1 00:00:00,040 --> 00:00:02,760 Speaker 1: Hi everyone, this is Lee Klaskow when We're Talking Transports. 2 00:00:02,759 --> 00:00:06,760 Speaker 1: Welcome Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee 3 00:00:06,800 --> 00:00:10,719 Speaker 1: Klaskal SENI your freight transportation logistics analysts at Bloomberg Intelligence, 4 00:00:10,960 --> 00:00:13,640 Speaker 1: Bloomberg's in house research arm of almost five hundred analysts 5 00:00:13,640 --> 00:00:16,959 Speaker 1: and strategists around the globe. A quick public service announcement 6 00:00:17,200 --> 00:00:20,640 Speaker 1: before we dive in. Your support is instrumental to keep 7 00:00:20,680 --> 00:00:24,119 Speaker 1: bringing great guests and conversations to you, our listeners, and 8 00:00:24,160 --> 00:00:26,799 Speaker 1: we need your support. So please, if you enjoy this podcast, 9 00:00:27,200 --> 00:00:29,760 Speaker 1: share it, like it and leave a comment. Also, if 10 00:00:29,800 --> 00:00:32,840 Speaker 1: you get ideas, feedback, or just want to talk transports, 11 00:00:32,920 --> 00:00:34,879 Speaker 1: I'm always happy to connect. You can find me on 12 00:00:34,960 --> 00:00:38,120 Speaker 1: the Bloomberg terminal, LinkedIn, or on x at Logistics. 13 00:00:38,200 --> 00:00:38,560 Speaker 2: Lee. 14 00:00:38,800 --> 00:00:40,920 Speaker 1: Now we're going to do something a little different. Today's 15 00:00:40,920 --> 00:00:44,120 Speaker 1: episode has been taken from my fireside chats with Scorpio 16 00:00:44,200 --> 00:00:49,559 Speaker 1: Tankers president Robert Bugby and Starbucks president Hamish Norton. You'll 17 00:00:50,000 --> 00:00:53,479 Speaker 1: hear us discuss the state and outlook for the tanker 18 00:00:53,479 --> 00:00:57,200 Speaker 1: and dry book markets. Bloomberg Intelligence hosted a shipping event 19 00:00:57,360 --> 00:01:01,040 Speaker 1: at our London offices in September. The event was in 20 00:01:01,160 --> 00:01:05,360 Speaker 1: conjunction with London International Shipping Week. I hope you enjoy 21 00:01:05,400 --> 00:01:07,640 Speaker 1: these conversations as much as I did. 22 00:01:08,400 --> 00:01:09,959 Speaker 3: And so we. 23 00:01:09,840 --> 00:01:15,360 Speaker 1: Have our first fireside chat with Robert Bugby. So, for 24 00:01:15,400 --> 00:01:18,759 Speaker 1: those who know in KNC Robert Bugby, he's a president 25 00:01:18,800 --> 00:01:22,480 Speaker 1: of a Scorpio Tankers. It's a publicly traded company ticker STNG. 26 00:01:22,600 --> 00:01:28,440 Speaker 1: It's got a market cap around three billion. So you've 27 00:01:28,440 --> 00:01:31,039 Speaker 1: been in the business for a while, for about forty years. 28 00:01:31,200 --> 00:01:32,280 Speaker 3: That's that? Is that correct? 29 00:01:32,480 --> 00:01:35,479 Speaker 1: Yeah, you look like at least twenty five years, but 30 00:01:35,640 --> 00:01:36,160 Speaker 1: forty years. 31 00:01:36,160 --> 00:01:36,640 Speaker 3: It's great. 32 00:01:37,480 --> 00:01:39,880 Speaker 4: What feels the lattery will get you everywhere. Thank you. 33 00:01:39,959 --> 00:01:42,600 Speaker 5: I will still answer the question I think I heard. 34 00:01:42,800 --> 00:01:47,600 Speaker 1: Okay, So what's different in today's cycle versus over your 35 00:01:47,680 --> 00:01:48,440 Speaker 1: forty year career. 36 00:01:51,200 --> 00:01:56,760 Speaker 5: I think what's different in this cycle is that the 37 00:01:56,760 --> 00:02:02,680 Speaker 5: the there's been very little equity raised during a very 38 00:02:02,720 --> 00:02:06,200 Speaker 5: strong market for the last four years in tankers, so 39 00:02:06,200 --> 00:02:10,400 Speaker 5: that's been quite quite unusual. So we really haven't had 40 00:02:10,400 --> 00:02:16,920 Speaker 5: any new tanker companies of any significance. None of the 41 00:02:16,960 --> 00:02:19,600 Speaker 5: major companies have had to raise equity in these last 42 00:02:19,639 --> 00:02:26,400 Speaker 5: four years. In fact, nearly all the major players have 43 00:02:26,440 --> 00:02:33,200 Speaker 5: been at a deleverage through this cycle. That's fairly unusual, 44 00:02:33,760 --> 00:02:37,359 Speaker 5: and most have been very disciplined on. 45 00:02:39,560 --> 00:02:40,200 Speaker 4: Order books. 46 00:02:40,520 --> 00:02:43,760 Speaker 5: There's really little ordering really in the public companies. That's 47 00:02:43,800 --> 00:02:47,600 Speaker 5: different in the last cycles we particularly the one in 48 00:02:48,760 --> 00:02:52,480 Speaker 5: the one before that is that as the market moved upwards, 49 00:02:52,600 --> 00:02:56,600 Speaker 5: we suddenly got to this sort of new paradigm and 50 00:02:56,720 --> 00:02:59,079 Speaker 5: this is going to last forever, and this will be different. 51 00:02:59,240 --> 00:03:03,280 Speaker 5: And analysts were giving credit for if a company ordered 52 00:03:03,360 --> 00:03:07,000 Speaker 5: vessels in two and a half years for delivery, they 53 00:03:07,040 --> 00:03:09,760 Speaker 5: would be given credits in their forward multiples for those 54 00:03:09,880 --> 00:03:13,920 Speaker 5: ordered vessels, and so you and the other thing was 55 00:03:13,960 --> 00:03:16,280 Speaker 5: that the fleet was new, the product anchor market was 56 00:03:16,400 --> 00:03:19,440 Speaker 5: almost brand new at that time, so you were just 57 00:03:19,560 --> 00:03:21,600 Speaker 5: adding and adding and adding. So as soon as you 58 00:03:21,639 --> 00:03:25,399 Speaker 5: had any form of demand disruption, which you obviously had 59 00:03:25,440 --> 00:03:29,360 Speaker 5: in two thousand and eight, there was no way out. 60 00:03:29,639 --> 00:03:33,480 Speaker 5: Nothing was getting scrapped. So what you have now is, ironically, 61 00:03:33,720 --> 00:03:37,880 Speaker 5: is that the market has kind of climbed that to 62 00:03:38,000 --> 00:03:40,520 Speaker 5: one to a Wall Street phrase, climb the wall to worry. 63 00:03:41,560 --> 00:03:44,720 Speaker 5: We haven't got We had very little ordering in fact 64 00:03:44,760 --> 00:03:47,680 Speaker 5: this year, despite it being a strong year, and we've 65 00:03:47,720 --> 00:03:48,200 Speaker 5: got a. 66 00:03:50,520 --> 00:03:51,800 Speaker 4: Old fleet. 67 00:03:52,160 --> 00:03:55,120 Speaker 5: So that if there is is that there's a flip 68 00:03:55,200 --> 00:03:59,120 Speaker 5: down anywhere, you'll start to get sort of scrapping pretty quickly. 69 00:04:00,080 --> 00:04:02,680 Speaker 4: Read to rebalance. That's really what's different. 70 00:04:03,600 --> 00:04:08,760 Speaker 1: And so how do you differentiate Scorpio versus your peers. 71 00:04:07,520 --> 00:04:10,480 Speaker 1: What's your competitive advantage? 72 00:04:10,480 --> 00:04:13,320 Speaker 3: I guess over your peers. 73 00:04:14,200 --> 00:04:16,920 Speaker 5: We have, you know, I think the newest public company 74 00:04:17,000 --> 00:04:17,880 Speaker 5: products inking fleet. 75 00:04:17,960 --> 00:04:18,440 Speaker 4: That's one. 76 00:04:19,000 --> 00:04:23,480 Speaker 5: So we have very little. We have no requirement to 77 00:04:23,600 --> 00:04:26,279 Speaker 5: spend capital and renewal. At the moment, we're not forced 78 00:04:26,279 --> 00:04:29,080 Speaker 5: to renew that fleet, and soon our peers are going 79 00:04:29,120 --> 00:04:32,120 Speaker 5: to have to renew their fleets before. 80 00:04:32,080 --> 00:04:32,599 Speaker 4: We have to. 81 00:04:34,279 --> 00:04:38,160 Speaker 5: Our other competitive advantages, I think our shareholder base, you know, 82 00:04:38,279 --> 00:04:42,760 Speaker 5: our top you haven't gone much below twenty four, but 83 00:04:42,920 --> 00:04:48,039 Speaker 5: our top shareholders apart from the Norwegian Sovereign Fund or 84 00:04:48,040 --> 00:04:51,560 Speaker 5: all US institutions, and they have a very different view 85 00:04:51,600 --> 00:04:54,080 Speaker 5: to high payout dividend structures. 86 00:04:54,440 --> 00:04:55,840 Speaker 4: They kind of hate them. 87 00:04:56,279 --> 00:05:00,400 Speaker 5: So our advantage is that that long only group looking 88 00:05:00,480 --> 00:05:08,080 Speaker 5: for the longer term. So therefore you're not forced to 89 00:05:08,120 --> 00:05:13,200 Speaker 5: do something that's abnormal to a normal public company, which 90 00:05:13,240 --> 00:05:16,000 Speaker 5: is just to pay out a lot of your cash 91 00:05:16,000 --> 00:05:19,240 Speaker 5: flowing dividends. In the good times, we've been able to 92 00:05:19,600 --> 00:05:23,480 Speaker 5: you know, their fleet in support of US deal leveragings. 93 00:05:23,560 --> 00:05:26,520 Speaker 5: And you know, I would think somewhere around Christmas there's 94 00:05:26,560 --> 00:05:30,920 Speaker 5: a very high probability will be net that zero, which 95 00:05:30,920 --> 00:05:35,400 Speaker 5: should be, which would be fantastic, as Scorpio ever done 96 00:05:35,440 --> 00:05:40,320 Speaker 5: that before. We were pretty close coming out of COVID. 97 00:05:40,440 --> 00:05:45,040 Speaker 4: Yeah, we were ninety one debt. No, we don't come 98 00:05:45,080 --> 00:05:45,680 Speaker 4: anywhere here. 99 00:05:45,960 --> 00:05:49,960 Speaker 5: Okay, it's a it's a rarity for any any shipping company. 100 00:05:50,080 --> 00:05:53,719 Speaker 5: And then this is what's different, and you know, but 101 00:05:53,720 --> 00:05:57,840 Speaker 5: but shareholders are still the same shareholders, you know. 102 00:05:58,360 --> 00:05:59,520 Speaker 4: Never going to be satisfied. 103 00:05:59,520 --> 00:06:02,919 Speaker 5: They're always want you to do more, do better with 104 00:06:03,000 --> 00:06:05,880 Speaker 5: their money, which is that's the game of a public company. 105 00:06:06,080 --> 00:06:10,839 Speaker 5: The other thing that's different these days is you know, 106 00:06:10,880 --> 00:06:19,400 Speaker 5: the actual let's say the lenders themselves that they're they're 107 00:06:19,400 --> 00:06:22,760 Speaker 5: not used to getting money paid back. I mean so 108 00:06:22,920 --> 00:06:26,360 Speaker 5: unused that sometimes they complain about it, which is extraordinary 109 00:06:26,440 --> 00:06:28,880 Speaker 5: if you think about it, that only two years ago 110 00:06:28,920 --> 00:06:31,880 Speaker 5: they were probably terrified that most of their accounts or 111 00:06:32,600 --> 00:06:34,720 Speaker 5: three years ago with COVID, we're actually going to be 112 00:06:34,720 --> 00:06:38,920 Speaker 5: able to pay them back. And those are the differences. 113 00:06:39,080 --> 00:06:43,719 Speaker 5: Otherwise it's pretty broadly the same. 114 00:06:44,680 --> 00:06:46,440 Speaker 1: So you mentioned the order book and now it's pretty 115 00:06:46,480 --> 00:06:48,640 Speaker 1: pretty low from historical standpoint. 116 00:06:49,160 --> 00:06:51,919 Speaker 5: No, I didn't say that it was low historically. What 117 00:06:51,960 --> 00:06:54,240 Speaker 5: I said was there's been very little ordering this year, 118 00:06:54,279 --> 00:06:56,440 Speaker 5: despite the fact that it's been a strong market in 119 00:06:56,520 --> 00:07:00,320 Speaker 5: tankers and the companies have the word with orto with draw, 120 00:07:01,000 --> 00:07:05,040 Speaker 5: and that there is a high degree of older vessels. 121 00:07:05,600 --> 00:07:09,440 Speaker 5: The actual order book itself in total is you know, 122 00:07:09,480 --> 00:07:10,560 Speaker 5: it's quite reasonable. 123 00:07:10,760 --> 00:07:12,440 Speaker 4: What what what makes it not a. 124 00:07:12,440 --> 00:07:15,560 Speaker 5: High order book or not a low order book is that, 125 00:07:16,360 --> 00:07:19,640 Speaker 5: you know, you have more than double digits on order, 126 00:07:20,840 --> 00:07:23,960 Speaker 5: but that is over a long period three years, so 127 00:07:24,680 --> 00:07:28,000 Speaker 5: on an each year basis, it's not much counterbalanced by 128 00:07:28,800 --> 00:07:29,520 Speaker 5: the old fleet. 129 00:07:30,240 --> 00:07:32,040 Speaker 3: So we'll call it Goldielocks order book. 130 00:07:32,560 --> 00:07:36,360 Speaker 5: Just no Goldilocks. We're really greedy in the tack of 131 00:07:36,360 --> 00:07:39,040 Speaker 5: mark Goldilocks order book with this like nothing much on 132 00:07:39,160 --> 00:07:43,160 Speaker 5: order at all, Like coming out of COVID that was that. 133 00:07:43,040 --> 00:07:43,840 Speaker 4: Was a Goldilocks. 134 00:07:43,920 --> 00:07:46,760 Speaker 3: And how is Scorpio approaching ordering new vessels? 135 00:07:47,080 --> 00:07:51,080 Speaker 5: We haven't ordered one for a long time now. It's 136 00:07:51,160 --> 00:07:53,560 Speaker 5: you know, as I said, the fleet is new, it's 137 00:07:55,200 --> 00:07:58,559 Speaker 5: you know, we have the critical mass. You know, it's nice, 138 00:07:58,600 --> 00:08:01,520 Speaker 5: it's a nice place to be at the moment relative 139 00:08:01,640 --> 00:08:06,560 Speaker 5: to the headline risks out there. I mean, one thing 140 00:08:06,560 --> 00:08:11,320 Speaker 5: that's different at the moment is we were either very naive, 141 00:08:11,880 --> 00:08:16,000 Speaker 5: probably very unnaive in the two thousands boom that things 142 00:08:16,040 --> 00:08:19,360 Speaker 5: could become wrong in credit markets. But on the way up, 143 00:08:19,400 --> 00:08:22,360 Speaker 5: everyone was very in the world was at peace, economies 144 00:08:22,400 --> 00:08:25,760 Speaker 5: were growing, everything was fantastic. In your introduction, you said, look, 145 00:08:25,840 --> 00:08:28,560 Speaker 5: you know, China is slowing. You know, there's risk of 146 00:08:29,480 --> 00:08:33,439 Speaker 5: you know, terrified at what's going to happen in Europe. 147 00:08:33,559 --> 00:08:37,000 Speaker 5: You know over these next months, whether it's the France, UK, etc. 148 00:08:39,600 --> 00:08:40,080 Speaker 4: America. 149 00:08:40,160 --> 00:08:42,440 Speaker 5: Here's the FED trying to make a decision in this 150 00:08:42,640 --> 00:08:46,080 Speaker 5: next next few days about whether they're going to cut 151 00:08:46,120 --> 00:08:50,160 Speaker 5: interest rates because they're worried that US unemployment is rising 152 00:08:50,200 --> 00:08:52,760 Speaker 5: and the economy is slowing, or whether they're going to 153 00:08:52,800 --> 00:08:55,720 Speaker 5: keep interest rates the same or raise them because they're 154 00:08:55,800 --> 00:09:00,280 Speaker 5: terrified of tarists leading to inflation. Neither of them are 155 00:09:00,320 --> 00:09:05,080 Speaker 5: a good look to actual real economic stability and growth. 156 00:09:05,880 --> 00:09:13,199 Speaker 5: We've got a very unpredictable headline risks. You know, we've 157 00:09:13,240 --> 00:09:18,120 Speaker 5: got two you know, pretty major war things going on 158 00:09:18,160 --> 00:09:18,720 Speaker 5: in the world. 159 00:09:18,840 --> 00:09:19,679 Speaker 4: We've got. 160 00:09:20,960 --> 00:09:23,760 Speaker 5: A lot of disruption, a lot of things that are 161 00:09:23,800 --> 00:09:27,320 Speaker 5: being thrown right out there. You know, you wouldn't naturally 162 00:09:27,360 --> 00:09:30,680 Speaker 5: think that, you know, the US and Canada would be 163 00:09:31,320 --> 00:09:34,240 Speaker 5: at log aheads with each other. You wouldn't sort of 164 00:09:34,280 --> 00:09:39,120 Speaker 5: think that, you know, the US could sort of push 165 00:09:39,240 --> 00:09:41,640 Speaker 5: India all the way to Russia and China in. 166 00:09:41,600 --> 00:09:42,800 Speaker 4: Such an overt way. 167 00:09:43,160 --> 00:09:46,320 Speaker 5: That's that's well, that'll be interesting how that one gets 168 00:09:46,360 --> 00:09:50,000 Speaker 5: sorted out. And you know, there are a whole bunch 169 00:09:50,080 --> 00:09:54,080 Speaker 5: of other things. So how we're approaching this that's different 170 00:09:54,080 --> 00:09:57,959 Speaker 5: to before is that we're recognizing that we're only great 171 00:09:58,000 --> 00:10:02,079 Speaker 5: cash flows, but we we are very very conscious that 172 00:10:02,160 --> 00:10:05,720 Speaker 5: we have some things out there that could be very 173 00:10:05,760 --> 00:10:10,680 Speaker 5: bad for the tanker market that we can't control or 174 00:10:10,720 --> 00:10:13,679 Speaker 5: even predict. So that's why we're maintaining strength. 175 00:10:14,200 --> 00:10:16,920 Speaker 1: In terms of the geopolitical things out there. What was 176 00:10:17,000 --> 00:10:22,080 Speaker 1: more a bigger impact for the tankers. Was it Russia's 177 00:10:22,080 --> 00:10:23,959 Speaker 1: war with Ukraine or what's going on in the Middle 178 00:10:23,960 --> 00:10:24,800 Speaker 1: East and the Red Sea? 179 00:10:26,200 --> 00:10:28,640 Speaker 5: Well, I'm not sure we know what the impact is. 180 00:10:29,080 --> 00:10:31,280 Speaker 4: Yeah, we really don't. 181 00:10:31,360 --> 00:10:36,160 Speaker 1: I mean, did it change like trade patterns and yeah, 182 00:10:36,200 --> 00:10:37,719 Speaker 1: but that's pluses and minuses. 183 00:10:37,840 --> 00:10:40,120 Speaker 5: I mean, it's forced to think that just if they 184 00:10:40,160 --> 00:10:42,839 Speaker 5: made peace tomorrow in Russia, that everything would go back. 185 00:10:42,920 --> 00:10:44,040 Speaker 4: You know, that would be harmful. 186 00:10:44,800 --> 00:10:47,760 Speaker 5: It's forced to think that if you had peace in 187 00:10:47,800 --> 00:10:51,200 Speaker 5: the Middle East, everything would be harmful. Now, first of all, 188 00:10:51,440 --> 00:10:54,960 Speaker 5: you know these developed into wars and risk. It's not 189 00:10:55,040 --> 00:10:58,040 Speaker 5: good that people are starting to increase their spending on 190 00:10:58,840 --> 00:11:03,320 Speaker 5: you know, disposable miss and drones as opposed to economic growth. 191 00:11:03,480 --> 00:11:07,040 Speaker 5: So your headline demand is being is generally affected by 192 00:11:07,120 --> 00:11:12,160 Speaker 5: war and disruption. Your situation. Now if we you know 193 00:11:12,600 --> 00:11:16,200 Speaker 5: where if Russia stopped then it started exporting again, et cetera, 194 00:11:16,240 --> 00:11:20,120 Speaker 5: et cetera. Probably that shadow fleet just wouldn't have a home. 195 00:11:20,640 --> 00:11:25,360 Speaker 5: It would go to scrap. So yes, your ton mile 196 00:11:25,679 --> 00:11:30,200 Speaker 5: may change slightly, but your supply will be drastically reduced. 197 00:11:31,320 --> 00:11:36,640 Speaker 5: If you look at Israeli and Gaza, it's you know, 198 00:11:36,880 --> 00:11:37,160 Speaker 5: it's a. 199 00:11:37,240 --> 00:11:38,760 Speaker 4: Risk out there. 200 00:11:38,800 --> 00:11:41,280 Speaker 5: We don't know whether it's going to spread into the 201 00:11:41,320 --> 00:11:44,840 Speaker 5: other areas, whether some of the kingdoms are being put 202 00:11:44,920 --> 00:11:49,319 Speaker 5: under pressure right now from their population, and their population 203 00:11:49,559 --> 00:11:53,840 Speaker 5: starts to just you know unwind and we get into 204 00:11:54,679 --> 00:11:58,400 Speaker 5: you know, quite a big threat later. But piece is 205 00:11:58,600 --> 00:12:00,960 Speaker 5: just better. It's better for economic growth. 206 00:12:01,320 --> 00:12:07,440 Speaker 1: You know, I would agree with that, right, So so 207 00:12:07,640 --> 00:12:13,800 Speaker 1: the so when you're talking about your ships are the Scorpio, 208 00:12:13,920 --> 00:12:18,280 Speaker 1: I'm assuming they're totally avoiding this West canal since since. 209 00:12:18,080 --> 00:12:19,280 Speaker 4: The yeah visions. 210 00:12:20,640 --> 00:12:23,720 Speaker 1: Yeah, and so what what has that done to you know, 211 00:12:23,800 --> 00:12:26,200 Speaker 1: your fleet and kind of like you know, eating up 212 00:12:26,240 --> 00:12:27,800 Speaker 1: of the capacity. 213 00:12:29,080 --> 00:12:29,760 Speaker 3: For Scorpio. 214 00:12:30,400 --> 00:12:33,840 Speaker 5: You know that that initially was a positive, as I said, 215 00:12:33,920 --> 00:12:36,880 Speaker 5: now that's kind of being taken absorbed in the disruption. 216 00:12:37,080 --> 00:12:41,840 Speaker 5: I think is is actually on a fundamental level negative. 217 00:12:43,280 --> 00:12:45,280 Speaker 5: You know, you may get if you suddenly got peace 218 00:12:45,320 --> 00:12:48,880 Speaker 5: in Israel and peace in Gods and Israel and peace 219 00:12:48,880 --> 00:12:54,880 Speaker 5: in Russia and Ukraine. You might get a momentary sell 220 00:12:54,920 --> 00:12:58,319 Speaker 5: off in tanker stocks, the knee jerk reaction from a 221 00:12:58,400 --> 00:13:03,040 Speaker 5: hedge fund. But to me that that's a by signal 222 00:13:03,480 --> 00:13:07,160 Speaker 5: at that point because you've eliminated right to the massive 223 00:13:07,600 --> 00:13:08,880 Speaker 5: uncertainties out there. 224 00:13:10,280 --> 00:13:12,280 Speaker 1: You know I mentioned earlier, you know the fees on 225 00:13:12,480 --> 00:13:15,160 Speaker 1: Chinese built or operated chips. 226 00:13:15,320 --> 00:13:21,200 Speaker 3: Is that can impact Scorpio at all? Sorry, the USTR 227 00:13:21,559 --> 00:13:24,439 Speaker 3: fees on Chinese built or Chinese operated ships. 228 00:13:25,440 --> 00:13:27,760 Speaker 4: I don't really want to I don't think any of 229 00:13:27,800 --> 00:13:29,760 Speaker 4: this is certain. I'm not certain. 230 00:13:29,920 --> 00:13:32,240 Speaker 3: Okay, So you think that might not even happen. 231 00:13:33,880 --> 00:13:38,040 Speaker 5: I mean, they're even taking tariffs to the Supreme Court. Scene, right, 232 00:13:38,200 --> 00:13:41,080 Speaker 5: we really don't know what is going to happen in 233 00:13:41,120 --> 00:13:43,120 Speaker 5: the In the US, there's been a lot of talk, 234 00:13:43,320 --> 00:13:45,400 Speaker 5: but not really much certainty. 235 00:13:46,720 --> 00:13:48,840 Speaker 1: Okay, And you know what we've seen also in the 236 00:13:48,920 --> 00:13:51,199 Speaker 1: US is that kind of step back of you know, 237 00:13:51,320 --> 00:13:54,720 Speaker 1: mission regulations. But obviously the other shipping industry is going 238 00:13:55,080 --> 00:13:58,640 Speaker 1: full steam ahead with trying to get to zero. How 239 00:13:58,800 --> 00:14:03,000 Speaker 1: is a scorpio handling that or what's what's well scopios? 240 00:14:03,200 --> 00:14:06,120 Speaker 5: So I always tried to be you know, ahead right 241 00:14:06,160 --> 00:14:08,960 Speaker 5: from it's you know, birth as a public company with 242 00:14:09,760 --> 00:14:14,600 Speaker 5: focusing on ecoships very quickly in its adoption. You know, 243 00:14:15,000 --> 00:14:18,559 Speaker 5: the first thing we're handling it is afleet is relatively new, 244 00:14:18,760 --> 00:14:23,880 Speaker 5: so you know, news ships consume less fuel, so that's 245 00:14:23,880 --> 00:14:26,520 Speaker 5: the first step. Then you know, there are various other 246 00:14:26,600 --> 00:14:30,280 Speaker 5: things you can do to cut down fuel, which we've adopted. 247 00:14:31,720 --> 00:14:39,000 Speaker 5: We're fully compliant with the twenty thirty regulations. We're obviously 248 00:14:39,040 --> 00:14:42,120 Speaker 5: not compliant with the twenty fifty regulations, but I'm not 249 00:14:42,160 --> 00:14:44,320 Speaker 5: sure that any of the existing fleet were lost or 250 00:14:44,320 --> 00:14:52,840 Speaker 5: twenty fifty anyway, And when it comes to the alternative 251 00:14:52,880 --> 00:14:59,560 Speaker 5: fuels or the less non more renewable fuels. Here is 252 00:14:59,600 --> 00:15:03,680 Speaker 5: that we're waiting and watching because there's not yet the 253 00:15:03,680 --> 00:15:05,440 Speaker 5: infrastructure to supply. 254 00:15:05,280 --> 00:15:07,640 Speaker 4: Many of them. 255 00:15:07,880 --> 00:15:10,240 Speaker 5: So when you're going to do your fuel, for example, 256 00:15:10,440 --> 00:15:12,840 Speaker 5: it's it's okay if you've got a contract with hotel 257 00:15:13,320 --> 00:15:17,920 Speaker 5: and they're supplying everything, and like a A to B movement, 258 00:15:18,120 --> 00:15:23,000 Speaker 5: it's hard to do trampionship or spot fixing. And the 259 00:15:23,040 --> 00:15:26,720 Speaker 5: product market is very much a traded arbitrage market market, 260 00:15:27,440 --> 00:15:31,240 Speaker 5: so it's not yet the infrastructures developed to make that call. 261 00:15:32,480 --> 00:15:35,200 Speaker 5: And when we see what there's going to be, then 262 00:15:35,200 --> 00:15:38,600 Speaker 5: we'll adapt to that at that time. But if you 263 00:15:38,680 --> 00:15:41,600 Speaker 5: look at it as the whole again, this is another uncertainty. 264 00:15:41,760 --> 00:15:45,320 Speaker 4: So you know Europe. Europe is. 265 00:15:46,760 --> 00:15:50,800 Speaker 5: Trying to go full bore on this environmental regulations, et cetera. 266 00:15:51,920 --> 00:15:54,640 Speaker 5: The United States have got you know, splits in the 267 00:15:54,640 --> 00:15:59,120 Speaker 5: States already in their in their recent voting, they're really 268 00:15:59,160 --> 00:16:05,560 Speaker 5: split extremely along Democratic Republican lines. We then look at 269 00:16:05,800 --> 00:16:09,520 Speaker 5: the US is obviously, you know, trying to do as 270 00:16:09,600 --> 00:16:12,760 Speaker 5: much as they can in carbon right, They're trying to 271 00:16:13,040 --> 00:16:18,400 Speaker 5: improve coal, their own coal exports and production crude. 272 00:16:18,040 --> 00:16:20,280 Speaker 4: As well gas as well. 273 00:16:20,960 --> 00:16:25,160 Speaker 5: And then you know, the largest population in the world 274 00:16:25,160 --> 00:16:29,520 Speaker 5: in China is benefiting tremendously from low crude oil prices. 275 00:16:30,240 --> 00:16:34,760 Speaker 5: The second largest population in the India is benefiting, and 276 00:16:34,840 --> 00:16:39,160 Speaker 5: the growing economy is desperate to have low oil prices. 277 00:16:39,240 --> 00:16:42,920 Speaker 4: So you've got and you know, one of the. 278 00:16:42,880 --> 00:16:45,160 Speaker 5: Key things that Trump is trying to do is keep 279 00:16:45,160 --> 00:16:48,480 Speaker 5: gasoline prices down in the United States for the consumer. 280 00:16:49,040 --> 00:16:51,920 Speaker 5: So you've got this tremendous irony that you've got these 281 00:16:52,120 --> 00:16:59,240 Speaker 5: huge economic and population blocks that are kind of going backwards, 282 00:17:00,280 --> 00:17:04,959 Speaker 5: you know, or very fast in reverse. And you have 283 00:17:05,359 --> 00:17:09,000 Speaker 5: Europe sort of trying to do the transition, but it 284 00:17:09,040 --> 00:17:11,160 Speaker 5: doesn't look as if they can afford to do a transition. 285 00:17:14,200 --> 00:17:17,920 Speaker 3: And that's obviously good for the product well or maybe not. 286 00:17:18,760 --> 00:17:23,280 Speaker 5: It calls into question the you know, the you know, 287 00:17:25,080 --> 00:17:28,919 Speaker 5: whether or not you know, oil is dead or gasoline 288 00:17:29,040 --> 00:17:33,600 Speaker 5: is dead. I don't see that coming in this right now. 289 00:17:35,280 --> 00:17:37,760 Speaker 3: Yeah, especially not out of the US. 290 00:17:37,920 --> 00:17:41,480 Speaker 1: So where are the growth markets if there are, for 291 00:17:41,640 --> 00:17:44,520 Speaker 1: the product anchor market the growth markets. 292 00:17:44,560 --> 00:17:47,680 Speaker 5: The theme of growth in the product markets is related 293 00:17:47,720 --> 00:17:52,520 Speaker 5: to the difference in where refineries are and countries tomorrow. 294 00:17:52,560 --> 00:17:55,959 Speaker 5: So an easy one is that we've seen the tremendous 295 00:17:55,960 --> 00:18:00,800 Speaker 5: growth in Middle Eastern refinery ability, in Indian finery ability, 296 00:18:00,800 --> 00:18:03,480 Speaker 5: which is effectively very close two three days from the 297 00:18:03,480 --> 00:18:06,639 Speaker 5: Middle East oil. So here, if you wind it back, 298 00:18:07,200 --> 00:18:10,280 Speaker 5: they didn't have any refineries, so they produce oil. When 299 00:18:10,280 --> 00:18:12,919 Speaker 5: Ope said, when Middley said, are we're going to produce 300 00:18:13,119 --> 00:18:15,919 Speaker 5: million barrels of oil, they'd have a little bit for 301 00:18:16,000 --> 00:18:18,040 Speaker 5: domestic and then you could guarantee the rest would be 302 00:18:18,080 --> 00:18:24,040 Speaker 5: exported on a ship. Now you know that million barrels 303 00:18:24,080 --> 00:18:27,800 Speaker 5: increase isn't all exported on a crude oil ship. It's 304 00:18:27,840 --> 00:18:30,040 Speaker 5: put into a refinery and a lot of it is 305 00:18:30,160 --> 00:18:33,879 Speaker 5: used to export it on a product ship because of 306 00:18:33,920 --> 00:18:37,199 Speaker 5: the shift there, So you're getting And then if we 307 00:18:37,240 --> 00:18:40,240 Speaker 5: take the countries like Australia, that's a different thing where 308 00:18:40,280 --> 00:18:44,080 Speaker 5: they've closed down their refineries because they don't want to 309 00:18:44,280 --> 00:18:47,320 Speaker 5: for environmental reasons, don't want to import a refined crude, 310 00:18:48,000 --> 00:18:50,880 Speaker 5: so they've turned them into product import tournaments. So though, 311 00:18:51,119 --> 00:18:54,520 Speaker 5: and then you in Europe and the United States, they've 312 00:18:54,560 --> 00:19:01,359 Speaker 5: had to close inefficient refineries and then sorry, and then 313 00:19:01,400 --> 00:19:06,119 Speaker 5: we're seeing it's a busy market now right, it's really 314 00:19:06,119 --> 00:19:16,040 Speaker 5: good and the the the aspect related to you know, 315 00:19:16,680 --> 00:19:19,080 Speaker 5: if we just take in general, look who's growing crew 316 00:19:19,080 --> 00:19:21,560 Speaker 5: it has to be shipped. You know, you have Nigeria 317 00:19:21,560 --> 00:19:27,840 Speaker 5: and West Africa, you have Guyana. I mean that's pretty 318 00:19:27,880 --> 00:19:32,200 Speaker 5: much all for expert and you have you know, Brazil 319 00:19:32,280 --> 00:19:37,399 Speaker 5: as well. So in terms of the actual that's the theme. 320 00:19:37,880 --> 00:19:41,560 Speaker 5: So you have obviously headlined immand growth, which is let's 321 00:19:41,600 --> 00:19:46,960 Speaker 5: say you should be revising upwards headline headline immand growth 322 00:19:47,000 --> 00:19:50,560 Speaker 5: because of the changes of environmental priorities in the world 323 00:19:50,600 --> 00:19:55,040 Speaker 5: in total, and you would change it up if you 324 00:19:55,080 --> 00:20:03,040 Speaker 5: were positive on economic growth, and that's what's what's driving 325 00:20:03,080 --> 00:20:04,960 Speaker 5: things at the moment and. 326 00:20:04,960 --> 00:20:08,280 Speaker 1: Will increase refinery capabilities in China. But it'll be a 327 00:20:08,320 --> 00:20:10,480 Speaker 1: good thing or a bad thing for the product anchor market. 328 00:20:10,680 --> 00:20:13,880 Speaker 5: I think it's good historically. You know, if you've ever 329 00:20:14,280 --> 00:20:19,800 Speaker 5: grown products, when you grow product in a refinery area, 330 00:20:21,080 --> 00:20:23,600 Speaker 5: it's not to the detriment to the product market. It's 331 00:20:23,640 --> 00:20:27,080 Speaker 5: always been to the positive because no one refinery complex 332 00:20:27,200 --> 00:20:34,560 Speaker 5: can produce or produce fine products exactly to their sales requirements. 333 00:20:34,640 --> 00:20:37,520 Speaker 4: So that's where you get arbitrage, right. 334 00:20:38,200 --> 00:20:40,720 Speaker 1: You know, we were talking earlier about emissions. You know, 335 00:20:40,760 --> 00:20:47,199 Speaker 1: if you're looking longer term than twenty fifty mandates, not 336 00:20:47,280 --> 00:20:49,280 Speaker 1: where a scorpio is going, but where do you do 337 00:20:49,359 --> 00:20:50,879 Speaker 1: you what do you think the solution is? 338 00:20:50,920 --> 00:20:52,600 Speaker 3: What do you personally think the solution. 339 00:20:52,359 --> 00:20:54,919 Speaker 5: Is going to end up being the way above my 340 00:20:55,960 --> 00:20:57,520 Speaker 5: intellectual Oh? 341 00:20:57,640 --> 00:20:59,320 Speaker 4: Please capacity? 342 00:20:59,600 --> 00:21:04,080 Speaker 5: Okay, No, it's just too We got dealing with too 343 00:21:04,160 --> 00:21:06,159 Speaker 5: much in front of us right now to start worrying 344 00:21:06,200 --> 00:21:09,320 Speaker 5: about where that is. Is much better to you know, 345 00:21:09,400 --> 00:21:14,399 Speaker 5: to watch and see how it actually develops. You know, 346 00:21:14,440 --> 00:21:17,560 Speaker 5: we could be all change if you know, I think 347 00:21:17,600 --> 00:21:22,040 Speaker 5: America does matter in this, and you know, if you 348 00:21:22,160 --> 00:21:28,600 Speaker 5: have two or three Republican terms with the presidency and 349 00:21:28,640 --> 00:21:33,520 Speaker 5: a majority then in the Houses, then that's going to. 350 00:21:35,280 --> 00:21:36,160 Speaker 4: Be very different. 351 00:21:36,480 --> 00:21:43,560 Speaker 5: If the Republicans lose the election, that's just the United States. 352 00:21:43,720 --> 00:21:47,840 Speaker 1: Right, So just changing gears a little bit. Is there 353 00:21:47,960 --> 00:21:51,680 Speaker 1: much M and A in the space this scorpio out there? 354 00:21:51,800 --> 00:21:53,879 Speaker 1: I mean, does it make sense for you guys to 355 00:21:54,520 --> 00:21:57,520 Speaker 1: grow through that or just given where the market is, 356 00:21:58,359 --> 00:21:59,879 Speaker 1: you don't see much consolidation. 357 00:22:02,960 --> 00:22:06,080 Speaker 5: I do with Scopya at the moment, is that it 358 00:22:06,200 --> 00:22:08,200 Speaker 5: makes sense for us to pay down our debt. There's 359 00:22:08,200 --> 00:22:13,879 Speaker 5: no there's nothing out there that we should be. You know, 360 00:22:13,960 --> 00:22:16,720 Speaker 5: our stock is trading under the acid value, it's moving 361 00:22:16,800 --> 00:22:20,960 Speaker 5: up strongly, but we don't have a currency in our 362 00:22:21,000 --> 00:22:27,879 Speaker 5: stock at the moment, and there's no public company in 363 00:22:27,960 --> 00:22:31,320 Speaker 5: the product space that would be that has a fleet 364 00:22:32,400 --> 00:22:36,160 Speaker 5: there's better than ours, So you would, you know, you'd 365 00:22:36,160 --> 00:22:43,000 Speaker 5: be spending money in uncertain times to acquire you know, 366 00:22:43,280 --> 00:22:47,240 Speaker 5: less of less quality as they were. So no, I 367 00:22:47,280 --> 00:22:50,000 Speaker 5: mean I think that you know, we're really happy and 368 00:22:50,240 --> 00:22:54,359 Speaker 5: just learning a lot of cash and and looking at 369 00:22:54,400 --> 00:22:56,679 Speaker 5: life from that point at the moment, but there is 370 00:22:57,320 --> 00:23:00,400 Speaker 5: emin a activity in the space. I mean, I'm as 371 00:23:01,400 --> 00:23:07,360 Speaker 5: sure as you know I can be that there will 372 00:23:07,400 --> 00:23:10,800 Speaker 5: be a merger between Hafnear and TORM, which I think 373 00:23:10,840 --> 00:23:15,359 Speaker 5: is super constructive. I think that the tanker industry really 374 00:23:15,440 --> 00:23:20,960 Speaker 5: needs to have bigger market cap companies, more liquidity, more 375 00:23:21,000 --> 00:23:26,160 Speaker 5: companies that have access to the index funds, more companies 376 00:23:26,200 --> 00:23:29,600 Speaker 5: that have access to the bigger long only funds. If 377 00:23:29,600 --> 00:23:33,280 Speaker 5: we look at the trading in the tanker industry, I mean, 378 00:23:34,520 --> 00:23:38,640 Speaker 5: on any given day, with exception of Frontline, Scorpio virtually 379 00:23:38,680 --> 00:23:42,359 Speaker 5: trades all of the other tanker companies in terms of 380 00:23:42,400 --> 00:23:47,800 Speaker 5: its liquidity, and that's not healthy. Overall for the industry you. 381 00:23:47,840 --> 00:23:50,080 Speaker 1: Mentioned if I heard, you're right that scop history and 382 00:23:50,119 --> 00:23:52,880 Speaker 1: below its asset, Like, what's what's the market getting wrong? 383 00:23:53,240 --> 00:23:56,720 Speaker 5: Where are they giving going to campaign about the market? 384 00:23:56,800 --> 00:23:59,320 Speaker 4: Don't get it that they're there. 385 00:24:00,080 --> 00:24:03,160 Speaker 5: You know, they were sort of, I don't know whatever 386 00:24:03,160 --> 00:24:08,040 Speaker 5: it is, distracted by the shiny object of high dividends, 387 00:24:09,080 --> 00:24:10,440 Speaker 5: and now they're. 388 00:24:10,160 --> 00:24:11,280 Speaker 4: Kind of figuring that. 389 00:24:11,640 --> 00:24:13,960 Speaker 5: Hold on a minute, why would we pay a discount 390 00:24:14,000 --> 00:24:17,640 Speaker 5: to a fleet that's you know, the newest in the thing, 391 00:24:17,960 --> 00:24:22,160 Speaker 5: paying a regular dividend and has a fantastic balance sheet 392 00:24:22,160 --> 00:24:26,080 Speaker 5: in uncertain times as you've seen what's happening with those 393 00:24:26,119 --> 00:24:29,320 Speaker 5: long only is coming into our stock. If you look 394 00:24:29,359 --> 00:24:32,480 Speaker 5: at the transition in the last nine months, it's it's tremendous. 395 00:24:32,760 --> 00:24:37,160 Speaker 5: You know, the hedge funds have moved away, very little retail. 396 00:24:38,400 --> 00:24:41,120 Speaker 5: You can literally see in the first twenty five shareholders 397 00:24:41,119 --> 00:24:45,200 Speaker 5: seventy percent of the stock is held between a very 398 00:24:45,240 --> 00:24:50,200 Speaker 5: good long only is where our strategy is very compatible 399 00:24:50,240 --> 00:24:59,159 Speaker 5: with them. So they I'd never complain whether whether the 400 00:24:59,200 --> 00:25:04,040 Speaker 5: market has something wrong or right, that they see it 401 00:25:04,080 --> 00:25:05,560 Speaker 5: as they see it in the time. 402 00:25:06,640 --> 00:25:08,359 Speaker 1: And what would you need to see it a start? 403 00:25:09,840 --> 00:25:13,840 Speaker 1: I guess ordering new ships increasing your fleets. 404 00:25:13,920 --> 00:25:19,040 Speaker 5: I don't think it has anything to do with the well, 405 00:25:19,080 --> 00:25:21,320 Speaker 5: I guess it does have something to the stock price, 406 00:25:21,400 --> 00:25:23,880 Speaker 5: because you could, you know, once we've achieved net debt, 407 00:25:23,920 --> 00:25:26,000 Speaker 5: you could you could always buy back stock if you 408 00:25:26,040 --> 00:25:27,399 Speaker 5: had a dislocation. 409 00:25:26,920 --> 00:25:27,920 Speaker 4: In any of you there. 410 00:25:27,960 --> 00:25:33,199 Speaker 5: But new building is about a bunch of things that 411 00:25:33,320 --> 00:25:36,359 Speaker 5: need to be sorted out. It's love to see some 412 00:25:36,400 --> 00:25:40,679 Speaker 5: more transparency in the world. You know, it's maybe like 413 00:25:40,720 --> 00:25:44,840 Speaker 5: a broken record, but you know there's a high degree 414 00:25:44,880 --> 00:25:49,520 Speaker 5: of risk out there that's being ignored by If you 415 00:25:49,520 --> 00:25:51,680 Speaker 5: ask me what the stock market has got wrong at 416 00:25:51,680 --> 00:25:55,760 Speaker 5: the moment, it's not scorpio tankers. It's the you know, 417 00:25:56,200 --> 00:26:01,479 Speaker 5: absolute complacency and confidence that it's moving up. I mean, 418 00:26:01,520 --> 00:26:05,920 Speaker 5: you're seeing hedge funds now chasing retail because retail were 419 00:26:05,960 --> 00:26:08,359 Speaker 5: bolder in the beginning of the year, and then you 420 00:26:08,440 --> 00:26:11,000 Speaker 5: had hedge funds pulled back and go no, no, no, you know, 421 00:26:11,200 --> 00:26:13,479 Speaker 5: tid ofs so bad and we can't possibly do this 422 00:26:13,600 --> 00:26:16,080 Speaker 5: in retail said no, I think, well we'll buy, and 423 00:26:16,119 --> 00:26:20,080 Speaker 5: now the hedge funds have to chase again. It's not 424 00:26:20,280 --> 00:26:25,720 Speaker 5: necessarily the best of reasons to do that. So I 425 00:26:25,760 --> 00:26:28,040 Speaker 5: think we just have to be a little humble at 426 00:26:28,080 --> 00:26:31,720 Speaker 5: the moment and just wait for some parity. 427 00:26:34,119 --> 00:26:37,160 Speaker 1: All right, well, Robert, that that's our time to thank 428 00:26:37,200 --> 00:26:37,800 Speaker 1: you very much. 429 00:26:38,040 --> 00:26:40,439 Speaker 3: Appreciate it, appreciate, thank you. 430 00:26:41,119 --> 00:26:42,119 Speaker 4: It's great anytime. 431 00:26:43,640 --> 00:26:45,879 Speaker 1: So on stage with me right now is Hamish Norton, 432 00:26:46,280 --> 00:26:50,120 Speaker 1: president of Star Bulk Tikerr SBLK. It's got a market 433 00:26:50,160 --> 00:26:53,640 Speaker 1: cap around two point two billion dollars. Hamish, thanks for joining. 434 00:26:53,480 --> 00:26:54,400 Speaker 2: Us, my pleasure. 435 00:26:54,960 --> 00:26:57,119 Speaker 1: So tell us about you know, we heard about the 436 00:26:57,119 --> 00:26:59,399 Speaker 1: product anchor market, so tell us about the. 437 00:26:59,440 --> 00:26:59,959 Speaker 3: Dry balk mark. 438 00:27:00,240 --> 00:27:03,520 Speaker 2: Okay, so let me give an introduction to the dry 439 00:27:03,560 --> 00:27:08,000 Speaker 2: balk market. It is almost it is the most perfect 440 00:27:08,040 --> 00:27:10,600 Speaker 2: market that I know of which means there are no 441 00:27:10,760 --> 00:27:15,200 Speaker 2: leading indicators. So I don't know anybody who is able 442 00:27:15,240 --> 00:27:19,680 Speaker 2: to predict the course of the dry bulk market. Our 443 00:27:19,760 --> 00:27:22,760 Speaker 2: experience is that if you have a balance sheet that 444 00:27:22,880 --> 00:27:26,200 Speaker 2: allows you to go through the cycle and not have 445 00:27:26,240 --> 00:27:31,480 Speaker 2: to raise equity and distress, that you'll make money. But 446 00:27:32,440 --> 00:27:35,400 Speaker 2: how and when you'll make money is very hard to predict, 447 00:27:35,800 --> 00:27:40,360 Speaker 2: impossible to predict. So the dry bulk market is doing 448 00:27:40,400 --> 00:27:43,359 Speaker 2: pretty well right now. I think it's doing better than 449 00:27:43,400 --> 00:27:46,880 Speaker 2: people expected. But I refer you to the beginning of 450 00:27:46,960 --> 00:27:50,359 Speaker 2: what I was saying, which is that nobody is really 451 00:27:50,359 --> 00:27:52,160 Speaker 2: ever able to predict this market. 452 00:27:53,440 --> 00:27:55,920 Speaker 1: So what was the biggest change versus in the beginning 453 00:27:55,960 --> 00:27:57,960 Speaker 1: of the year, what people were thinking with what. 454 00:27:57,840 --> 00:27:58,719 Speaker 3: Kind of transpired. 455 00:27:59,000 --> 00:28:01,800 Speaker 2: So at the beginning of the year, for example, China 456 00:28:01,960 --> 00:28:05,240 Speaker 2: was not buying a lot of grain because they had 457 00:28:05,280 --> 00:28:08,440 Speaker 2: big stockpiles of grain, And they were not buying a 458 00:28:08,480 --> 00:28:12,119 Speaker 2: lot of coal because they had increased domestic production of 459 00:28:12,160 --> 00:28:19,360 Speaker 2: coal and it was outpacing the growth in coal generated electricity. 460 00:28:20,800 --> 00:28:24,560 Speaker 2: Second half of the year, they cut domestic production of 461 00:28:24,600 --> 00:28:30,479 Speaker 2: coal and thermal coal produced electricity group and so they 462 00:28:30,520 --> 00:28:35,280 Speaker 2: had to import more coal, and they started importing grains 463 00:28:35,640 --> 00:28:44,080 Speaker 2: as well because the stockpiles got eaten up, and India 464 00:28:44,400 --> 00:28:54,280 Speaker 2: was also importing more coal. And you know, then there's 465 00:28:54,360 --> 00:28:59,400 Speaker 2: a concept in dry bulk of ocean imbalance. All the 466 00:28:59,400 --> 00:29:05,280 Speaker 2: best cards are in the Atlantic, all the best discharge 467 00:29:05,280 --> 00:29:08,480 Speaker 2: ports are in the Pacific, so ships tend to move 468 00:29:08,520 --> 00:29:11,960 Speaker 2: from the Atlantic to the Pacific. Sometimes there's a greater 469 00:29:12,040 --> 00:29:15,840 Speaker 2: imbalance where there's more of a need in the Atlantic 470 00:29:16,000 --> 00:29:19,920 Speaker 2: for ships to take cargoes to the Pacific. If you 471 00:29:20,040 --> 00:29:22,160 Speaker 2: anticipate that, and you take a little bit of a 472 00:29:22,240 --> 00:29:25,240 Speaker 2: hit getting your ship to the Atlantic sooner you can 473 00:29:25,280 --> 00:29:32,479 Speaker 2: make more money on the next cargo. We did project that. 474 00:29:33,920 --> 00:29:37,239 Speaker 2: Maybe that was pure chance, but we did get our 475 00:29:37,280 --> 00:29:45,560 Speaker 2: ships to the Atlantic quicker by taking basically worse worse charters, 476 00:29:47,440 --> 00:29:53,480 Speaker 2: and that was good. There is a situation that often 477 00:29:53,520 --> 00:29:57,840 Speaker 2: occurs where when you have a lot of dry ball movements, 478 00:29:58,160 --> 00:30:01,880 Speaker 2: you get port congestion. And the port congestion is good 479 00:30:02,720 --> 00:30:05,160 Speaker 2: because it puts the ships out of service as they're 480 00:30:05,200 --> 00:30:10,160 Speaker 2: lining up to discharge or load in a port, and 481 00:30:10,240 --> 00:30:13,959 Speaker 2: so there are effectively fewer ships to carry out the business. 482 00:30:14,520 --> 00:30:19,440 Speaker 2: Port congestion in the by the end of the first 483 00:30:19,760 --> 00:30:22,880 Speaker 2: half of the year was all the way back to 484 00:30:23,080 --> 00:30:25,560 Speaker 2: sort of a normal level, so it could only go 485 00:30:25,760 --> 00:30:30,360 Speaker 2: up from there, and you know, it's gone up a 486 00:30:30,360 --> 00:30:37,920 Speaker 2: little bit, not a lot, and you know then there's 487 00:30:37,960 --> 00:30:43,480 Speaker 2: a very interesting phenomenon. There were a lot of ships 488 00:30:43,560 --> 00:30:46,880 Speaker 2: dryball ships delivered between two thousand and nine and twenty twelve. 489 00:30:47,440 --> 00:30:49,520 Speaker 2: These were the ships that were ordered in two thousand 490 00:30:49,520 --> 00:30:55,280 Speaker 2: and seven. In two thousand and seven, the earliest new 491 00:30:55,280 --> 00:30:57,640 Speaker 2: building you could get was at a shipyard that did 492 00:30:57,680 --> 00:31:02,080 Speaker 2: not then exist. The shipyard had to be built. Then 493 00:31:02,120 --> 00:31:04,080 Speaker 2: that shipyard had to build your ship. And a lot 494 00:31:04,160 --> 00:31:08,160 Speaker 2: of these shipyards were built and they delivered ships, and 495 00:31:08,200 --> 00:31:13,240 Speaker 2: they were terrible ships. But these ships are now coming 496 00:31:13,280 --> 00:31:16,440 Speaker 2: to what is known as their third special survey. So 497 00:31:16,760 --> 00:31:20,120 Speaker 2: every year twenty percent of the fleet goes through a 498 00:31:20,200 --> 00:31:27,560 Speaker 2: dry docking. Well this year there's more than twenty percent 499 00:31:28,160 --> 00:31:33,400 Speaker 2: because those ships that were built in twenty twelve are 500 00:31:33,480 --> 00:31:37,000 Speaker 2: coming up on their third special survey, and you know 501 00:31:40,600 --> 00:31:42,360 Speaker 2: it's going to continue for a few years. 502 00:31:42,720 --> 00:31:45,080 Speaker 1: I'm going to ask similar questions I asked Robert earlier. 503 00:31:45,080 --> 00:31:48,040 Speaker 1: But so, with all the geopolitical risks out there, whether 504 00:31:48,040 --> 00:31:51,040 Speaker 1: it's Russia's war Ukraine or the Red Sea, how has 505 00:31:51,080 --> 00:31:55,520 Speaker 1: that impacted you know, the dry bulk industry and starbulk specifically. 506 00:31:55,640 --> 00:32:04,880 Speaker 2: Yeah, well, so the Red Sea is helpful. You know, 507 00:32:05,360 --> 00:32:08,840 Speaker 2: Robert thought that it was no longer helpful for product tankers. 508 00:32:08,880 --> 00:32:13,840 Speaker 2: I think it's still helpful for dry ball rates. Not 509 00:32:14,200 --> 00:32:19,000 Speaker 2: all the dry ball ships are avoiding the Red Sea. 510 00:32:19,080 --> 00:32:22,000 Speaker 2: I think more of the tankers are avoiding the Red Sea, 511 00:32:22,880 --> 00:32:26,800 Speaker 2: except those in the shadow fleet that might have deals 512 00:32:26,800 --> 00:32:27,520 Speaker 2: with hulusies. 513 00:32:28,160 --> 00:32:30,200 Speaker 3: So that the dry bulkers that are using this sue 514 00:32:30,240 --> 00:32:31,000 Speaker 3: as are. 515 00:32:31,600 --> 00:32:36,160 Speaker 2: They are not public companies. There are people who are 516 00:32:36,200 --> 00:32:38,720 Speaker 2: willing to take more risks than we're willing to take, 517 00:32:39,240 --> 00:32:42,120 Speaker 2: and you know, more risks frankly, with the safety of 518 00:32:42,160 --> 00:32:47,720 Speaker 2: their crew. We had three ships at the beginning of 519 00:32:47,760 --> 00:32:50,800 Speaker 2: this Red Sea closure that were on charter to go 520 00:32:50,880 --> 00:32:55,000 Speaker 2: through the Red Sea. They carried out their charter because 521 00:32:55,040 --> 00:32:58,240 Speaker 2: it wasn't a war zone, so we didn't actually have 522 00:32:58,320 --> 00:33:02,320 Speaker 2: the right to not carry out the charter. Those ships 523 00:33:02,320 --> 00:33:07,480 Speaker 2: were shot at. Nobody was injured, no serious damage. Well, 524 00:33:07,560 --> 00:33:10,920 Speaker 2: there was one ship that had a missile go through 525 00:33:10,960 --> 00:33:17,200 Speaker 2: the top into the hole, blew up, knocked the hatch 526 00:33:17,240 --> 00:33:21,880 Speaker 2: covers off, but that was bad. Yeah, it was terrifying. 527 00:33:22,400 --> 00:33:26,920 Speaker 2: The ship was relatively easily repaired, thank heaven, and the 528 00:33:27,000 --> 00:33:31,320 Speaker 2: crew were fine, except you know, terrified. And then we 529 00:33:31,400 --> 00:33:35,600 Speaker 2: stopped and we have we've not gone back through since, 530 00:33:35,760 --> 00:33:41,320 Speaker 2: and you know, we'll see when that reverses. If the 531 00:33:41,360 --> 00:33:44,600 Speaker 2: war with between Russia and Ukraine ends, we think that 532 00:33:44,640 --> 00:33:48,240 Speaker 2: will be good for the market. There will be reconstruction. 533 00:33:48,760 --> 00:33:51,960 Speaker 2: It takes a lot of dry bulk to build the 534 00:33:52,480 --> 00:33:58,120 Speaker 2: rebuild the real estate that's been destroyed. You know, it 535 00:33:58,120 --> 00:34:00,040 Speaker 2: can be quite significant. 536 00:34:01,440 --> 00:34:04,800 Speaker 1: And what was the biggest impact I guess with the 537 00:34:05,200 --> 00:34:09,200 Speaker 1: Russia war with Ukraine, just given how there's both big 538 00:34:09,320 --> 00:34:10,319 Speaker 1: exporters of egg. 539 00:34:11,000 --> 00:34:15,040 Speaker 2: Well, I mean trade flows, you know, I think ten 540 00:34:15,160 --> 00:34:24,759 Speaker 2: miles were more or less unaffected because there were obviously 541 00:34:25,600 --> 00:34:29,760 Speaker 2: Ukraine and to some extent Russia had trouble shipping their grain. 542 00:34:32,040 --> 00:34:35,480 Speaker 2: The people who bought the Ukrainian grain had to buy 543 00:34:35,520 --> 00:34:40,480 Speaker 2: from somewhere else. There was less grain traded in aggregate, 544 00:34:40,680 --> 00:34:44,480 Speaker 2: but the trip lengths for the grain that was traded 545 00:34:44,520 --> 00:34:49,040 Speaker 2: were longer, so it was not a big effect net. 546 00:34:50,680 --> 00:34:53,840 Speaker 2: It was a bigger effect on the shipping insurance market. 547 00:34:54,920 --> 00:34:58,280 Speaker 2: We had three ships trapped in Ukraine when the war started. 548 00:34:59,600 --> 00:35:02,080 Speaker 2: We got two of them out one that was in 549 00:35:02,200 --> 00:35:07,160 Speaker 2: Nikolaiev we did not get out, and after a year 550 00:35:07,480 --> 00:35:12,440 Speaker 2: it was a constructive total loss, and we got the 551 00:35:12,440 --> 00:35:16,719 Speaker 2: insurance proceeds which were about twenty million dollars above the 552 00:35:16,760 --> 00:35:20,760 Speaker 2: market value of the ship. And that's the that's nothing 553 00:35:20,800 --> 00:35:24,799 Speaker 2: wrong with that. That's how marine insurance works. You have 554 00:35:24,840 --> 00:35:28,080 Speaker 2: to make sure your ships are insured for enough, but 555 00:35:28,719 --> 00:35:30,880 Speaker 2: you can insure them for a little extra. 556 00:35:31,080 --> 00:35:34,520 Speaker 1: Also, what you know, we really didn't talk about that 557 00:35:34,520 --> 00:35:36,920 Speaker 1: in the earlier conversation. But like, you know, the insurance market, 558 00:35:36,960 --> 00:35:40,319 Speaker 1: how much is insurance rates gone up? Just given the 559 00:35:40,880 --> 00:35:44,719 Speaker 1: what it seems like increased geopolitical risks to the fleet. 560 00:35:44,960 --> 00:35:48,319 Speaker 2: Insurance rates are up. But I have to say I'm 561 00:35:48,400 --> 00:35:52,360 Speaker 2: not an expert in the marine insurance market. 562 00:35:52,560 --> 00:35:56,359 Speaker 1: So okay, so you know what what is you know 563 00:35:56,400 --> 00:35:58,160 Speaker 1: your outlook for the dry bulk market? You know you 564 00:35:58,200 --> 00:36:00,919 Speaker 1: said there's no leading indicators, so so. 565 00:36:00,920 --> 00:36:04,440 Speaker 2: Take everything I say with a large grain of salt. 566 00:36:04,800 --> 00:36:08,920 Speaker 2: We're optimistic for the second half of twenty twenty five 567 00:36:09,080 --> 00:36:14,719 Speaker 2: and going into twenty twenty six. You know, we do 568 00:36:14,800 --> 00:36:21,759 Speaker 2: see China importing more coal and more grain. We see 569 00:36:21,760 --> 00:36:23,200 Speaker 2: India importing more coal. 570 00:36:24,360 --> 00:36:26,000 Speaker 3: This thermal coal met coal. 571 00:36:26,360 --> 00:36:31,880 Speaker 2: It's basically thermal met coal is a pretty small it's 572 00:36:32,320 --> 00:36:40,120 Speaker 2: not a big trade. And iron ore is doing well. 573 00:36:40,920 --> 00:36:45,239 Speaker 2: First of all, China is importing kind of as much 574 00:36:45,280 --> 00:36:50,400 Speaker 2: iron ore as ever, which is maybe a surprise, but 575 00:36:51,760 --> 00:36:56,520 Speaker 2: you know, cutting back on steel production, they've they've actually 576 00:36:56,560 --> 00:37:01,280 Speaker 2: cut back on the electric mini mills. They're getting more 577 00:37:01,320 --> 00:37:05,719 Speaker 2: iron ore from Brazil, which is three times the distance 578 00:37:06,600 --> 00:37:11,680 Speaker 2: that you know that iron ore travels from Australia. Brazil 579 00:37:11,800 --> 00:37:16,920 Speaker 2: is producing more iron ore China is taking it. It 580 00:37:17,000 --> 00:37:21,400 Speaker 2: doesn't look like Australia is being pushed out yet. But 581 00:37:21,840 --> 00:37:26,680 Speaker 2: in the fourth quarter there's a new mine opening in Guinea, 582 00:37:27,480 --> 00:37:32,880 Speaker 2: the Simundum mine, which by sometime in two thousand and 583 00:37:32,920 --> 00:37:35,200 Speaker 2: six is supposed to get up to ninety million tons 584 00:37:35,200 --> 00:37:39,279 Speaker 2: a year and eventually one hundred and twenty million tons 585 00:37:39,320 --> 00:37:44,640 Speaker 2: a year. That's a big deal, and it's half owned 586 00:37:44,640 --> 00:37:48,319 Speaker 2: by China. Chinese companies they're going to take that iron ore. 587 00:37:49,360 --> 00:37:54,279 Speaker 2: Probably that will offset Australian iron ore. So even if 588 00:37:54,480 --> 00:37:59,440 Speaker 2: iron ore imports don't grow or even drop, if you 589 00:37:59,560 --> 00:38:02,160 Speaker 2: get more of your iron ore from three times as 590 00:38:02,200 --> 00:38:05,680 Speaker 2: far away, that's a big help for dry ball shipping. 591 00:38:07,360 --> 00:38:13,360 Speaker 2: It's ton miles that matter, not tons. And you know, 592 00:38:13,480 --> 00:38:19,240 Speaker 2: box Site, also coming from Guinea, is becoming a big cargo. 593 00:38:19,320 --> 00:38:23,640 Speaker 2: It's becoming it's a cape size cargo. You know, you 594 00:38:23,920 --> 00:38:26,480 Speaker 2: used to be that box Site was thought to be 595 00:38:26,520 --> 00:38:31,080 Speaker 2: a so called minor bulk. It's it's getting up there 596 00:38:31,120 --> 00:38:36,240 Speaker 2: with you know, it's it's it's probably the fourth major 597 00:38:36,280 --> 00:38:38,200 Speaker 2: bulk after grain at this point. 598 00:38:39,640 --> 00:38:42,640 Speaker 1: And so you know, the supply demand dynamics isn't as 599 00:38:42,880 --> 00:38:44,880 Speaker 1: positive in the dry bulk industry as it is. 600 00:38:44,920 --> 00:38:46,480 Speaker 3: Maybe in the tanker market. 601 00:38:46,800 --> 00:38:49,680 Speaker 1: I think Clarkson's has supply growth out pacing demand this 602 00:38:49,760 --> 00:38:53,719 Speaker 1: year next year. Yeah, what are you guys doing with 603 00:38:53,800 --> 00:38:56,759 Speaker 1: your in terms of ordering new ships? How are you 604 00:38:56,800 --> 00:38:58,520 Speaker 1: approaching the new ship market? 605 00:38:59,120 --> 00:39:06,160 Speaker 2: Yeah, well the order book is about ten and a 606 00:39:06,200 --> 00:39:10,359 Speaker 2: half percent of the fleet. You know, we think that 607 00:39:11,239 --> 00:39:15,560 Speaker 2: fleet growth will be you know, order of three percent 608 00:39:16,880 --> 00:39:22,160 Speaker 2: net of net of scrapping, which is more than clarkson 609 00:39:22,320 --> 00:39:32,200 Speaker 2: is predicting for for you know, demand growth. But you know, 610 00:39:32,480 --> 00:39:38,719 Speaker 2: for for example, that the effect of the special surveys 611 00:39:38,760 --> 00:39:41,479 Speaker 2: of the two thousand and nine through twenty twelve built 612 00:39:41,480 --> 00:39:44,919 Speaker 2: ships is we think going to account for say one 613 00:39:45,000 --> 00:39:50,319 Speaker 2: percent of capacity for several years. So you know, there 614 00:39:50,480 --> 00:39:59,520 Speaker 2: there are there are mitigating factors, and you know the 615 00:39:59,560 --> 00:40:05,359 Speaker 2: first half of this year was relatively depressing. Second half 616 00:40:05,440 --> 00:40:14,560 Speaker 2: is looking good. So is Clarkson's right, It's hard to know. Yeah, 617 00:40:15,239 --> 00:40:17,839 Speaker 2: you only really know what's happened to the dry ball 618 00:40:17,960 --> 00:40:21,560 Speaker 2: market sort of in the rear view mirror. Once it's happened, 619 00:40:22,200 --> 00:40:25,800 Speaker 2: rates are better than they should be if Clarkson's is right. 620 00:40:26,280 --> 00:40:30,279 Speaker 3: So you know, so are you ordering new ships now? 621 00:40:30,440 --> 00:40:36,080 Speaker 2: We are not. We are not ordering new ships the shipyards. 622 00:40:36,120 --> 00:40:38,440 Speaker 2: First of all, dry ball ships are really cheap and 623 00:40:38,520 --> 00:40:42,880 Speaker 2: simple relative to tankers, relative to container ships. They're just 624 00:40:43,680 --> 00:40:50,479 Speaker 2: basically hulls with holds with hatch covers at the top. 625 00:40:50,840 --> 00:40:54,239 Speaker 2: Maybe nine holes in a cape, five holds in a Supermax. 626 00:40:55,440 --> 00:40:57,920 Speaker 2: You take the hatch cover off, you dump in the cargo, 627 00:40:58,040 --> 00:41:01,400 Speaker 2: or you put the hatch cover back on. Nothing really 628 00:41:01,440 --> 00:41:10,480 Speaker 2: sophisticated except the engine. A US shipyard just parenthetically has 629 00:41:10,520 --> 00:41:14,000 Speaker 2: trouble getting the steel to make a dry ball carrier 630 00:41:14,160 --> 00:41:17,040 Speaker 2: for less than the market price of a new building 631 00:41:17,120 --> 00:41:24,680 Speaker 2: dryball carrier. So the shipyards don't want to build dry 632 00:41:24,719 --> 00:41:30,160 Speaker 2: ball carriers unless they are empty, don't have any orders. Well, 633 00:41:30,200 --> 00:41:33,600 Speaker 2: they have orders. They have orders for LNG carriers, for 634 00:41:33,640 --> 00:41:37,800 Speaker 2: container ships, to some extent for tankers. They're fat and happy, 635 00:41:37,920 --> 00:41:39,919 Speaker 2: and they don't want to cut price to get dry 636 00:41:39,920 --> 00:41:46,520 Speaker 2: ball orders. Our experience tells us that when the shipyards 637 00:41:47,360 --> 00:41:51,520 Speaker 2: are not willing to cut price and stretch to get 638 00:41:52,040 --> 00:41:55,000 Speaker 2: dry ball orders, it's not a good time to buy 639 00:41:55,080 --> 00:42:01,759 Speaker 2: dry ball ships. Also, you know, we don't know what 640 00:42:01,880 --> 00:42:03,960 Speaker 2: kind of ship to order in terms of the fuel. 641 00:42:05,880 --> 00:42:09,920 Speaker 2: If we ordered a ship that burned fuel oil only 642 00:42:10,640 --> 00:42:16,359 Speaker 2: and could in theory burned biofuel. You know, we don't 643 00:42:16,400 --> 00:42:19,399 Speaker 2: think you'll be able to get biofuel when everybody needs it. 644 00:42:19,480 --> 00:42:23,480 Speaker 2: You can get biofuel today because nobody needs it. But 645 00:42:24,239 --> 00:42:28,719 Speaker 2: the ingredients for making biofuel for ships are you know, 646 00:42:29,520 --> 00:42:39,520 Speaker 2: use cooking oil, animal fat. You know, the the quantity 647 00:42:39,800 --> 00:42:44,560 Speaker 2: of biofuel ingredients is so minuscule compared to the amount 648 00:42:44,680 --> 00:42:48,080 Speaker 2: of fuel that ships burn that I you know, we 649 00:42:48,120 --> 00:42:51,200 Speaker 2: think that by the time you'll need biofuel, it basically 650 00:42:51,320 --> 00:42:53,000 Speaker 2: won't be available at all. 651 00:42:53,560 --> 00:42:55,200 Speaker 1: So how do you think the shipping industry is going 652 00:42:55,280 --> 00:42:59,239 Speaker 1: to get to twenty fifty emission standards by the IMO? 653 00:43:00,920 --> 00:43:05,200 Speaker 2: It's going to be very hard. You know, there's there's 654 00:43:05,200 --> 00:43:09,120 Speaker 2: I think it's realistic, not unless people are prepared to 655 00:43:09,120 --> 00:43:16,080 Speaker 2: go nuclear. Nuclear propulsion is demonstrated to work. The US 656 00:43:16,200 --> 00:43:19,839 Speaker 2: Navy has a seventy some year record of no accidents. 657 00:43:21,120 --> 00:43:30,799 Speaker 2: You know, some people have suggested using nuclear power to 658 00:43:30,840 --> 00:43:35,920 Speaker 2: create hydrogen electrolytically from water, use the hydrogen to make ammonia, 659 00:43:36,200 --> 00:43:42,920 Speaker 2: use the ammonia to fuel the ship. The losses involved 660 00:43:43,160 --> 00:43:48,440 Speaker 2: in taking that nuclear electricity and creating hydrogen and then 661 00:43:48,520 --> 00:43:51,080 Speaker 2: using the hydrogen to create ammonia and then burning the 662 00:43:51,120 --> 00:43:54,760 Speaker 2: ammonia in an engine on board the ship are eighty 663 00:43:54,800 --> 00:43:58,759 Speaker 2: percent of the energy. So you need five times the 664 00:43:58,840 --> 00:44:01,960 Speaker 2: nuclear electricity that you would have needed if the reactor 665 00:44:02,000 --> 00:44:07,840 Speaker 2: had been on board the ship. Nuclear electricity is not free, 666 00:44:07,840 --> 00:44:10,160 Speaker 2: and if you multiply the price by five, it's going 667 00:44:10,239 --> 00:44:14,720 Speaker 2: to be expensive. So I think ammonia can be made 668 00:44:15,040 --> 00:44:20,000 Speaker 2: and used insufficient quantity, but it's going to be extremely expensive. 669 00:44:22,719 --> 00:44:32,200 Speaker 2: I think so called emethanol and E LNG are also possible, 670 00:44:32,400 --> 00:44:37,000 Speaker 2: but the chemical engineering is much more complex. Those will 671 00:44:37,040 --> 00:44:39,880 Speaker 2: be much more expensive, I think than ammonia. 672 00:44:40,560 --> 00:44:43,640 Speaker 1: Right, And so obviously the ship owners have to buy 673 00:44:43,680 --> 00:44:45,600 Speaker 1: these new, more expensive ships. 674 00:44:45,719 --> 00:44:48,480 Speaker 3: And how do you charge for that? 675 00:44:49,760 --> 00:44:54,840 Speaker 2: Well, at the moment you can't. You'll be able to 676 00:44:54,920 --> 00:45:01,080 Speaker 2: charge for it when there is a sufficient financial penalty 677 00:45:01,280 --> 00:45:04,920 Speaker 2: that the ammonia is cheaper than fuel oil net of 678 00:45:04,920 --> 00:45:09,759 Speaker 2: the penalty, and the penalty has to be rigorously enforced. 679 00:45:10,880 --> 00:45:14,960 Speaker 2: And you know, the the discussions at the I m 680 00:45:14,960 --> 00:45:21,120 Speaker 2: OH have been around the concept that the I m 681 00:45:21,200 --> 00:45:25,000 Speaker 2: O will collect these in effect taxes and it's a 682 00:45:25,040 --> 00:45:28,920 Speaker 2: lot of money, and it's you know, the IMO has 683 00:45:29,000 --> 00:45:35,520 Speaker 2: never collected money, and you know, I don't know how 684 00:45:35,560 --> 00:45:39,840 Speaker 2: they're going to prevent corruption. You know, in the process. 685 00:45:40,120 --> 00:45:42,279 Speaker 2: We have nothing to do with corruption at the I 686 00:45:42,480 --> 00:45:45,120 Speaker 2: m oh, it's corruption on the way to the I 687 00:45:45,360 --> 00:45:50,560 Speaker 2: m oh, it's it's a it's a difficult problem. 688 00:45:50,680 --> 00:45:54,040 Speaker 1: And so if you, if you were a betting person, 689 00:45:54,160 --> 00:45:57,279 Speaker 1: would would how do you think the industry is it's 690 00:45:57,320 --> 00:45:59,840 Speaker 1: gonna what do you think the industry is going to 691 00:45:59,920 --> 00:46:00,920 Speaker 1: do it? 692 00:46:02,719 --> 00:46:05,160 Speaker 2: I have no idea what we really want this to 693 00:46:05,200 --> 00:46:09,680 Speaker 2: go through. Frankly, Uh, you know we are you know, 694 00:46:09,880 --> 00:46:12,840 Speaker 2: Scorpio is a big company. Starbuck is a big company. 695 00:46:14,280 --> 00:46:18,879 Speaker 2: You know, we're basically just about the biggest dry ball 696 00:46:18,920 --> 00:46:23,600 Speaker 2: company in the public markets. We can afford a compliance department, 697 00:46:23,719 --> 00:46:29,080 Speaker 2: We can afford people to deal with very complex regulations 698 00:46:29,400 --> 00:46:37,880 Speaker 2: in a way that our peers cannot. But you know, 699 00:46:38,920 --> 00:46:43,080 Speaker 2: I have my doubts that this will work. But you know, 700 00:46:44,120 --> 00:46:46,319 Speaker 2: knock on wood, they'll figure out a way to make 701 00:46:46,360 --> 00:46:46,840 Speaker 2: it work. 702 00:46:47,200 --> 00:46:50,560 Speaker 3: And how Starbuck being more efficient? I guess with with 703 00:46:50,680 --> 00:46:51,480 Speaker 3: the assets that. 704 00:46:51,440 --> 00:46:55,480 Speaker 2: You have, well, we're doing a lot. Actually, we're putting 705 00:46:55,520 --> 00:47:06,239 Speaker 2: on basically fuel saving devices, which are are basically ducts 706 00:47:06,680 --> 00:47:09,120 Speaker 2: just before the propeller that give the water a spin. 707 00:47:09,239 --> 00:47:12,399 Speaker 2: Opposite the spin of the propeller, so that water comes 708 00:47:12,400 --> 00:47:17,239 Speaker 2: out more sort of straight back instead of twisting. That 709 00:47:17,400 --> 00:47:22,680 Speaker 2: can save five percent of the fuel. We're going with 710 00:47:22,960 --> 00:47:29,839 Speaker 2: more expensive paints, which actually can save another five to 711 00:47:29,880 --> 00:47:31,000 Speaker 2: ten percent of the fuel. 712 00:47:31,080 --> 00:47:32,240 Speaker 3: What do the paints do. 713 00:47:32,320 --> 00:47:38,520 Speaker 2: The paints keep fouling down and they reduce friction with 714 00:47:38,560 --> 00:47:43,160 Speaker 2: the water, and it's a pretty big effect, as it 715 00:47:43,200 --> 00:47:47,879 Speaker 2: should be because the paints are incredibly expensive. And then 716 00:47:48,120 --> 00:47:53,919 Speaker 2: we are experimenting with hull cleaning robots that allow us 717 00:47:54,000 --> 00:48:00,960 Speaker 2: to keep the fouling from forming. You don't keep your 718 00:48:01,000 --> 00:48:03,840 Speaker 2: hull clean, you can wake up one day and find 719 00:48:03,840 --> 00:48:06,880 Speaker 2: you're burning forty percent more fuel. I mean, it's a 720 00:48:06,960 --> 00:48:11,759 Speaker 2: huge effect. And if you don't clean the fouling off, 721 00:48:11,920 --> 00:48:14,880 Speaker 2: by the time you're burning ten percent more fuel, it 722 00:48:14,920 --> 00:48:17,879 Speaker 2: has time to grow roots into your paint and then 723 00:48:17,920 --> 00:48:21,600 Speaker 2: you have to redo the expensive paint job, which is yeah, 724 00:48:21,760 --> 00:48:26,160 Speaker 2: it's so we're then and then robots robots well, I 725 00:48:26,200 --> 00:48:28,800 Speaker 2: mean you know, they don't they don't have arms and legs, 726 00:48:29,239 --> 00:48:34,719 Speaker 2: they have wheels. And then we're using some very sophisticated 727 00:48:35,840 --> 00:48:42,720 Speaker 2: software as a service that optimizes our root based upon 728 00:48:43,640 --> 00:48:50,760 Speaker 2: fuel price, charter rate, wind waves, wind direction wave spectrum. 729 00:48:50,840 --> 00:48:52,760 Speaker 3: It is a AI. Can we get AI in this country? 730 00:48:53,360 --> 00:48:54,000 Speaker 3: Get another turn? 731 00:48:54,280 --> 00:48:58,960 Speaker 2: It is basically AI. Yeah, and the company that we 732 00:48:59,120 --> 00:49:03,280 Speaker 2: use is insent and Cisco, so near all the AI people. 733 00:49:03,480 --> 00:49:03,680 Speaker 4: Yeah. 734 00:49:05,719 --> 00:49:11,840 Speaker 1: So I guess in closing CAD you just you know, 735 00:49:11,920 --> 00:49:16,359 Speaker 1: the consensus has you guys growing your ebit pretty pretty well. 736 00:49:16,400 --> 00:49:16,759 Speaker 3: Next year. 737 00:49:16,800 --> 00:49:20,240 Speaker 1: I think it was sixteen percent I'm sorry, up sixty 738 00:49:20,239 --> 00:49:22,960 Speaker 1: two percent next year and up sixteen percent twenty twenty seven. 739 00:49:23,280 --> 00:49:27,959 Speaker 1: But that's from a down year this year. What has 740 00:49:27,960 --> 00:49:32,239 Speaker 1: to happen for I guess expectations to be exceeded over 741 00:49:32,280 --> 00:49:33,440 Speaker 1: the next eighteen months. 742 00:49:33,800 --> 00:49:39,400 Speaker 2: Well, you know, things have to go well, you know, 743 00:49:39,760 --> 00:49:43,040 Speaker 2: it's it's an impossible market to predict. What we're doing 744 00:49:43,520 --> 00:49:47,200 Speaker 2: is we're getting rid of our leverage, just like Scorpio. 745 00:49:47,320 --> 00:49:49,640 Speaker 2: We're paying down two hundred and fifty million of debt 746 00:49:49,640 --> 00:49:52,520 Speaker 2: a year. Our debt is already less than the scrap 747 00:49:52,640 --> 00:49:58,799 Speaker 2: value of our fleet. You know, if if you have 748 00:49:58,880 --> 00:50:02,040 Speaker 2: a strong enough balance sheet in this business, you'll make money. 749 00:50:02,719 --> 00:50:05,000 Speaker 2: The way to lose money is to have to issue 750 00:50:05,000 --> 00:50:10,880 Speaker 2: equity and distress. And you know, ask me how I 751 00:50:10,960 --> 00:50:16,160 Speaker 2: know that? How do you know that dams yeah, in 752 00:50:16,200 --> 00:50:21,239 Speaker 2: twenty sixteen. Our capes that in two thousand and eight 753 00:50:21,320 --> 00:50:24,120 Speaker 2: earn two hundred and fifty thousand dollars a day and 754 00:50:24,200 --> 00:50:27,560 Speaker 2: today earned you know, twenty three to thirty thousand dollars 755 00:50:27,600 --> 00:50:30,280 Speaker 2: a day depending on the ship. Earned eight hundred dollars 756 00:50:30,320 --> 00:50:35,719 Speaker 2: a day for the month of February. Yes, so you 757 00:50:35,760 --> 00:50:39,520 Speaker 2: know it was it was bad, all right. 758 00:50:39,560 --> 00:50:41,839 Speaker 1: And just before I let you go, can you talk 759 00:50:41,880 --> 00:50:43,400 Speaker 1: about consolidation in the market. 760 00:50:44,360 --> 00:50:45,439 Speaker 3: Is there any going on? 761 00:50:46,120 --> 00:50:49,799 Speaker 2: There's nothing going on. We think there should be. We 762 00:50:49,840 --> 00:50:53,160 Speaker 2: think it benefits everybody. Frankly, our market cap of two 763 00:50:53,200 --> 00:50:58,440 Speaker 2: point two billion is too small for many investors. You know. 764 00:50:58,480 --> 00:51:01,680 Speaker 2: I think what you need to have in this market 765 00:51:01,960 --> 00:51:05,359 Speaker 2: it's the ability to allow an investor to invest about 766 00:51:05,360 --> 00:51:09,560 Speaker 2: five hundred million. Nobody's going to do that with a 767 00:51:09,600 --> 00:51:12,440 Speaker 2: company with a two point two billion market cap. I 768 00:51:12,480 --> 00:51:16,840 Speaker 2: think we need a five billion market cap dryball company. 769 00:51:18,760 --> 00:51:22,319 Speaker 2: And it's hard to get that to happen because, just 770 00:51:22,440 --> 00:51:27,120 Speaker 2: like Scorpio, our share trades at less than the net 771 00:51:27,200 --> 00:51:31,000 Speaker 2: liquidation value of the hard assets. You know, I think 772 00:51:31,040 --> 00:51:40,280 Speaker 2: the problem is that institutional investors don't have the bandwidth 773 00:51:40,440 --> 00:51:46,440 Speaker 2: or the money basically to pay for research into such 774 00:51:46,520 --> 00:51:50,960 Speaker 2: a small universe. That's why they should be using BI 775 00:51:52,320 --> 00:51:58,800 Speaker 2: exactly exactly. But you know, if we had shipping companies 776 00:51:58,840 --> 00:52:01,160 Speaker 2: with a five billion dollar market cap, I think more 777 00:52:01,160 --> 00:52:04,360 Speaker 2: investors would do their research and conclude that the stock 778 00:52:04,440 --> 00:52:09,279 Speaker 2: is really cheap. And you know, in terms of consolidation, 779 00:52:09,480 --> 00:52:13,440 Speaker 2: basically everybody wants to keep their job. Yeah, you even 780 00:52:13,480 --> 00:52:16,920 Speaker 2: board members you know, can make enough money to make 781 00:52:16,960 --> 00:52:17,520 Speaker 2: a difference. 782 00:52:18,120 --> 00:52:20,359 Speaker 1: I want to thank Robert and Hamish for their time 783 00:52:20,400 --> 00:52:22,919 Speaker 1: and insights. I also want to thank you for tuning in. 784 00:52:23,320 --> 00:52:26,040 Speaker 1: If you liked the episode, please subscribe and leave a review. 785 00:52:26,360 --> 00:52:28,880 Speaker 1: We've lined up a number of great guests for the podcast, 786 00:52:28,880 --> 00:52:34,200 Speaker 1: so please check back to hear conversations with C suite executives, shippers, 787 00:52:34,400 --> 00:52:37,680 Speaker 1: and regulators three two one. I also want to thank 788 00:52:37,680 --> 00:52:40,000 Speaker 1: you for tuning in. If you like the episode, please 789 00:52:40,040 --> 00:52:42,719 Speaker 1: subscribe and leave a review. We've lined up a number 790 00:52:42,719 --> 00:52:44,920 Speaker 1: of great guests for the podcast, so check back to 791 00:52:44,960 --> 00:52:49,440 Speaker 1: hear conversations with C suite executives, shippers, regulators, and decision 792 00:52:49,440 --> 00:52:52,160 Speaker 1: makers within the freight markets. Also, if you want to 793 00:52:52,200 --> 00:52:55,080 Speaker 1: learn more about the freight transportation markets, check out our 794 00:52:55,120 --> 00:52:58,440 Speaker 1: work on the Bloomberg terminal at Bigo and on social media. 795 00:52:58,800 --> 00:53:01,280 Speaker 1: This is Lee Klaska cuning off and thanks for talking 796 00:53:01,320 --> 00:53:03,520 Speaker 1: transports with me. Talk to you next time.