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Speaker 1: Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast.

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Speaker 1: I'm your host, Lee Klaskows, Senior freight transportational logistics analysts

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Speaker 1: at Bloomberg Intelligence, Bloomberg's and house research arm. Before diving

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Speaker 1: in a little public service announcement, your support is instrumental

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Speaker 1: in keeping our ability to bring in great guests onto

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Speaker 1: the podcast like the one we have today. If you

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Speaker 1: haven't already, please do take a moment to follow, rate

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Speaker 1: and share the Talking Transport Podcast. We appreciate your support.

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Speaker 1: I'm excited to have today with us Lois Zabrowski, International Seaways,

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Speaker 1: President and CEO on today's podcast. She's been instrumental in

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Speaker 1: the transformation of International Seaways and so the one of

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Speaker 1: the largest tanker fleets on the ocean. International Seaways trades

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Speaker 1: under the ticker INSW with a market cap of around

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Speaker 1: three point one billion dollars. Consensus expects the company to

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Speaker 1: generate one point one billion in revenue this year and

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Speaker 1: earn about eleven dollars and fourteen cents to share in

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Speaker 1: earnings per share, which is about five percent increase from

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Speaker 1: last year. She has over thirty years experience in the

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Speaker 1: shipping industry in various operational management roles. She entered the

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Speaker 1: industry as a third mate aboard a US flag chemical tanker.

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Speaker 1: Lois holds a Bachelor of Science degree from the US

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Speaker 1: Merchant Marine Academy and holds a third mate's license. Welcome

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Speaker 1: to the podcast, Lois, Thank you so much.

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Speaker 2: Lee, It's really a pleasure to be here.

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Speaker 1: So people might not be familiar with International Seedways, Can

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Speaker 1: you give a brief explanation of what the company does?

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Speaker 2: Absolutely, so, International Seaways.

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Speaker 3: We are an oil tanker company, and we have eighty

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Speaker 3: two oil tankers, almost evenly split between CREWD tankers which

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Speaker 3: are larger, and our product tankers which are on the

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Speaker 3: smaller side. So we have everything from vlccs which are

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Speaker 3: very large CREWD carriers like three hundred and fifty thousand

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Speaker 3: dead weight that can carry two million barrels of crude

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Speaker 3: largely from like the Middle East to consuming markets often

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Speaker 3: in Asia, all the way down to fifty thousand tons

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Speaker 3: product carriers that will carry refined product, usually in stems

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Speaker 3: of around three hundred thousand barrels to smaller, more regional markets.

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Speaker 1: And refined products are like diesel and gasoline sort of thing.

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Speaker 2: Absolutely, you know, and it's raw form.

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Speaker 3: You know, crude needs to be refined, so it has

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Speaker 3: to go through refineries all over the world in order

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Speaker 3: to become you know, what we would recognize as consumers

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Speaker 3: usable gasoline, diesel, jet fuel, which is, you know, a

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Speaker 3: lighter product that we would recognize.

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Speaker 1: So you pretty much you guys operate every kind of

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Speaker 1: tanker out there, whether it's crude, product or chemical.

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Speaker 3: You know, mostly we're doing crude and product where we're

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Speaker 3: balanced almost evenly in the split between our tankers between

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Speaker 3: crude and product. When you get into chemicals, we'll do

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Speaker 3: we will carry what we call easy chemicals. When you

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Speaker 3: get into really sophisticated heavy parcel caring stainles steel tankers,

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Speaker 3: that's beyond our scope.

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Speaker 1: Okay, great, and you guys have grown a lot over

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Speaker 1: the years. I just read a press release a couple

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Speaker 1: of days ago. You bought a few tankers. Could you

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Speaker 1: talk about that acquisition?

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Speaker 2: Absolutely?

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Speaker 3: You know, when you know, International Seaways was spun out

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Speaker 3: of a much larger company, a bell Weather for many decades.

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Speaker 3: OSG at the end of twenty sixteen, and we represent

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Speaker 3: the international assets. And when we were spun out, our

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Speaker 3: fleet was thirteen years old and a bit of a

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Speaker 3: motley collection of assets, so myself, our team got to

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Speaker 3: work on renewing that fleet and building it. So since

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Speaker 3: we have been on the New York Stock Exchange, as

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Speaker 3: I insw, we've returned four hundred and ninety percent, so

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Speaker 3: it's like twenty three percent annual compounded, right, which is

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Speaker 3: really kind of amazing. And there were some things that

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Speaker 3: were very critical in that development.

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Speaker 2: You know, our market.

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Speaker 3: Is cyclical, and so I say we were blessed at

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Speaker 3: International seaways that you know, the market was very, very

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Speaker 3: poor when we were spun out, and that allowed for

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Speaker 3: you really want to do the preponderance of your transactions

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Speaker 3: when the market is in that part of the cycle, right,

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Speaker 3: And then that positions you, you know, now we have

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Speaker 3: When we were spun out, we had just over a

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Speaker 3: billion in assets. Now we're three and a half plus

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Speaker 3: and our debt as at seven hundred million. So we're

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Speaker 3: just in a really fantastic place as the company has grown,

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Speaker 3: and you know, we make sure that we're set up

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Speaker 3: to take advantage of these fabulous times and then also

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Speaker 3: make sure that the actions we take will protect us

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Speaker 3: as we go through the cycle.

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Speaker 1: Right, And most watchers of the industry. You think that

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Speaker 1: we're in early innings of a really great rate cycle,

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Speaker 1: a positive rate cycle for the tanker, the product and

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Speaker 1: the crew tanker market. So could you talk about you know,

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Speaker 1: where you're seeing supplied demand dynamics in those various markets,

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Speaker 1: and it is there are much a difference between the

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Speaker 1: crude market and the product market.

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Speaker 3: You know, these two markets dovetail. And that's why we

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Speaker 3: say we're balanced, right, because.

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Speaker 2: Particularly in the last couple.

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Speaker 3: Of years, you've just really seen we've been able to

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Speaker 3: take advantage of opportunities where we find them in different spaces, right,

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Speaker 3: and we don't have to just wait for one class

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Speaker 3: A vessel for the opportunity to be perfect. On the

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Speaker 3: crude side, it actually hasn't been as strong. It's been

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Speaker 3: very strong over the last couple of years. It hasn't

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Speaker 3: been as outperforming as product side has. So you know,

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Speaker 3: when we went through COVID in the world, oil consumption

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Speaker 3: in the world went from over one hundred million barrels

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Speaker 3: a day down in the middle of twenty two twenty

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Speaker 3: to eighty five million barrels per day.

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Speaker 2: That had never happened before.

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Speaker 3: So suddenly the world went into what we call contango

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Speaker 3: and everybody is trying to store oil everywhere because it's

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Speaker 3: very you have a glut today and it's expensive tomorrow.

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Speaker 3: And what that caused in our tanker market was what

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Speaker 3: I call the hangover, where inventory levels were very, very high,

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Speaker 3: and for our market to recover, it took around a

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Speaker 3: year for all of those inventory levels to be worn

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Speaker 3: off and for people to consume it right and then

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Speaker 3: for worldwide oil demand to resume a more natural pattern.

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Speaker 3: So as we sit here today in the world, oil

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Speaker 3: consumption worldwide is well over where it was in twenty nineteen,

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Speaker 3: and you see all those components. You know, everybody's driving,

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Speaker 3: there's traffic in New York City, you know, everybody's.

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Speaker 2: Flying all over the world. So you see that.

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Speaker 3: Consumption patterns are back at and above where they were

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Speaker 3: in two nineteen. Inventory levels came down dramatically and are

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Speaker 3: at and below where they were then as well, And

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Speaker 3: so we have this very healthy market where all of demand,

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Speaker 3: you know, is there were not a lot of tankers

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Speaker 3: that were being built during COVID.

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Speaker 2: And during that time, and so now we're.

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Speaker 3: Seeing that we have an aging fleet and increased utilization,

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Speaker 3: which means very strong fundamentals on the tanker space that

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Speaker 3: we're taking advantage of right now at IW right and.

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Speaker 1: On the demand side, that's a great picture. And on

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Speaker 1: the supply side it's from my understands, just as good

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Speaker 1: because of the low order book.

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Speaker 2: Is that is that right?

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Speaker 3: That's right, that's correct. We've seen a few more orders

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Speaker 3: here recently. One of the things that's exceptional right now

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Speaker 3: the order book. You know, if you're looking to order

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Speaker 3: a tanker, especially on the biggest side of the LCC,

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Speaker 3: you could be looking at twenty twenty eight berths now.

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Speaker 2: Right, So this is very far forward where.

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Speaker 3: In very lean times when no one is ordering, you

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Speaker 3: know that could be eighteen months. So now you're looking

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Speaker 3: at a very full pipeline because you have a success

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Speaker 3: worldwide in all different tanker spaces, LNG carriers, you have

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Speaker 3: the qataris with one hundred and twenty vessels on order, right,

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Speaker 3: so you really see all across the space with gas carriers,

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Speaker 3: LNG carriers, dry cargo. You see everybody really looking to say, Okay,

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Speaker 3: there was a hesitation, we went through a tough place.

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Speaker 3: Now we need you know, the world's going to go

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Speaker 3: back to living and now we need to order and

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Speaker 3: move cargo.

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Speaker 1: Right. And then when you guys are making decisions about

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Speaker 1: ordering vessels, I mean, do you typically buy new vessels

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Speaker 1: or do you buy them in the aftermarket secondhand? How

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Speaker 1: do you guys approach that?

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Speaker 3: Yes, yes, So we look at you know, we've done

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Speaker 3: all of the above. You know, some of our first

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Speaker 3: purchases were secondhand vessel purchases that actually were vessels that

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Speaker 3: the other owner at the shipyard walked away from, right,

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Speaker 3: so we picked those up.

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Speaker 2: We bought some very modern secondhand.

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Speaker 3: We did a major merger with a company called diamond

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Speaker 3: S in the middle of twenty twenty one at the

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Speaker 3: absolute nature of the market, and that really transformation of

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Speaker 3: an insw and helped us to dramatically increase our size.

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Speaker 2: So we're also.

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Speaker 3: Building some lr ones, which are mid sized product carrier

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Speaker 3: that we have kind of a specialized trade for niche

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Speaker 3: and that particular sector. The vessels are so old that

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Speaker 3: you can't really find what we're looking for. So, you know,

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Speaker 3: in our business, which is a commodity business, you're always

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Speaker 3: looking for your differentiation and how you can find your niche,

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Speaker 3: how do you find your asymmetric advantage and you know,

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Speaker 3: really put your dollars to work in the best way

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Speaker 3: you can.

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Speaker 1: Okay, great, And then you know there's a lot of

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Speaker 1: new regulations or you know, maybe they're not new, but

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Speaker 1: they're going to be coming into effect in twenty some

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Speaker 1: odd years. You know, there's the IMO twenty fifty, there's

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Speaker 1: new new regulations out of Europe and it's all related

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Speaker 1: to mostly emissions. So how does international seaways approach that

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Speaker 1: with their fleet? Are you looking to buy methane enabled

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Speaker 1: ships or are you just looking to put on after

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Speaker 1: treatments and scrubbers and that sort of stuff to try

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Speaker 1: to meet the standards that you're can be required to make.

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Speaker 2: Yeah, you have such good questions.

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Speaker 3: It's a yes again, you know where you look at

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Speaker 3: you know, we have we were one of the first

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Speaker 3: companies that had a sustainability linked loan. Jeff Prebor was

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Speaker 3: the architect of that, you know, and you know twenty twenty,

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Speaker 3: I think, so we're very conscious and aware of all

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Speaker 3: of these and you know, in twenty thirty, you know,

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Speaker 3: we need to have a forty percent reduction of emissions

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Speaker 3: from a baseline in you know, two thousand and eight, right,

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Speaker 3: and so you're constantly running all of these trajectories. And

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Speaker 3: one of the things I didn't talk about yet, we

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Speaker 3: were able to work with oil company Shell during COVID

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Speaker 3: and they contracted some fabulous you know VLCC berths for

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Speaker 3: LNG powered vlccs, very large crude carriers, and we're now

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Speaker 3: operating those on the water and Shell is fully operating

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Speaker 3: them on LNG. So this is LNG for US is

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Speaker 3: considered a transition fuel and we'll take those vessels lives

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Speaker 3: well into the twenty forties. If you look at our

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Speaker 3: existing fleet we now have and you know, I think

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Speaker 3: for this year it's twelve to fifteen million of green spent.

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Speaker 3: Where you're really putting on every efficiency improvement as our

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Speaker 3: vessels go into dry doct that you can find, right,

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Speaker 3: So anything to reduce you know, mavis ducks that reduce

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Speaker 3: your wake, the churn in the water, and increase your efficiency,

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Speaker 3: slick paints on the hull, you know, constantly monitoring, very

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Speaker 3: live monitoring. For example, with those vs we have thousands

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Speaker 3: of sensors on board and that's all being transmitted live

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Speaker 3: to the office and you can see live time. Now,

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Speaker 3: how do you improve the performance of the vessel. Maybe

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Speaker 3: you have to stop the vessel and clean the hull

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Speaker 3: because you can kind of get an aquarium on a vessel,

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Speaker 3: particularly if they are anchored for a period of time

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Speaker 3: for customer and tropical waters. So all of these measures

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Speaker 3: are being taken, and you know, we for the new

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Speaker 3: building ships that we're building, we've spent an extra around

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Speaker 3: a million dollars to strengthen the deck.

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Speaker 2: We're doing conventional fuel.

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Speaker 3: And they're ready to accommodate the LNG conversion, and we

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Speaker 3: made that project bear that cost when we're looking at

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Speaker 3: the just kind of cash flow to say, hey, this

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Speaker 3: vessel will not operate for the life of this tanker

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Speaker 3: in this form, so we're going to put on those

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Speaker 3: extra big generators and make sure that that vessel is

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Speaker 3: ready to be converted, say at its first major overhaul

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Speaker 3: in five years to LNG dual fuel. We didn't do

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Speaker 3: the LNG dual fuel because it's not one hundred percent

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Speaker 3: clear yet. The LERNG for the largest ships is kind

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Speaker 3: of fantastic because we need bunkers and the vlccs, the

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Speaker 3: biggest ships in the world have the smallest myriad of roots.

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Speaker 2: So you're either loading in the.

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Speaker 3: You know, US golf, you're loading in the Middle East,

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Speaker 3: and you're discharging, so you're always passing Singapore fou gyro

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Speaker 3: or you may be in the US, you're you're you know,

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Speaker 3: you could find our product carriers and do find.

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Speaker 2: Them all over the world where you're not necessarily going

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Speaker 2: to have that availability. So you know, is it L

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Speaker 2: and G.

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Speaker 3: Yes, is it methanol yes, is it ammonia yes.

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Speaker 2: It seems that it's a.

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Speaker 3: Multi fuel future for the oil tanker industry, which prevents

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Speaker 3: you know, presents opportunities for.

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Speaker 1: Us, right and from getting from here to twenty fifty.

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Speaker 1: I mean, it's not as easy as some people might

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Speaker 1: want the industry to think because of the availability of

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Speaker 1: fuels and all that stuff. So are you guys are

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Speaker 1: you would you say that you're waiting to see others

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Speaker 1: lead the charts just to make sure which technology is

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Speaker 1: the best technology for international seaways, or would you say

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Speaker 1: you're kind of more leading the charge in terms of

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Speaker 1: you know, we're going with methane and that's what we're

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Speaker 1: going to be doing.

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Speaker 2: You know, you've seen all the big container lines, you know,

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Speaker 2: come out and go with methanol, and then which we've

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Speaker 2: never had to do, they're building the bunker supply chain

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Speaker 2: so that they can go to the gas station and

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Speaker 2: get gassed up. Right.

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Speaker 3: So you know, as we see expensive very and as

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Speaker 3: you see these b A muths, you know, undertaking those challenges.

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Speaker 3: So you know, we have a sustainability department with engineers

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Speaker 3: that are really looking at Okay.

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Speaker 2: One thing that's constantly evolving.

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Speaker 3: Okay, we're going to put sales on board tankers, right,

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Speaker 3: and so is that a three percent efficiency improvement?

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Speaker 2: Is that ten percent?

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Speaker 3: Who's going to break out with the tech and have

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Speaker 3: the efficacy and then you're going to cut that way?

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Speaker 3: You know, So you're trying to be a fast follower, right,

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Speaker 3: But I do believe that there is and we need more.

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Speaker 3: But there is a lot of talent in our industry,

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Speaker 3: you know, in the classification societies, in all of our

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Speaker 3: tech people, the engineers that know the ins and out

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Speaker 3: of making the world shipping fleet as efficient as possible.

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Speaker 1: It'll be interesting to watch transition. That's that's that's for sure.

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Speaker 1: You know, we were talking about supply for a while

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Speaker 1: and going back to demand. I mean, one of the

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Speaker 1: positives for demand, as you know, you know, which I

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Speaker 1: want to hear more about, is all the dislocations in

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Speaker 1: supply chain, whether it's you know, Russia's war in Ukraine,

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Speaker 1: what's going on in the Red Sea or low water

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Speaker 1: water levels in Panama. Can you talk about how that's

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Speaker 1: impacted your fleet and maybe like the ton miles that

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Speaker 1: you guys travel.

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Speaker 3: Right, So I go back to you know, the really

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Speaker 3: the recovery from COVID, because that set up the situation

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Speaker 3: where world inventories came down and where you know, consumption

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Speaker 3: was going up. That line crosses and you started to

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Speaker 3: see some you know improvement in the fundamentals in end

293
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Speaker 3: to twenty one, mostly early twenty two, and then you

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Speaker 3: see the war Russia with Ukraine, and in particular that's

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Speaker 3: been you know, a massive impact on the tanker market

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Speaker 3: because the largest producers of oil in the world, United States,

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Speaker 3: Saudi Russia. Right, you know who's in the lead, it's

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Speaker 3: it's in any particular day, right, So for Russia no

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Speaker 3: longer to be able to put crude oil into Europe,

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Speaker 3: nor crude you know product refined product into Europe.

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Speaker 2: Yes, well we have. We have not been loading Russian

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Speaker 2: barrels since the.

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Speaker 3: Start of the war, which which was a decision that

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Speaker 3: was kind of unique at the time because uh, in

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Speaker 3: a way that was self selected, right, That wasn't mandated

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Speaker 3: legally that you couldn't load Russian barrels. And but it

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Speaker 3: was a decision that we took at the board level,

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Speaker 3: and there was a lot of input from uh, you know,

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Speaker 3: senior people because in the in the beginning you're like, okay,

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Speaker 3: you know, well how long you know, we would have

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Speaker 3: no idea this would be so sustained. Right, So Russia

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Speaker 3: is now putting their crude oil selling it, you know,

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Speaker 3: a lot to India, a lot to China, and then

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Speaker 3: a lot to product to South America. So I'm going

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Speaker 3: to Turkey, you know, et cetera. Right, So what this

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Speaker 3: means is that Europe haths to pull in crude and product.

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Speaker 3: So Europe's been pulling in crude, a lot of it

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Speaker 3: from the Western Hemisphere and this has really put an

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Speaker 3: underpinning of strong rates for international seaways on our sews maxis,

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Speaker 3: our mid size crude, our afromaxis, our panemaxis, and then

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Speaker 3: on the product side, it has it very immediately was

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Speaker 3: a very big impact on those vessels. So the vlccs

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Speaker 3: are kind of now becoming you know, into focus as okay, everyone,

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Speaker 3: you know, they've been decent.

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Speaker 2: But it looks like they'll break out to the upside.

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Speaker 3: Why because you have China coming back stronger now, increasing demand.

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Speaker 1: And then so you know the impact of the the

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Speaker 1: Suez Canal. How big of an impact has that been

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Speaker 1: on your fleet? I'm assuming you're of avoiding the Suez Canal.

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Speaker 3: So you know, the way that I'll talk about that

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Speaker 3: is you know essentially that you know the first thing

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Speaker 3: and in mid December, you know, we were on calls

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Speaker 3: with Central Command, and you know, it's really a blessing

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Speaker 3: that safety of your seafares and your assets really comes

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Speaker 3: to the fore, and everybody is looking at it not

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Speaker 3: from an economic perspective, but from a pure safety perspective.

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Speaker 2: And we work with.

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Speaker 3: Central Command, we work with the oil companies, we work

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Speaker 3: with our insurance companies, and you know, we made the

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Speaker 3: decision to be best to be safe in these situations.

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Speaker 2: And that's kind of where I will leave that, because

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Speaker 2: we would like to be very circumspect.

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Speaker 3: You can imagine of our vessels and our sailors that

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Speaker 3: are out there on the point end of getting everything

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Speaker 3: done for us. But I would say that you know,

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Speaker 3: if you can imagine, you know you have to go

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Speaker 3: around the cape. This now starts to be on top

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Speaker 3: of the disruptions from the Russian War. Now you have

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Speaker 3: additional disruption.

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Speaker 2: Right.

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Speaker 3: So I think our market is very efficient, and the

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Speaker 3: oil traders and the oil companies very quickly scramble and

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Speaker 3: will source crude and product from the most efficient place

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Speaker 3: that they can. But you know, largely people are then, yes,

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Speaker 3: going around the capes, right. And even you asked about

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Speaker 3: the Panama Canal. To me, the Panama Canal was you know,

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Speaker 3: maybe a percent or something. You know, it was like

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Speaker 3: an extra bit of disruption on top of everything else.

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Speaker 3: But we did have vessels that transit it, you know,

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Speaker 3: the cape instead of going through the Panama Canal, which

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Speaker 3: is you know, really you know, really an extreme situation.

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Speaker 3: You're really seeing the Panama Canal largely moderated. Our guys

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Speaker 3: were down there ten days ago and it was raining

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Speaker 3: all the time, right, So it looks like, yeah, the

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Speaker 3: switch in the Ninas is making it so that that

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Speaker 3: draft will be restored. We have a particular are PanAm

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Speaker 3: axis that go through there and trade back and forth

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Speaker 3: between the Americas. There's two Panama Canals, the old one

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Speaker 3: and the new one. The new one is stretched because

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Speaker 3: it largely accommodates large container vessels gas carriers, and it

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Speaker 3: kind of shoves a little bit of the tanker business.

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Speaker 2: Down to the old canal.

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Speaker 3: So you know that's also a factor where you see

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Speaker 3: these canals being fully utilized in Panama by the ever

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Speaker 3: growing trade.

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Speaker 1: And which do you think has been more disruptive or

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Speaker 1: more add more of an impact on the tanker market,

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Speaker 1: not just international seawaye but the market in general. Was

379
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Speaker 1: is it the Russia's war with Ukraine or is it

380
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Speaker 1: the Suez Canal closure? But some people avoiding, most ships

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Speaker 1: avoiding the area.

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Speaker 2: I would start with the base of Russia. Yeah, and then.

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Speaker 3: Just in the order kind of in which things happened actually, right,

384
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Speaker 3: so the base really disruption comes from from Russia. And

385
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Speaker 3: then on top of that is just all this geopolitical

386
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Speaker 3: tension worldwide that's you know, putting our seafares in danger.

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Speaker 1: Yeah, it's one terrible black Swan event after the next.

388
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Speaker 1: It seems you know, you did mention China. Can you

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Speaker 1: talk a little bit about China? Obviously China is a

390
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Speaker 1: large importer of crude and refined products. What are the

391
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Speaker 1: major trades with China as it relates to the tanker market,

392
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Speaker 1: like where are they sourcing their crude and crewe related

393
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Speaker 1: products from.

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Speaker 3: Absolutely so you know China, you know, runs their refineries.

395
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Speaker 3: They now have somewhere, you know, fifteen more than fifteen,

396
00:22:41,640 --> 00:22:45,160
Speaker 3: probably around sixteen million barrels a day of refining capacity,

397
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Speaker 3: and that's kind of neck and neck a little bit

398
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Speaker 3: with the United States. And you know, they're they're strategic.

399
00:22:52,760 --> 00:22:55,959
Speaker 3: You know, they're they've largely built their refineries so that

400
00:22:56,400 --> 00:22:59,840
Speaker 3: they're not captive to bring in product. They can import

401
00:23:00,240 --> 00:23:04,119
Speaker 3: from all over the world, refine it and then distribute

402
00:23:04,160 --> 00:23:09,439
Speaker 3: that and they sometimes are even exporting product, right, so

403
00:23:09,480 --> 00:23:12,240
Speaker 3: they at times end up as a product exporter to

404
00:23:12,280 --> 00:23:16,240
Speaker 3: the world. But they have around four million barrels a

405
00:23:16,320 --> 00:23:19,760
Speaker 3: day of their own production, but they're importing I think

406
00:23:19,840 --> 00:23:22,160
Speaker 3: last month it was like eleven million barrels a day, right,

407
00:23:22,280 --> 00:23:27,359
Speaker 3: So the largest crude oil importer in the world. So

408
00:23:27,600 --> 00:23:30,280
Speaker 3: very important you know how their economy is doing and

409
00:23:30,320 --> 00:23:33,280
Speaker 3: how that flows through and affects us in the oil

410
00:23:33,320 --> 00:23:36,720
Speaker 3: tanker business. And I think the world at large more

411
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Speaker 3: than most people realize.

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Speaker 1: Right, So international seaways is a pretty diverse portfolio of

413
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Speaker 1: vessels on the like as you mentioned on the product

414
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Speaker 1: side and the crew side. Is there one sub segment

415
00:23:48,200 --> 00:23:52,159
Speaker 1: of those vessel types that are doing better than others,

416
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Speaker 1: like are you know, or VLCC is doing better, or

417
00:23:56,000 --> 00:23:58,719
Speaker 1: L one is doing better? You know what is what

418
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Speaker 1: has been the strongest of late.

419
00:24:01,720 --> 00:24:04,280
Speaker 3: So the for the last couple of years really are

420
00:24:04,520 --> 00:24:07,879
Speaker 3: MR fleet, which is those fifty thousand tonters that are

421
00:24:07,880 --> 00:24:10,880
Speaker 3: bringing three hundred thousand barrels is ish you know, of

422
00:24:11,280 --> 00:24:14,080
Speaker 3: refined product around the world, and if you think about it,

423
00:24:14,320 --> 00:24:17,120
Speaker 3: they have performed the best, you know, as far as

424
00:24:17,160 --> 00:24:19,959
Speaker 3: for their size, and if you think about it, you know,

425
00:24:20,119 --> 00:24:22,680
Speaker 3: as soon as there is a geopolitical impact.

426
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Speaker 2: In the world, you know, you want product.

427
00:24:26,080 --> 00:24:28,439
Speaker 3: You know, crude is part of a chain, sure, but

428
00:24:28,720 --> 00:24:30,520
Speaker 3: it's it's nice if you can get the products right

429
00:24:30,560 --> 00:24:32,960
Speaker 3: in and you go right to the use right So

430
00:24:33,000 --> 00:24:36,040
Speaker 3: the product carriers have really been the superstars, and we

431
00:24:36,080 --> 00:24:38,680
Speaker 3: look for that to continue and then it would flow

432
00:24:38,800 --> 00:24:41,320
Speaker 3: right up the chain. In the mid crude sector, you

433
00:24:41,320 --> 00:24:45,960
Speaker 3: know our panamaxis, our afromaxis, SUSM maxis and then the

434
00:24:46,080 --> 00:24:48,800
Speaker 3: vs have been solid, but again we look for those

435
00:24:48,880 --> 00:24:52,440
Speaker 3: to continue to strengthen as we go into the backside

436
00:24:52,440 --> 00:24:55,760
Speaker 3: of twenty twenty four. You know everyone's watching, okay, well,

437
00:24:55,760 --> 00:25:01,480
Speaker 3: OPEC plus now increase their crew, increase their crude exports

438
00:25:02,200 --> 00:25:04,359
Speaker 3: in the second half of twenty twenty four. And if

439
00:25:04,400 --> 00:25:07,679
Speaker 3: they do that, then that's additional barrels on the water.

440
00:25:07,800 --> 00:25:10,000
Speaker 3: And they may not do that here in June, but

441
00:25:10,080 --> 00:25:14,720
Speaker 3: we think that there's enough oil demand increase in twenty

442
00:25:14,760 --> 00:25:17,320
Speaker 3: twenty four that the OPEC will come to market with

443
00:25:17,359 --> 00:25:19,120
Speaker 3: additional barrels before the end of the year.

444
00:25:19,720 --> 00:25:21,359
Speaker 1: And just so if I heard you correctly, So the

445
00:25:21,440 --> 00:25:24,280
Speaker 1: smaller ships are doing better just because they're more versatile

446
00:25:24,320 --> 00:25:26,320
Speaker 1: and they can go to a lot more different ports

447
00:25:26,320 --> 00:25:27,600
Speaker 1: than maybe the larger ones.

448
00:25:28,000 --> 00:25:31,719
Speaker 3: I mean, you know, I would say that it's you know,

449
00:25:31,760 --> 00:25:36,680
Speaker 3: on the middle crude they've done particularly well. If you're

450
00:25:36,760 --> 00:25:40,240
Speaker 3: trying to bring crude oil into Russia, you know, instead

451
00:25:40,240 --> 00:25:44,399
Speaker 3: of bringing it on a VLCC, you can't go through

452
00:25:44,800 --> 00:25:47,320
Speaker 3: the Sewics Canal fully laden, right, so you would if

453
00:25:47,320 --> 00:25:49,760
Speaker 3: you were fully loaded, you'd either shoot it through the

454
00:25:49,760 --> 00:25:53,760
Speaker 3: pipeline there or go around the cape and bring it up.

455
00:25:53,840 --> 00:25:57,760
Speaker 2: It's it's just more the ports are more designed.

456
00:25:57,320 --> 00:26:01,119
Speaker 3: For the mid crude, and then you also have a

457
00:26:01,119 --> 00:26:05,320
Speaker 3: lot of non OPEC, increased productions coming from the Americas,

458
00:26:05,560 --> 00:26:10,800
Speaker 3: United States, Canada, Brazil, Guana, they're all increasing production and

459
00:26:11,240 --> 00:26:15,399
Speaker 3: on these mid sized crewed vessels that's carrying that into Europe.

460
00:26:15,720 --> 00:26:18,159
Speaker 3: So you're seeing them be strong. And then on the

461
00:26:18,200 --> 00:26:22,080
Speaker 3: product carriers, you know, when you are trying, you know,

462
00:26:22,119 --> 00:26:25,639
Speaker 3: Europe is short product and you're bringing it in very often.

463
00:26:25,680 --> 00:26:28,200
Speaker 3: That may come from the United States on an MR,

464
00:26:28,600 --> 00:26:31,520
Speaker 3: it may come on a mid size clean vessel from

465
00:26:31,520 --> 00:26:34,840
Speaker 3: the Middle East, So that has really driven our market.

466
00:26:35,240 --> 00:26:37,000
Speaker 1: Can you talk about the mix of business at the

467
00:26:37,000 --> 00:26:40,240
Speaker 1: international sea ways in terms of contract versus spot Where

468
00:26:40,240 --> 00:26:41,000
Speaker 1: do you guys play?

469
00:26:41,760 --> 00:26:44,720
Speaker 3: So, you know, we look at you know, right now,

470
00:26:44,720 --> 00:26:47,440
Speaker 3: our markets are very strong, so we're not too keen

471
00:26:47,600 --> 00:26:50,439
Speaker 3: to lock up a time charter or fixed revenue for

472
00:26:50,520 --> 00:26:53,840
Speaker 3: one year. We've done some selective We have about fifteen

473
00:26:53,880 --> 00:26:59,160
Speaker 3: percent of our tankers on three year charters and when

474
00:26:59,200 --> 00:27:02,240
Speaker 3: we see you know, a return that's well above long

475
00:27:02,359 --> 00:27:05,800
Speaker 3: term averages and provides a solid return for international seaways,

476
00:27:06,080 --> 00:27:10,080
Speaker 3: we might lock into something for three years and we

477
00:27:10,119 --> 00:27:14,440
Speaker 3: work with oil traders, oil companies and develop those relationships

478
00:27:14,480 --> 00:27:16,199
Speaker 3: and then the remainder of the fleet is on the

479
00:27:16,200 --> 00:27:16,879
Speaker 3: spot market.

480
00:27:17,440 --> 00:27:21,080
Speaker 1: So the overwhelming majority is on is on the spot.

481
00:27:21,080 --> 00:27:23,200
Speaker 1: You know, you're you were mentioning earlier. You know in

482
00:27:23,440 --> 00:27:28,720
Speaker 1: LNG VLCC enabled ship that you have with that you're

483
00:27:28,920 --> 00:27:32,280
Speaker 1: that you're working with Shell. So does are those the

484
00:27:32,359 --> 00:27:35,160
Speaker 1: kind of longer term contracts that you have when you're

485
00:27:35,240 --> 00:27:39,520
Speaker 1: like making this additional investment in an alternative fuel.

486
00:27:39,840 --> 00:27:40,600
Speaker 2: Yes, that's great.

487
00:27:40,600 --> 00:27:43,560
Speaker 3: You know, we're always looking to expand on that base

488
00:27:43,640 --> 00:27:47,320
Speaker 3: of opportunities to work with. It's in a way like

489
00:27:47,440 --> 00:27:51,399
Speaker 3: a bit of a decommoditization of the tanker industry and

490
00:27:51,480 --> 00:27:54,760
Speaker 3: try to work with an oil company, partner, customers and

491
00:27:54,840 --> 00:27:59,959
Speaker 3: say okay, you know, let's let's together make this technological investment.

492
00:28:00,800 --> 00:28:03,560
Speaker 3: And that helps us as an owner. So those are

493
00:28:03,600 --> 00:28:06,640
Speaker 3: seven year deals with Shell. That helps us as an

494
00:28:06,680 --> 00:28:11,399
Speaker 3: owner to d risk making that investment. You know, if

495
00:28:11,400 --> 00:28:15,320
Speaker 3: you're going to make a VLCC dual fuel today, you

496
00:28:15,359 --> 00:28:17,639
Speaker 3: know when we ordered these vessels, we.

497
00:28:17,640 --> 00:28:19,320
Speaker 2: Took delivery of them at one hundred million.

498
00:28:19,400 --> 00:28:22,480
Speaker 3: Under one hundred million today to order the same vessel

499
00:28:23,160 --> 00:28:26,320
Speaker 3: could be close to one thirty. Oh well, and you

500
00:28:26,359 --> 00:28:28,840
Speaker 3: want to put the LNG capability on, it's another twenty.

501
00:28:29,640 --> 00:28:36,280
Speaker 3: So you can see these are really big investments in technology,

502
00:28:36,440 --> 00:28:40,160
Speaker 3: and it really helps owners to defray that to work

503
00:28:40,200 --> 00:28:41,200
Speaker 3: with the customer very.

504
00:28:41,040 --> 00:28:43,680
Speaker 1: Closely and when you buy a new ship. And I

505
00:28:43,760 --> 00:28:46,400
Speaker 1: know every deal is different, but roughly speaking, you know,

506
00:28:46,480 --> 00:28:49,600
Speaker 1: how much is finance versus what you guys are paying

507
00:28:49,680 --> 00:28:50,560
Speaker 1: down in cash?

508
00:28:50,880 --> 00:28:54,480
Speaker 3: You know, in today's finance markets, it's you know, again,

509
00:28:54,560 --> 00:28:56,920
Speaker 3: asset values are fairly high, so it's kind of a

510
00:28:57,000 --> 00:28:57,720
Speaker 3: fifty to fifty.

511
00:28:58,240 --> 00:29:00,480
Speaker 2: If you have a specific.

512
00:29:00,240 --> 00:29:03,280
Speaker 3: Long term contract with a very high credit counter party

513
00:29:04,160 --> 00:29:06,120
Speaker 3: such a shell, you know, you may get that up

514
00:29:06,120 --> 00:29:09,560
Speaker 3: to a very high percentage, right, And then you look

515
00:29:09,600 --> 00:29:12,560
Speaker 3: at that in the context of your overall portfolio and

516
00:29:13,000 --> 00:29:15,000
Speaker 3: where you want your debt ratios to be.

517
00:29:15,280 --> 00:29:17,600
Speaker 1: And can you share any long term or near term

518
00:29:17,680 --> 00:29:20,400
Speaker 1: targets that you have for the company or the management team.

519
00:29:20,400 --> 00:29:22,880
Speaker 3: As for the company, no, absolutely, you know, we want

520
00:29:22,880 --> 00:29:26,880
Speaker 3: to continue to you know, pivot into the sustainable future,

521
00:29:27,000 --> 00:29:32,600
Speaker 3: and so we will look increasingly to increase that decarbonization

522
00:29:32,760 --> 00:29:37,160
Speaker 3: spend and projects. So I think that's very important. You know,

523
00:29:37,360 --> 00:29:40,040
Speaker 3: we are balanced, you know, so we have both crud

524
00:29:40,080 --> 00:29:42,720
Speaker 3: and product. We think that has made us very strong

525
00:29:42,880 --> 00:29:44,560
Speaker 3: over the last couple of years, and we will look

526
00:29:44,600 --> 00:29:49,080
Speaker 3: to continue to high grade, upgrade our fleet and grow

527
00:29:49,640 --> 00:29:50,560
Speaker 3: in that context.

528
00:29:50,840 --> 00:29:55,680
Speaker 1: Okay, and what is the use of I guess capital

529
00:29:55,800 --> 00:29:58,640
Speaker 1: priorities for the company. Is it dividends buybacks?

530
00:29:59,400 --> 00:30:01,600
Speaker 3: So right now now, you know, if you go back LTM,

531
00:30:01,680 --> 00:30:04,760
Speaker 3: you know, last twelve months, we've returned over thirteen percent

532
00:30:05,000 --> 00:30:07,000
Speaker 3: in dividends to our shareholders and.

533
00:30:06,960 --> 00:30:08,200
Speaker 2: We're continuing on that trend.

534
00:30:08,680 --> 00:30:12,880
Speaker 3: We just declared a dividend four in June that represents

535
00:30:13,320 --> 00:30:17,120
Speaker 3: sixty percent of our net income. And what I think

536
00:30:17,240 --> 00:30:19,480
Speaker 3: is one of the differentiators with sea Ways is that

537
00:30:19,520 --> 00:30:23,640
Speaker 3: we've been able to do that as well as invest

538
00:30:24,720 --> 00:30:29,320
Speaker 3: in new building vessels. So we've invested half a billion

539
00:30:29,360 --> 00:30:33,720
Speaker 3: dollars in secondhand vessels that we brought in new buildings,

540
00:30:33,760 --> 00:30:37,800
Speaker 3: and we paid down in addition to our normal amortization,

541
00:30:37,960 --> 00:30:41,440
Speaker 3: over three hundred million in debt in twenty twenty three.

542
00:30:41,960 --> 00:30:46,200
Speaker 3: So now we're in this wonderful place of having seventeen

543
00:30:46,240 --> 00:30:51,760
Speaker 3: percent net leverage, having you know, returning to shareholders thirteen percent,

544
00:30:52,400 --> 00:30:55,760
Speaker 3: and investing in the future by renewing our fleet. So

545
00:30:55,760 --> 00:30:58,800
Speaker 3: we're really able to hit on every capital allocation tenant.

546
00:30:59,040 --> 00:31:00,840
Speaker 1: And is that sixty percent a net income that you

547
00:31:00,880 --> 00:31:03,440
Speaker 1: gave in dividends. Is that a stated target or it

548
00:31:03,560 --> 00:31:04,440
Speaker 1: moves it?

549
00:31:04,840 --> 00:31:07,360
Speaker 2: You know, we have done that now three quarters in

550
00:31:07,360 --> 00:31:07,680
Speaker 2: a row.

551
00:31:07,800 --> 00:31:13,000
Speaker 1: Okay, all right. You lead a very challenging business with

552
00:31:13,080 --> 00:31:15,680
Speaker 1: a lot of you know, risks associated with it. You

553
00:31:15,720 --> 00:31:18,600
Speaker 1: know what kind of what keeps you up at night

554
00:31:18,760 --> 00:31:21,200
Speaker 1: when you're you know, about to go to sleep and

555
00:31:21,240 --> 00:31:22,840
Speaker 1: thinking about the business.

556
00:31:23,480 --> 00:31:28,240
Speaker 3: You know, I think that the key focus is always,

557
00:31:28,360 --> 00:31:30,520
Speaker 3: you know, making sure that we're running a safe operation,

558
00:31:30,880 --> 00:31:34,479
Speaker 3: that our ships are performing well, that we're delivering energy,

559
00:31:34,520 --> 00:31:38,320
Speaker 3: we're delivering the oil for our customers, and that they

560
00:31:38,360 --> 00:31:40,880
Speaker 3: don't have to think about us. Right, So if we

561
00:31:40,960 --> 00:31:43,680
Speaker 3: worry about that, then they hopefully not have to worry

562
00:31:43,720 --> 00:31:44,080
Speaker 3: about that.

563
00:31:44,760 --> 00:31:47,040
Speaker 1: So you started your career, you know, coming from the

564
00:31:47,080 --> 00:31:50,920
Speaker 1: Merchant Marine Academy. What what made you decide like that's

565
00:31:51,000 --> 00:31:53,040
Speaker 1: the career I want as a I don't know. I

566
00:31:53,040 --> 00:31:55,680
Speaker 1: it's an eighteen year old young lady.

567
00:31:56,480 --> 00:32:00,440
Speaker 3: You know, this country is blessed with the academy system.

568
00:32:00,520 --> 00:32:03,400
Speaker 2: And I'm the youngest of eight kids.

569
00:32:03,440 --> 00:32:05,480
Speaker 3: So my brother's two years older than me, and we

570
00:32:05,480 --> 00:32:10,360
Speaker 3: were coming from a dairy farm and the opportunity to

571
00:32:11,040 --> 00:32:13,480
Speaker 3: go to the Merchant Marine Academy was incredible.

572
00:32:13,480 --> 00:32:15,040
Speaker 2: And it opened up the entire world.

573
00:32:15,080 --> 00:32:16,400
Speaker 1: So let me just ask you what to do we

574
00:32:16,480 --> 00:32:18,120
Speaker 1: led the way. Were you on a dairy farm like

575
00:32:18,240 --> 00:32:20,400
Speaker 1: Landlock somewhere in the United States or were you Iowa?

576
00:32:20,600 --> 00:32:22,840
Speaker 2: Iowa? So, I mean we had the Mississippi. But that's

577
00:32:22,840 --> 00:32:26,760
Speaker 2: a stretch, right, that's a stretch, you know. So being

578
00:32:26,800 --> 00:32:29,480
Speaker 2: able to go to the academy, it was just amazing.

579
00:32:29,560 --> 00:32:31,480
Speaker 3: And then as a cadet at the merchan A Marine Academy,

580
00:32:31,520 --> 00:32:35,080
Speaker 3: you go out for three hundred days to see and

581
00:32:35,200 --> 00:32:38,080
Speaker 3: you know, I'm sitting in Ethiopia with another kid that's

582
00:32:38,200 --> 00:32:43,360
Speaker 3: eighteen years old, and you think, wow, how blessed we

583
00:32:43,400 --> 00:32:48,160
Speaker 3: are right with our opportunities'.

584
00:32:46,960 --> 00:32:50,080
Speaker 1: That's pretty cool. So your older brother led the way?

585
00:32:50,320 --> 00:32:50,600
Speaker 2: Yes?

586
00:32:50,760 --> 00:32:53,360
Speaker 1: Is he still in the Industry's.

587
00:32:52,760 --> 00:32:56,760
Speaker 3: He works at ge Vernova and he runs North America

588
00:32:56,840 --> 00:33:00,240
Speaker 3: sales power systems, right, So I find it interesting he

589
00:33:00,320 --> 00:33:03,400
Speaker 3: and I are both in industrial things, right. So you

590
00:33:03,400 --> 00:33:05,280
Speaker 3: think it has nothing to do with shipping, but it's

591
00:33:05,320 --> 00:33:08,720
Speaker 3: a very industrial business. You know, you're making things happen.

592
00:33:08,760 --> 00:33:11,960
Speaker 3: It's infrastructure is getting you know, getting things done.

593
00:33:12,640 --> 00:33:15,480
Speaker 1: And do you have like a book that you've read recently,

594
00:33:15,520 --> 00:33:19,240
Speaker 1: whether it's on shipping or you know, leadership that kind

595
00:33:19,240 --> 00:33:20,640
Speaker 1: of really struck a chord with.

596
00:33:20,600 --> 00:33:24,400
Speaker 3: You if you know nothing about this shipping industry and

597
00:33:24,440 --> 00:33:28,200
Speaker 3: you read the prize, or even just if you want

598
00:33:28,200 --> 00:33:30,200
Speaker 3: to cheat, watch the documentary series.

599
00:33:30,880 --> 00:33:31,680
Speaker 2: It is really.

600
00:33:31,440 --> 00:33:33,880
Speaker 3: Amazing that was written by Daniel Jurgen and it is

601
00:33:33,920 --> 00:33:38,719
Speaker 3: a primer soup to nuts on shipping, which is mostly

602
00:33:38,760 --> 00:33:41,520
Speaker 3: it's oil, but it's also shipping in there, right, and

603
00:33:41,560 --> 00:33:44,920
Speaker 3: the evolution of you know, you need to understand and

604
00:33:44,960 --> 00:33:47,560
Speaker 3: know the markets that you're in. And then I would

605
00:33:47,600 --> 00:33:51,880
Speaker 3: say I really was fascinated by the Malcolm Gladwell books,

606
00:33:52,080 --> 00:33:56,760
Speaker 3: the whole series of them, because you know, there were

607
00:33:56,760 --> 00:33:59,080
Speaker 3: two things that I really took away. One is the

608
00:33:59,120 --> 00:34:02,760
Speaker 3: ten thousand hours and if you work forty hours a week,

609
00:34:02,840 --> 00:34:05,360
Speaker 3: you know, that's like five years.

610
00:34:05,400 --> 00:34:07,200
Speaker 2: If you work eighty hours a week, it's the only

611
00:34:07,240 --> 00:34:07,880
Speaker 2: two and a half.

612
00:34:07,920 --> 00:34:10,080
Speaker 3: And so you know, you really see how if you

613
00:34:10,200 --> 00:34:13,439
Speaker 3: love something and you dig in, you know, we say

614
00:34:13,440 --> 00:34:15,759
Speaker 3: we're always you know, you open your eyes in the

615
00:34:15,760 --> 00:34:19,040
Speaker 3: morning and everything that we're reading affects us in this business,

616
00:34:19,760 --> 00:34:24,840
Speaker 3: whether that's a tsunami somewhere, you know, it is geopolitics

617
00:34:24,840 --> 00:34:28,120
Speaker 3: in the tanker industry, in the shipping industry were very affected.

618
00:34:27,760 --> 00:34:28,680
Speaker 2: By everything going on.

619
00:34:29,200 --> 00:34:31,680
Speaker 3: And the other one he talks about in the Outsiders,

620
00:34:31,719 --> 00:34:38,880
Speaker 3: how you need opportunity. Sure, and the same individual, you know,

621
00:34:39,040 --> 00:34:43,440
Speaker 3: given an opportunity, will be you know, it's not just

622
00:34:44,360 --> 00:34:47,800
Speaker 3: personality and hard work. All of that's so incredibly important,

623
00:34:47,840 --> 00:34:49,960
Speaker 3: and then you need opportunity. So I just find those

624
00:34:49,960 --> 00:34:51,680
Speaker 3: books to be really kind of stimulating.

625
00:34:51,800 --> 00:34:54,200
Speaker 1: Absolutely. I like the ten thousand hour one. I always

626
00:34:54,200 --> 00:34:56,919
Speaker 1: tell my son that h exactly he needs to practice.

627
00:34:56,560 --> 00:34:58,879
Speaker 3: And he's opposed to be an excellent piano player with

628
00:34:59,000 --> 00:34:59,640
Speaker 3: like ten minutes.

629
00:34:59,680 --> 00:35:04,320
Speaker 1: Yea exactly. Well, well, Lowis, I really really appreciate your time.

630
00:35:04,840 --> 00:35:07,760
Speaker 1: This was a great conversation. I've learned a lot about

631
00:35:07,760 --> 00:35:10,799
Speaker 1: the tanker industry and international seaways. So thanks so much.

632
00:35:11,200 --> 00:35:14,839
Speaker 2: We're very grateful INNSW to be here and be able

633
00:35:14,840 --> 00:35:15,360
Speaker 2: to speak with you.

634
00:35:15,400 --> 00:35:17,160
Speaker 1: Thank you very much, Lee, all right, and thanks for

635
00:35:17,200 --> 00:35:19,320
Speaker 1: tuning in. If you liked the episode, please subscribe and

636
00:35:19,400 --> 00:35:21,840
Speaker 1: leave a review. We've lined up a number of great

637
00:35:21,880 --> 00:35:24,640
Speaker 1: guests for the podcast. Check back to hear conversations with

638
00:35:24,680 --> 00:35:28,239
Speaker 1: C suite executives, shippers, regulators, and decision makers within the

639
00:35:28,239 --> 00:35:30,400
Speaker 1: freight markets. Also, if you have an idea for a

640
00:35:30,440 --> 00:35:32,840
Speaker 1: future episode, Please hit me up on the Bloomberg terminal

641
00:35:33,160 --> 00:35:35,799
Speaker 1: or on Twitter at logistics Lee. Thanks everyone, Take care,