented part?
Speaker 3 (17:29):
Well, when I think of fragmented, I think about the
world stage right, and I think about the fact that China,
for example, just made you know, great new contracts with
New Zealand and Australia right for beef trade, which would
have been you know, our heartland, our Kansas, Nebraska, you know,
(17:52):
huge beef exporters. So fragmented in the sense that the
tides are changing, right, people are still moving and they're
making decisions that are good for their company, whereas in
a geopolitical event, right, people are making decisions on what's
good for the country, and sometimes the two don't play
nice together. So I think the fragmentation, you know, is,
(18:15):
for example, it might be great. I talked to a
friend in Australia this morning and you know, he was
talking to me about the ten percent duties for Australian cargo,
ten percent New Zealand, ten percent Singapore. And granted, you know,
there's not much activity right that's coming out of there
that people can pivot to, but it's a good indication
(18:35):
I think of how these war rooms starting to play
the numbers and the fragmentation of trade shifting away more
rapidly than we might have expected. You know, you always
have been told it's really tough to displace a Chinese
factory in Mexico. Well, okay, this is definitely expedited. So
I think that's kind of where I'm looking at the
(18:57):
fact that these geopolitical events are causing this fragmentation at
the same time.
Speaker 1 (19:02):
Gotcha, And I asked with you know, just hitting back
on the three f's, you know, can you talk a
little bit more amount fine tuning? Where else do you
think that the industry is going to do that?
Speaker 4 (19:14):
Yeah?
Speaker 3 (19:14):
Absolutely, And I think a lot of it has to
do with you know, here we are now in a
twenty twenty five where we have a lot of the
vessel alliances with you know, new rotations and new hub
and spoke activities, bringing everything into one big port and
then sending them out on smaller ships or smaller ships
(19:35):
going into one big port, and then one big port
feeding everything into the US. I think that the thing
about the fine tuning is ocean carriers. They must know
something I don't know, right, because I just saw the
other day, you know, one of the one of the
voccs just went in for you know, eight or ten
(19:58):
new new builds. The one thing that's really fascinating is
the cost of leasing container ships is not falling, it's
actually going up, right, And so what's uh that tells me. Right,
That tells me that, you know, their war rooms are terrific, Right,
they don't make these decisions for not you know, just
(20:20):
to have nicer ships. So it's sort of like my
shipping stocks, right, I'm a big shipping stock investor tankers,
you know, bulker is dry, dry, you know, you name it.
I look at everything in that in the shipping industry,
and there's an old adage I think that with container
shipping stocks or tanker stocks is that there's no such
(20:43):
thing as.
Speaker 4 (20:43):
By low sell high.
Speaker 3 (20:45):
There's always a good entry point because it's always going
to be a you know, uh, a tumultuous you know,
price environment. And and so I think that in our industry, right,
the fine tuning that is going on behind the scenes
at the vessel owner activity, it's not that they know
something we don't. It's that they know that these cycles
(21:05):
turn on their own, right.
Speaker 4 (21:07):
Lee, who would have ever thought.
Speaker 3 (21:09):
Right that unlike COVID, Right, a COVID event was a
kind of a physical chemical event. And now we had
a geopolitical event with the tariffs, And who would have
ever thought that the tariffs would have had such big blowback?
And I think that that's one of the things that
we're always have to look forward.
Speaker 4 (21:30):
You know.
Speaker 3 (21:31):
It's almost like I'm a big James Bond movie fan too, right,
So there's you know, Die Another Day, right, that's the
title of I think one of the Bond movies.
Speaker 4 (21:40):
I think it's Live Another Day.
Speaker 3 (21:42):
I think that there's so much the cyclical nature and
shipping that the owners are ready for, you know, the
next five years, the next ten years, and a lot
of this has to do you know with obviously the
types of fuels, the IMO, the emissions, the green energy.
So you know, right now, that's more in the No
one's thinking too much about that because bunker fuel is
(22:03):
pretty cheap right now. But I think that's part of
the answer to the question is that it's interesting how
new build contracts are being signed left and right. Leasing
rates on container ships are very high. They haven't dropped
at all as far as I know, right.
Speaker 2 (22:19):
You know that that's a good segue.
Speaker 1 (22:21):
You know, you mentioned some of the emission stuff. What
are your views on the IMO emission targets twenty fifty
getting to zero? Do you think that's something that is realistic,
assuming that we don't go back to sales.
Speaker 3 (22:38):
Well, again, you're looking at something I think that is
again a bit fragmented. I think if you looked at
you know, twenty twenty through twenty thirty, twenty forty, you
know we're going to still kind of be in the
current technology idiom, you know, scrubbers, slow steaming, maybe LNG,
you know, as propulsion. I think that if you start
(22:59):
to look to twenty thirty and twenty fifty, you know,
we really have to start moving into more zero carbon
type fuels, enhanced hell and ship design. And again, one
thing that's overlooked right is scale scalable infrastructure, you know,
both at landside ports and along the supply chain. Otherwise
(23:19):
the whole thing is a little bit moot. But I
think it's it's still a little premature, you know to say.
You know, like I talked a few minutes ago about
about bunker fuel prices.
Speaker 4 (23:30):
I looked this morning and I think WT West Texas.
Speaker 3 (23:35):
Intermediate crewed was about fifty nine or sixty. And you
know it's Saudi. You know they're you know, with their
pumping or not pumping right now. You know, the cap
ards seat is hey. You know, the bunker fuel is
fairly low. You know, the search charges on bunker you know,
during COVID years twenty twenty one twenty twenty two was
(23:58):
you know, outrageous, and now it's a little bit more
more moderate. So I think anytime you have that kind
of flex, you know, with the fuel cost, uh it,
I don't mind. I don't mean to say it takes
the eye off the ball of an important issue like
the whole IMO thing, but I think it does a bit,
and then it just takes a little bit longer for
you know, the carbon neutral folks to start getting on
(24:23):
their pulpit again, right right, you know.
Speaker 2 (24:26):
Just going back to to the the U S.
Speaker 1 (24:29):
T R you know, fees that they've announced. Do you
think it's gonna do you think it's gonna change the
where people buy their ships outside of China? Like obviously
the Chinese are going to buy Chinese, Chinese made ships
because it supports their ship building industry. I mean, do
(24:50):
you do you see other liners saying, well, you know,
obviously not going to go buy a U. S ship
because we're not really making them. But like maybe I'm
going to spend a little money and buy something out
of South Korea or Japan, so I don't have to,
you know, deal with these sort of fees in the future.
Speaker 3 (25:11):
Well, the nice thing about your about the answer potential
answers to the question is that there are obviously alternatives
in Japan and Korea as opposed to China. The US
shipbuilding obviously is right now out of the question. I
believe that my study show or I read something recently
(25:31):
that you know, a thirty million dollars ship in China
would have been a three hundred million dollars ship in
the US.
Speaker 4 (25:38):
Right.
Speaker 3 (25:39):
But I will say this though, I think that it's interesting,
you know, just is maybe a side. I follow the
market stock markets quite clearly closely, and I know mattson
my MATS line is in a very interesting position.
Speaker 4 (25:55):
I think with their.
Speaker 3 (25:58):
Stock price and is you know, the US, I think
that they could be a potential big winner. On the
on the other hand, you know, their root structure is
a bit limited.
Speaker 4 (26:09):
I will say this.
Speaker 3 (26:10):
I think that if you get a preponderance or a
cadence of ocean rates that are starting to look more stable, right,
not these you know, one thousand dollars and two thousand
dollars rates, And I think that if you start to
see more of a moderate increase, you know, in rates
are in the three thousand and four thousand for more
of a pronounced period.
Speaker 4 (26:29):
I think it gives more confidence to owners.
Speaker 3 (26:31):
To start saying, Okay, we're getting a little bit more
in the freight rate, then we'll contract, you know with
you know, with South Korea yard or Japanese yard. So
not to say it's impossible, right, but at the same time,
I think that one of the things you have to
keep in mind is the leasing the container leasing companies,
the I'm sorry, the charter companies like Global Ship Leaves,
(26:55):
like Denos Naviaris and mm you know, they're also so
you know, ocean liners have the ability to do obviously
long term leases, and so you have to also look
and kind of follow the money where the where the
container ship leasing companies are actually already contracted out for
(27:16):
their hells and their new builds. Some of these contracts
have already been out for years and it's tough to
pull back. So it's a little bit of a shell game,
right in terms of how I think how that ends
up being played.
Speaker 1 (27:27):
Gotcha, Well, the problem is that this is an industry
of booms and busts. So to have stable, respectable rates
for a long period of time is it's pretty hard
to accomplish.
Speaker 3 (27:41):
Well, I think that they when I say they obviously
the vessel operating common carriers that were proliferating and profiting
so highly and so multi dimensionally right during COVID and
the twenty one thousand dollars twenty two thousand dollars ocean rates.
Speaker 4 (27:57):
There's a lot to be said that they.
Speaker 3 (28:02):
Allocated their part of those incredible fees for many two years,
you know, to their war chest for new builds. So
on one hand, it's almost like, hey, we can pay it.
Right where my daughter goes to school, right, I see
a couple of Rolls Royces and a lot of Bentley's right,
and I'm thinking to myself, wow, how can somebody pay
(28:23):
four hundred thousand for that kind of car? And then
you know, you read about the person and well they
just iPod for you know, one hundred million, So you know,
what's a four hundred thousand dollars investment. I don't mean
to make it so trivial, but I think that some
of these things went into play, and they're not so
well pronounced in the media where you say, okay, well
they're really risking, you know, going into bankruptcy. By taking
(28:47):
their financial stability and investing it into new builds. The
fact is is that when those moneies came in in
twenty twenty one and twenty twenty two, they already allocated
a certain amount of those funds to new builds. So
this is almost like it, you know, And there's a
great movie margin Call where you know, they're thinking, Okay,
(29:08):
when is this uh calamity gonna destroy the bank and
the analysts say, well, it already happened two weeks ago, right,
And I love that movie so much because this is
almost part of that is that these decisions are not
being made now. These have been made, you know, for
months and years in the in the foreground background.
Speaker 1 (29:28):
You know, you mentioned TPM, which is a big shipping
conference that the JOC puts on. It's it's a must attend,
especially if you or I are speaking at it. Uh.
Speaker 4 (29:41):
I love that.
Speaker 1 (29:42):
Yeah, So you know, you know a lot of contraction negotiated.
Then what are you hearing like where are contract rates
today relative to where they were last year for a
lot of your your customers?
Speaker 3 (29:59):
You know, I I think that the answer to the
question is that it's in the middle, right. I think
that there's not any necessarily sustainable huge swings, because you
have to keep in mind when you're talking about the
you know, the eighty twenty rule or the twenty eighty rule,
and you're looking at you know, the walmarts and the
home depots, you know, those rates are always going to
(30:20):
be spectacular, despite what the general market might be doing.
And of course, now that you have so many interesting
indices and Nyschek's just came out with theirs, you know,
it's really becomes a little bit easier not to have
this war room to say, hey, am I getting a
good rate? Or am not getting a good rate? Did
our team do a good job negotiating? Did they not
(30:42):
do a good job negotiating the truth of the matter
is that a lot of the contracts and agreements are
sort of on hold on some of the big guys
and some of the intermedia guys. As I mentioned in
my earlier remarks, some of the people that are getting
space now, well, they decided to go for it, right
And when they go for it and they sign a contract,
(31:03):
that doesn't mean they're paying you know, four thousand or
five thousand dollars. You know, certainly the rates don't distinguish
themselves to be at those kind of levels right now,
So I think that the the.
Speaker 4 (31:15):
Traction, right.
Speaker 3 (31:16):
And if I was if I have a left entrepreneurship
and somebody had me run the war room, you know,
at a home depot or you know, Adidas or whoever
it is, by the way, I wouldn't like that role
because I like what I'm doing.
Speaker 4 (31:31):
It's not an indication I want to move into the
BCO side.
Speaker 3 (31:35):
But what I'm saying is I definitely would be looking.
Speaker 4 (31:38):
At a unique type of contract.
Speaker 3 (31:41):
With indices with overrides. You know, if this happens, then
this happens. I think, right what happens is because beneficial
cargo owners are hearing contracting news directly from the horse's mouth,
it sometimes limits their actions unless they're very well informed
and educated about the options. I think I would write
a completely unique type of contract to allow me to
(32:04):
take advantage of the market no matter what it's doing.
And I think unfortunately that's not always the case.
Speaker 1 (32:09):
Ley, Right, And you know you mentioned a couple of
times you know that you're that you're a big watcher
of the markets, and I guess you know you invest
in the markets as well, just broadly speaking, you know,
not to name you know, individual stocks, but you know,
are are you bullish of on the on the liner
(32:30):
stocks or on the tanker stocks and the dry boat stocks?
Speaker 4 (32:34):
Oh?
Speaker 3 (32:35):
Man, I'll tell you you know. I'm I'm out of
dry powder right now. I mean the extra funds to invest.
But if if I get some new cash, I would
be almost willing to put one hundred percent of it
and go on margin on some of the dry bulk
stocks and tanker stocks. I am so bullish on I
(32:57):
think the next five years to ten years, which is
my horizon based on my age in shipping.
Speaker 4 (33:03):
I am so bullish.
Speaker 3 (33:06):
Oh I should I should get I should get. One
caveat part I apologize. Maybe not so much on the
container the pure container stock, right, you know, like a
VOCC that is publicly traded. But as far as like
a ship or leased a leasing company of container ships,
I'm all in.
Speaker 2 (33:27):
That's great, that's great.
Speaker 1 (33:28):
So you know, we mentioned in the beginning you've been
in the industry for over forty years. Can you talk
a little bit of how you found your way into
the marine shipping industry.
Speaker 3 (33:40):
Yeah, that's one of my favorite things to talk about.
I love that I love thinking about that day when
it happened. In nineteen eighty two, I was an early
I got an early offer in my junior year, I
believe it or not, before I even became a senior
to go to work for Time magazine in New York
(34:02):
as a marketing manager. I did a lot of informational
interview and interviewing. I had great mentors, and I actually
lined up a job with Time in Manhattan, and I
thought to myself, Wow, there's nothing better, right, being twenty
one and in Manhattan, And I remember back in nineteen
eighty two, that prospective job paid sixteen thousand dollars, right
(34:24):
is sixteen thousand. It was pretty good back then. And
then my senior year, a little maritime company came to
campus and I said my career counselors said, hey, you
should meet them. You know, they're doing some innovative stuff.
And at the time the company was called Well it
was the original US Lines, Malcolm maclean's company. And so
(34:47):
they come on campus and they said, you know, we
like your style. What's your offer from Time? And I
said sixteen thousand. They said, well we'll do thirty two.
Speaker 4 (34:59):
What sign up?
Speaker 3 (35:01):
So as romantic as I would want it to seem
like me coming into the industry. It was purely like,
what what did I just hear?
Speaker 4 (35:08):
You know?
Speaker 3 (35:09):
And the thing is is that either were eight hundred
people in my class and I was I think number
four hundred. I was exactly in the middle. And so
we had some really super talented folks in my class
at Providence College, and there were people going to Goldman
and you know, Procter and Gamble, and they were all
making less than I would like. I never said, really
(35:30):
what I made. This is like one of the first
time I ever talked about it publicly. But it was
amazing what that did to me. Yeah, and little did
I know that I would stay in the industry and
what kind of role was it At US Lions.
Speaker 4 (35:43):
It was really interesting.
Speaker 3 (35:45):
They said, we're not sure you know what your role
will be until you go through our extensive training program.
Speaker 4 (35:51):
And they were amazing because they would put me.
Speaker 3 (35:55):
I worked on the docks in New York City, you know,
with some of the most strangest and shady characters I'd
ever meet, you know, in the waterfront. You can just
picture where I'm going with that. And they put me
through operations through the equipment yard through you know, managing
the vessel still plan. And at the end they said, hey, look,
(36:15):
you know you're a fine operator, but your personality and
persona is what we want on the street to talk
to Walmart and to you know, Procter and Gamble to
get their cargo on our ships. And so I ended
up with them with them, and then ended up at
Sea Land after US Lions went bankrupt due to their
some bad investments in their eco ships. And then I
(36:37):
was in China and Taiwan for a good number of
years where I cut my teeth over there. So yeah,
I've been really gifted and blessed that the ocean industry
has brought me along to you know the level I am.
Speaker 1 (36:52):
Now, that's great, That's absolutely great.
Speaker 2 (36:55):
And I would like to ask my guests this question.
Speaker 1 (36:58):
You know, obviously, besides your own books, is there a
book about the shipping industry or maybe you know, investing
or entrepreneurship that's kind of close to your heart.
Speaker 3 (37:12):
You know, I think that for me, you know, my
wife is a voracious reader.
Speaker 4 (37:18):
Me not so.
Speaker 3 (37:19):
I mean I think that what I try to do
is pry myself on what's happening in real time I'm
sixty four, so I think that by taking action on
like i'm I'm in tune with one of the best
investment guys in the world on shipping, and he writes
a thesis on, you know, the state of shipping. So
(37:40):
I'm looking more towards that right now as opposed to,
you know, getting into something new. Obviously there's some great
seminal works. The Box comes to my mind in terms
of one of the great books on the container shipping industry.
A big fan of Malcolm MacLean, anything that mentions him
or his journey, I've always kind of mimicked a lot
(38:02):
of my life after what he's done.
Speaker 4 (38:04):
Yeah.
Speaker 1 (38:04):
For for those that don't know, Malcolm MacLean pretty much
invented the intermodal box that we that we have today,
so he's uh, he's credited with really creating the container
liner industry. So uh, that's super Well. Well, Steve, I
really want to thank you for your time. I think
(38:26):
this is a great conversation and you know, I joined.
I really enjoyed hearing your insights about the industry.
Speaker 4 (38:33):
O Leet.
Speaker 3 (38:34):
What an honor to chat with you about some of
the dynamic things that are happening love the reporting that
you're doing at Bloomberg and please keep up the great work.
And again, thank you so much for the time today.
Speaker 2 (38:44):
All right, thank you, and I want to thank you
for tuning in.
Speaker 1 (38:47):
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, regulators,
and decision makers within the freight markets. Also, if you
want to learn more about the freight transportation markets, please
check out our work on the Bloomberg terminal at BIGO
(39:08):
or on social media. This is Lee Clasgal signing off
and thanks for talking transports with me. Bye.
Host
Lee Klaskow
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