WEBVTT - MPC Container Ships Bets on Feeder Fleets 0:00:07.880 --> 0:00:10.560 Hi everyone, this is Lee Klasko when We're Talking Transports. 0:00:10.640 --> 0:00:13.920 Welcome to Bloomberg Intelligence Talking Transports podcast. I'm your host, 0:00:14.040 --> 0:00:16.680 Lee Klascowseed to create transportation lot'g just extend on us 0:00:16.720 --> 0:00:20.279 a Bloomberg Intelligence, Bloomberg's in house research arm. Before we 0:00:20.320 --> 0:00:22.720 get started, a quick favor. If you enjoy the podcast, 0:00:22.720 --> 0:00:25.280 please subscribe, share it and leave a review, and also 0:00:25.520 --> 0:00:28.800 tell a friend. Your support helps us continue bringing industry 0:00:28.840 --> 0:00:32.479 leaders and insightful conversations to you. And if you like 0:00:32.560 --> 0:00:35.120 to connect, you can find me on the Bloomberg terminal, 0:00:35.159 --> 0:00:38.080 on LinkedIn or on ax at Logistics. Late Today, we're 0:00:38.159 --> 0:00:40.959 joined by Maurice Furman, who currently serves as the co 0:00:41.080 --> 0:00:45.879 CEO and CFO of MPC Container Ships, where since April 0:00:45.960 --> 0:00:48.520 twenty twenty four. He joined the company in twenty twenty 0:00:48.520 --> 0:00:53.960 two as CFO. Prior to MPCC MARI, he's worked at 0:00:54.000 --> 0:00:57.960 London based Hafen Capital Management, where he served as principal 0:00:57.960 --> 0:01:01.840 and the maritime team. PC Container Ships is listed on 0:01:01.880 --> 0:01:05.960 the Aslo Stock Exchange under the ticker MPCC and has 0:01:06.000 --> 0:01:08.759 a market cap of a little over one point two 0:01:08.880 --> 0:01:12.600 billion or ease. Thank you for joining us on Talking transports. 0:01:12.800 --> 0:01:14.720 Thank you very much, Lee, happy to be on. 0:01:14.880 --> 0:01:19.119 So you became the co CEO and after serving as 0:01:19.120 --> 0:01:22.039 the CFO, a position you continue to have. You know, 0:01:22.160 --> 0:01:26.280 how is your perspective change moving from capital allocation to 0:01:26.400 --> 0:01:28.399 helping lead the entire business? 0:01:29.080 --> 0:01:33.120 Truth be totally is that the transition that's called a 0:01:33.160 --> 0:01:38.520 transition has been relatively smooth all day it's called it. 0:01:38.560 --> 0:01:44.720 The larger management decisions are taken by Constantinos to co CEO, 0:01:44.840 --> 0:01:47.680 but also Christian who serves as a CEO. Also we 0:01:48.560 --> 0:01:54.639 coordinate very very closely. So from moving purely capital location 0:01:54.800 --> 0:01:58.640 into leading the entire business. I think the title change 0:01:58.960 --> 0:02:01.520 suggests a bit more than it actually was, because from 0:02:01.560 --> 0:02:04.120 the very beginning I've been very much involved also in 0:02:05.240 --> 0:02:11.560 leading the business, obviously sharing the responsibilities on the CEO side. 0:02:12.000 --> 0:02:15.680 There's certainly a bit more involvement perhaps now on the 0:02:15.720 --> 0:02:19.359 capital market side than it was before, but all in all, 0:02:19.960 --> 0:02:24.280 not as a drastic change as the title might suggest. 0:02:25.040 --> 0:02:26.840 And you spent much of your career in shipping. So 0:02:26.919 --> 0:02:30.040 what brings you or brought you back to the industry, 0:02:30.080 --> 0:02:32.600 which obviously is extremely cyclical. 0:02:32.960 --> 0:02:35.679 I never really left the industry. I started as a 0:02:35.720 --> 0:02:39.079 ship broker. I studied at a business school with a 0:02:39.120 --> 0:02:41.560 shipping focus. You know, studying at a business school then 0:02:41.600 --> 0:02:44.280 you bragged, then you're being dragged into the dark side, 0:02:44.520 --> 0:02:49.960 the finite sides. But you know, I always found myself 0:02:50.360 --> 0:02:53.840 with a certain degree of shipping flavor in my career. 0:02:54.560 --> 0:02:57.040 And I guess, you know, the cyclicality that you mentioned 0:02:57.160 --> 0:03:01.679 is really you know, that pedigree that makes this very interesting. 0:03:01.800 --> 0:03:06.000 You know, you're you're moving between you know, conquering the vault, 0:03:07.400 --> 0:03:10.919 between conquering the vault and insolvency within a time spend 0:03:11.000 --> 0:03:17.200 of six months, and sort of to maneuver that very 0:03:17.280 --> 0:03:21.960 volatile industry makes it extremely interesting from my perspective. 0:03:22.240 --> 0:03:24.800 And you know, just you know, for people that aren't 0:03:24.800 --> 0:03:27.560 really familiar with NPC container ships, can you just talk 0:03:27.560 --> 0:03:30.320 a little bit about the company, you know, exactly where 0:03:30.360 --> 0:03:32.680 you fit in in the the shipping markets. 0:03:33.160 --> 0:03:37.440 Yeah, as the name suggests, we're purely focused on container vessels. 0:03:37.480 --> 0:03:40.880 We are the largest owner of feeder sized and mid 0:03:40.880 --> 0:03:43.520 sized container vessels. That is, for US, anything between one 0:03:43.560 --> 0:03:47.840 and nine thousand tu, so in that sort of subsegment, 0:03:47.880 --> 0:03:54.080 we're the largest tonnage provider and we're essentially providing tonage 0:03:54.120 --> 0:03:56.360 to the big land of companies who are more of 0:03:56.440 --> 0:04:00.480 logistic companies these days, and owning or child bring out 0:04:00.560 --> 0:04:04.000 vessel is a very important puzzle piece for the big 0:04:04.080 --> 0:04:07.000 banner companies to sort of be able to serve the 0:04:07.680 --> 0:04:11.080 liner services around the world. So it's a bit of 0:04:11.120 --> 0:04:13.760 a different dynamic in the container market relative to the 0:04:13.840 --> 0:04:16.400 dry board market and the tanker market in the sense 0:04:16.440 --> 0:04:21.880 that you have very predictable schedules of container vessels sailing 0:04:22.279 --> 0:04:25.799 from A to B and from B to C, whereas 0:04:26.440 --> 0:04:29.800 the dry and the web markets have a more pronounced 0:04:29.960 --> 0:04:34.200 spot market where you have different sort of vessels trading 0:04:34.640 --> 0:04:39.640 different regions throughout the year, and you have much less predictability. 0:04:40.839 --> 0:04:44.240 But also the sort of the perceived certainty in the 0:04:44.279 --> 0:04:50.040 line of schedules is also very sensitive to geopolitical disruptions, 0:04:50.040 --> 0:04:53.200 and I'm sure we'll talk about that later today. 0:04:53.320 --> 0:04:55.520 We certainly will, but before we do that, you know, 0:04:55.560 --> 0:04:58.080 I just want to cover some basics for people that 0:04:58.120 --> 0:05:00.400 may be not too familiar with the container world. Now. 0:05:00.480 --> 0:05:04.200 You mentioned a feeder fleet, which are obviously smaller ships 0:05:04.800 --> 0:05:07.039 in your world that's one to nine thousand to use. 0:05:07.920 --> 0:05:10.560 What is a feeder ship in like kind of what 0:05:10.680 --> 0:05:12.480 trades are they and if you can just give us 0:05:12.600 --> 0:05:15.240 a basic understanding of what they do. 0:05:16.200 --> 0:05:21.360 Yeah, there's a containers. There's essentially two markets, one being 0:05:21.400 --> 0:05:24.440 the let's call it the big main lane trades, which 0:05:24.520 --> 0:05:28.200 is the twenty thousand plus tu vessels, the mega carriers 0:05:29.240 --> 0:05:33.680 picking up cargo in the sort of main production regions 0:05:33.680 --> 0:05:38.039 which is mostly Asia, and transporting the goods to the 0:05:38.080 --> 0:05:41.520 big hub ports in Europe and the US, that being Rotterdam, 0:05:41.560 --> 0:05:46.279 Hamburg in Europe and Los Angeles in the US. And 0:05:46.760 --> 0:05:49.520 from those hub ports, you have feeder vessels who are 0:05:49.560 --> 0:05:53.800 purely focused on intraregional trades, picking up that cargo and 0:05:53.839 --> 0:05:57.920 feeding the containers into sort of smaller countries I mean 0:05:58.000 --> 0:06:01.120 not necessarily smaller country from a population perspective, but smaller 0:06:01.120 --> 0:06:04.920 countries relative to China of course, picking up the cargo 0:06:04.960 --> 0:06:08.880 and serving those markets. And in terms of vessel counts, 0:06:09.640 --> 0:06:12.960 the feeder markets or the intro regional markets are by 0:06:13.080 --> 0:06:17.919 far by far the biggest markets in containers. And also 0:06:17.960 --> 0:06:23.080 from more recently, let's call it the last five or 0:06:23.080 --> 0:06:26.679 ten years, we have also seen that from the demand 0:06:26.720 --> 0:06:29.760 side of things, that the intro regional markets have been 0:06:29.800 --> 0:06:32.960 growing at a faster pace as the let's call it 0:06:33.040 --> 0:06:36.799 mature markets serving China, Europe and China US. 0:06:37.760 --> 0:06:41.279 Yeah, and I guess, given the geopolitical issues is around 0:06:41.560 --> 0:06:45.320 tariffs and China, I'm assuming that just only increased since then. 0:06:46.960 --> 0:06:51.839 Yeah, exactly. It's it's people shippers importers around the world 0:06:52.440 --> 0:06:56.960 obviously trying to become less dependent on China as the 0:06:57.040 --> 0:07:01.839 sole market for sourcing goods. So you certainly have seen 0:07:01.920 --> 0:07:06.000 a near not necessarily only near shuring, but away shoring 0:07:06.400 --> 0:07:10.320 from from China being the only supplier. And that entails 0:07:10.760 --> 0:07:16.480 countries like Vietnam, Malaysia, Indonesia for example, which have seen 0:07:16.560 --> 0:07:20.880 strong growth rates in terms of exports. But you also 0:07:20.920 --> 0:07:24.440 have Chinese shippers, for example, just reallocating their goods into 0:07:24.480 --> 0:07:30.120 those markets to trying to circumvent some of the some 0:07:30.240 --> 0:07:32.800 of the tariffs that we have seen over the past years. 0:07:33.240 --> 0:07:36.160 But also that sort of effect on the market is 0:07:36.240 --> 0:07:39.320 positive for feeders, right, because you need feeda vessels to 0:07:39.360 --> 0:07:43.200 bring those boxes from from China to countries like Vietnam 0:07:43.240 --> 0:07:44.800 and Indonesia, right. 0:07:44.960 --> 0:07:47.320 You know, and you mentioned I know you guys charter 0:07:47.440 --> 0:07:51.120 ships out so to your models, you buy the ships 0:07:51.240 --> 0:07:53.600 and then you know, for those that don't know, can 0:07:53.640 --> 0:07:57.240 you talk about what chartering means, like you're essentially leasing 0:07:57.280 --> 0:07:59.720 them to larger players. 0:08:00.760 --> 0:08:03.440 Yeah, exactly. I ideally we lease them out on a 0:08:03.520 --> 0:08:06.720 very long term basis to have as much cash flow 0:08:06.760 --> 0:08:11.280 predictability as possible. Leasing out mean you get a fixed 0:08:11.360 --> 0:08:15.560 day rate for a great time period. With the liner companies, 0:08:16.640 --> 0:08:20.360 you will provide the crew of the vessel. But the 0:08:20.400 --> 0:08:24.320 liner company has, within the agreed framework of the charter 0:08:24.400 --> 0:08:29.000 party has commercial has commercial saying as to where the 0:08:29.080 --> 0:08:31.640 vessel has gone a trades, obviously with certain exceptions for 0:08:31.760 --> 0:08:38.000 war regions or sanctioned countries, but having that commercial saying 0:08:38.120 --> 0:08:41.600 on the sailing regions. The liner company is also bearing 0:08:41.640 --> 0:08:44.520 the bunker costs, so the fuel costs of the vessel 0:08:44.559 --> 0:08:47.719 and any sort of board fees that are applicable for 0:08:48.200 --> 0:08:52.120 entering one of the big parts around the world. 0:08:52.480 --> 0:08:57.600 And your customers are like, you know, costco or mayorsk hupabloid, 0:08:57.880 --> 0:08:58.800 those type of players. 0:08:59.480 --> 0:09:03.040 Yeah, so we have today because the market is really 0:09:03.040 --> 0:09:07.360 good in containers. It's it's very much favorable. So historically speaking, 0:09:08.280 --> 0:09:11.240 you know, the typical time shot iteration for feeder vessel 0:09:11.360 --> 0:09:13.959 was anything between six and twelve months. These days, we're 0:09:14.040 --> 0:09:16.680 chartering out between two and three years, which is a 0:09:16.720 --> 0:09:19.960 fantastic visibility in the cashlow that is translating into a 0:09:20.000 --> 0:09:22.400 revenue backlock as of today of around two point two 0:09:22.480 --> 0:09:25.920 two point three billion used dollars, and that two point 0:09:26.000 --> 0:09:30.400 two two point three billion dollars is essentially ninety percent 0:09:30.520 --> 0:09:32.960 covered by the top ten liner companies and that is 0:09:33.000 --> 0:09:36.160 exactly the names you just mentioned. So in terms of 0:09:36.200 --> 0:09:39.640 vessel count, Mersk is our biggest customer. In terms of 0:09:39.679 --> 0:09:44.319 revenue backlock, Hypercloid is one of our largest customers. Costco 0:09:44.320 --> 0:09:48.920 has recently been increasing in terms of importance in our 0:09:49.000 --> 0:09:52.439 revenue backlock. So it's it's really focusing on the on 0:09:52.320 --> 0:09:56.720 the on the top tier liner operator operators globally, which 0:09:56.760 --> 0:09:59.040 also helps in the context of you know, what's your 0:09:59.040 --> 0:10:02.240 revenue backlock and your sort of what's your credit view 0:10:02.679 --> 0:10:05.320 on your on your counterpart and all these companies are 0:10:05.360 --> 0:10:09.240 an incredibly strong shape these days from Avalanchet perspective. 0:10:09.280 --> 0:10:13.120 And when you're when you're renewing these contracts, whether you 0:10:13.160 --> 0:10:16.440 know you mentioned two to three years, you know, what 0:10:16.440 --> 0:10:21.320 what is the the current rate differential than it was 0:10:21.720 --> 0:10:24.839 two years ago, is it is it higher? Is it 0:10:25.280 --> 0:10:25.960 bound flat? 0:10:26.080 --> 0:10:29.480 Like? What are you saying? Yeah, let's let's say two 0:10:29.679 --> 0:10:31.959 two to three years ago. You you have seen a 0:10:32.080 --> 0:10:35.839 kind of a normalization of the market after the heydays 0:10:35.920 --> 0:10:40.360 of the of the COVID area. Today we're fixing probably 0:10:40.400 --> 0:10:43.679 around two times the charter rates we have seen two 0:10:43.720 --> 0:10:45.680 and a half years ago, three years ago. So the 0:10:45.720 --> 0:10:51.199 market has been really picking up again for reasons of 0:10:51.360 --> 0:10:55.800 geopolitical nature. So I mean, to put things into a perspective, 0:10:56.160 --> 0:11:01.920 we have probably across the fleet, let's call it fifteen 0:11:01.920 --> 0:11:05.040 thousand dollars per day hat room between what the vessels 0:11:05.040 --> 0:11:07.559 are earning and what the break even is across the fleet, 0:11:07.720 --> 0:11:13.719 So very very very very healthy levels generating very good 0:11:13.840 --> 0:11:16.080 income for us as a company, but also also for 0:11:16.160 --> 0:11:16.720 the investors. 0:11:17.080 --> 0:11:19.760 Right, Yeah, I'm sorry you said fifteen thousand overbreak even. 0:11:20.160 --> 0:11:22.360 Yeah, between I mean, depending on the vessel size, but 0:11:22.440 --> 0:11:25.600 between ten and fifteen thousand dollars per day. Very good. 0:11:25.800 --> 0:11:29.320 And you know, we hear a lot about the order 0:11:29.360 --> 0:11:31.199 book and how that's kind of like you know, wig 0:11:31.280 --> 0:11:34.440 on rates. Obviously, the theomatic passy has been sucked out 0:11:34.440 --> 0:11:36.199 of the market, whether it's because people aren't going to 0:11:36.320 --> 0:11:39.640 the Suez or they're avoiding the Persian Gulf. Right now, 0:11:40.320 --> 0:11:44.000 can you talk about the order book for feeder vessels 0:11:44.080 --> 0:11:46.679 versus the overall order book that you know a lot 0:11:46.720 --> 0:11:49.600 of people talk about. Is it the same or is 0:11:49.600 --> 0:11:50.480 there any difference? 0:11:51.280 --> 0:11:56.000 No, there's a massive dislocation in the autobook itself. Also 0:11:56.040 --> 0:11:58.839 the first time we see that in history, I mean 0:11:58.920 --> 0:12:03.120 his historically speak. You have a tendency of seeing a 0:12:03.200 --> 0:12:07.120 large auto book across all the subsegments, but this time 0:12:07.160 --> 0:12:11.000 around it's the auto book is heavily skewed. Let's call 0:12:11.080 --> 0:12:14.000 it seventy five eighty percent of the auderbook is skewed 0:12:14.000 --> 0:12:21.120 towards ten thousand tu and larger vessels. So it's an 0:12:21.160 --> 0:12:26.560 interesting dynamic these days, which also leads us being quite 0:12:26.600 --> 0:12:29.280 constructive on the market from a mid to long term perspective. 0:12:30.040 --> 0:12:32.280 If you look historically, and truth be told, if you 0:12:32.320 --> 0:12:36.920 have a large autobook, it's never great for shipping, irrespective 0:12:36.960 --> 0:12:40.040 of container, dry energy or wet. And if you look 0:12:40.040 --> 0:12:42.680 at the autobook, maybe with an exception for dry autobook 0:12:42.720 --> 0:12:45.800 is large. Everywhere people have been earning too much money 0:12:46.000 --> 0:12:52.120 and reallocating that cache into the autobook that we see today, 0:12:52.200 --> 0:12:58.560 but we also believe that the feeder segment will dislocate 0:12:58.559 --> 0:13:01.760 from a midterm perspective, will dislocate itself from the larger 0:13:01.800 --> 0:13:04.200 vessels because not only the auto book is manageable. So 0:13:04.240 --> 0:13:08.480 in the feeder segment, we're looking at fifteen of the 0:13:08.480 --> 0:13:12.400 current fleet being on order on average, I would say one, 0:13:12.679 --> 0:13:16.520 but two, you have around twenty or more than twenty 0:13:16.520 --> 0:13:18.959 percent of the existing fleet on the water in a 0:13:19.000 --> 0:13:23.480 feeder segment already being twenty years on older. And yes, 0:13:23.600 --> 0:13:26.120 as long as the market is performing as it is now, 0:13:26.160 --> 0:13:29.040 I mean, no one is recycling their vessels because you're 0:13:29.040 --> 0:13:30.920 simply earning too much money. But there will be a 0:13:30.960 --> 0:13:34.400 point in time where you see a correction on rates, 0:13:34.400 --> 0:13:37.679 which is natural in shipping because shipping is inherently cyclical, 0:13:38.360 --> 0:13:41.400 and then you will see a relatively large or a 0:13:41.440 --> 0:13:44.200 massive part of the fleet being pushed out. And at 0:13:44.200 --> 0:13:46.840 the same time, you have in fifteen fifteen between let's 0:13:46.840 --> 0:13:48.920 call it, between fifteen and twenty percent auto book which 0:13:48.960 --> 0:13:52.880 is sort of borderline able to replace the fleet that 0:13:53.000 --> 0:13:55.840 is going out, And at the same time you have 0:13:55.880 --> 0:13:58.800 a very healthy underlying demand, so you actually need a 0:13:58.880 --> 0:14:01.199 larger auto book. That then that what we see today 0:14:01.240 --> 0:14:03.840 to also cope with the demand growth, right, you see 0:14:04.240 --> 0:14:06.800 you see between four and five percent demand growth in 0:14:06.840 --> 0:14:09.719 the inter regional trade, which is also you know, fundamentally 0:14:09.840 --> 0:14:16.520 very strong. So that that's these sort of features makes 0:14:16.600 --> 0:14:19.400 us being very constructive on the feeder market. And will 0:14:19.440 --> 0:14:22.320 there be short term volatility because the overall autobook is 0:14:22.320 --> 0:14:25.920 too large? Certainly, I mean, we're definitely not denying that, 0:14:26.640 --> 0:14:29.160 but we're also saying from a mid to long term perspective, 0:14:29.160 --> 0:14:32.400 the feeder market is is in a very good ship. 0:14:32.840 --> 0:14:35.000 Right, So you're in the business of buying ships and 0:14:35.000 --> 0:14:37.360 then leasing them out. Can you talk about, you know, 0:14:37.400 --> 0:14:39.200 how you go about doing that if you put it 0:14:39.240 --> 0:14:42.000 in order today, when we get the ship, how do 0:14:42.000 --> 0:14:46.440 you finance it? You know, anything you can add to 0:14:46.520 --> 0:14:47.800 that process if you will. 0:14:48.240 --> 0:14:53.240 Yeah, So ideally, you know, as always in life, whether 0:14:53.280 --> 0:14:55.440 in shipping or buying stocks, you you know, you buy 0:14:55.520 --> 0:14:57.800 low and sell at at a premium at a later 0:14:57.880 --> 0:15:00.760 stage and try to be as countercyclic as possible, and 0:15:00.840 --> 0:15:03.960 which again you know, given the cyclicality in shipping, that 0:15:03.960 --> 0:15:07.600 that is what you should do in theory. But reality 0:15:07.680 --> 0:15:10.800 is also that it's always very difficult to sort of 0:15:11.040 --> 0:15:12.720 hit the nail on the head when it comes to 0:15:13.400 --> 0:15:16.440 finding the right point in time to executing a strategy. 0:15:17.080 --> 0:15:20.720 And we have at least for us, identified the ability 0:15:21.600 --> 0:15:25.160 to invest across the cycle. And we have been investing 0:15:25.200 --> 0:15:28.640 in twenty seventeen when you know, ships were dirt cheap, 0:15:29.520 --> 0:15:32.440 and we have been selling some of the ships with 0:15:32.520 --> 0:15:35.160 a fantastic premium, and we have been recycling that capital 0:15:35.280 --> 0:15:38.840 at a point in time we're historically speaking as surprising 0:15:38.960 --> 0:15:42.240 is rather elevated. But what we do then is we 0:15:42.320 --> 0:15:46.400 combine those acquisitions with long term charters to provide in 0:15:46.640 --> 0:15:50.040 immediate de risking. And the most recent transaction we have 0:15:50.120 --> 0:15:52.600 done either on the new building site, so we have 0:15:52.640 --> 0:15:54.920 been ordering quite a few new builds last year, but 0:15:55.000 --> 0:15:57.480 also second and transaction this year. We have always combined 0:15:57.480 --> 0:16:00.320 with a long term charter to a fantastic counterpart. From 0:16:00.320 --> 0:16:04.040 a credit perspective, you have immediately risking. You're creating essentially 0:16:04.080 --> 0:16:07.040 assets three four years later when the time charter is 0:16:07.080 --> 0:16:10.360 biased with very minimal residual risk. So of we we're 0:16:10.400 --> 0:16:13.760 more focused on managing the residual risk via v the 0:16:13.880 --> 0:16:16.960 upside on the assets that we see rather than to 0:16:17.040 --> 0:16:19.480 say we only invest on the belief as it's a 0:16:19.520 --> 0:16:22.520 dirt cheap because also from our perspective, you know what 0:16:22.520 --> 0:16:26.920 what scale matters in the commercial context of dealing with 0:16:26.960 --> 0:16:30.520 our customers the liner companies, not from a economies of 0:16:30.520 --> 0:16:33.120 scale and saving cost perspective, more from a perspective you 0:16:33.200 --> 0:16:36.960 have a massive sort of commercial offering to the liner companies. 0:16:37.000 --> 0:16:39.320 They can essentially pick and choose from your from your 0:16:39.400 --> 0:16:42.240 charter fleet. And that's also why we want to grow 0:16:42.280 --> 0:16:45.800 the fleet at any given point in time. How we finance, 0:16:45.920 --> 0:16:48.560 I mean, it's shipping is the capital intensive industry, so 0:16:48.640 --> 0:16:51.600 debt financing is the usual you know, part of the equation. 0:16:52.920 --> 0:16:55.400 Depending on the casual visibility that we have, we are 0:16:55.440 --> 0:16:58.160 we're willing to increase slightly leverage overall, I would say 0:16:58.160 --> 0:17:01.000 we're quite conservative from a better sheep perspective, but also 0:17:01.000 --> 0:17:04.560 from an investment perspective. Today we have more than fifty 0:17:04.600 --> 0:17:07.200 percent or roughly fifty percent of the fleet being debt free, 0:17:07.240 --> 0:17:09.600 which is you know, great balance sheet flexibility that we 0:17:09.640 --> 0:17:12.719 have going forward. If we acquire modern ships with long 0:17:12.800 --> 0:17:15.320 term casual visibility, we you know, we're looking at sixty 0:17:15.359 --> 0:17:19.800 sixty five percent leverage and luckily and that will probably 0:17:19.840 --> 0:17:21.920 also change in the future. We're in a borrow's market, 0:17:22.000 --> 0:17:25.359 so you know, bank lending is incredibly attractive. We have 0:17:25.520 --> 0:17:29.800 used the Nordic bond market recently, also very attractive unsecured 0:17:29.840 --> 0:17:33.280 paper that you can raise, and we have just recently 0:17:33.320 --> 0:17:36.960 also tapped the equity camedle markets. Those windows for shipping 0:17:37.000 --> 0:17:40.080 are not are not open every day, but we have 0:17:40.200 --> 0:17:43.480 managed to what I believe was a very successful transaction 0:17:44.400 --> 0:17:47.800 the week before last, raising another one hundred million, you know, 0:17:48.000 --> 0:17:51.320 adding to our ward chest and you know, also speaking 0:17:51.359 --> 0:17:54.320 to our reputation in the market and our ability to 0:17:54.720 --> 0:17:57.520 execute also the future on what we believe is very 0:17:57.520 --> 0:18:00.480 interesting in the creative asset acquisitions. 0:18:00.440 --> 0:18:03.960 And roughly you know, how long does it take to 0:18:04.040 --> 0:18:06.520 get a new ship when once you place an order 0:18:06.560 --> 0:18:11.560 with the shipyards. 0:18:09.240 --> 0:18:14.800 Given the given the capacity of today's shipyards, you're looking 0:18:14.840 --> 0:18:19.919 at deliveries in twenty twenty nine. Usually it's not the 0:18:19.920 --> 0:18:23.040 the limit the limited The limiting factor is not yard 0:18:23.080 --> 0:18:26.200 capacity per se. It's more in the main engine availability. 0:18:26.840 --> 0:18:30.160 And that's why you know, also looking at the sort 0:18:30.160 --> 0:18:33.159 of the different tiers you have from a yard perspective, 0:18:33.160 --> 0:18:37.280 but at a decent yard, you start looking into twenty 0:18:37.320 --> 0:18:40.520 twenty nine delivery for for any any any kind of 0:18:40.520 --> 0:18:41.960 ship these days, and. 0:18:41.920 --> 0:18:44.600 Do you guys work predominantly with one or two yards 0:18:44.680 --> 0:18:47.720 or do you just search for the best, best kind 0:18:47.760 --> 0:18:49.440 of deal if you will. 0:18:50.320 --> 0:18:53.520 It's a bit of both. I mean, we're we're best 0:18:53.560 --> 0:18:56.520 deal obviously if it comes at the cost saying, you know, 0:18:56.800 --> 0:18:59.439 we believe the yard might not be capable of delivering 0:18:59.520 --> 0:19:02.639 high quality, then obviously that's not something we're going to pursue. Today. 0:19:02.640 --> 0:19:06.080 We have vessels on order at four different Chinese yards, 0:19:06.080 --> 0:19:08.840 but we have also been building it at Korean yards 0:19:09.200 --> 0:19:10.520 in the not too distant past. 0:19:11.160 --> 0:19:15.040 Okay, so you know, I understand that you know, the 0:19:15.080 --> 0:19:19.320 company has transformed itself pretty significantly over the last five years. 0:19:19.600 --> 0:19:24.600 How would you describe MPCC today versus was back say 0:19:24.640 --> 0:19:25.480 in twenty twenty one. 0:19:26.040 --> 0:19:30.560 The company has essentially transitioned from being and being an 0:19:30.600 --> 0:19:34.719 asset play buying low flipping the assets at the peak market, 0:19:34.800 --> 0:19:39.719 into a long term vehicle both for the investors site. 0:19:39.840 --> 0:19:42.480 We have started to you know, paying out a lot 0:19:42.480 --> 0:19:45.920 of dividends, which is you know, the long term play 0:19:45.920 --> 0:19:48.399 you should play in the in the capital markets, but 0:19:48.640 --> 0:19:51.640 also for for our customers on on the liner side, 0:19:51.800 --> 0:19:55.240 and the requirements and the demands from the from the 0:19:55.359 --> 0:19:57.600 from the liner side are very clear. We need more 0:19:57.600 --> 0:20:01.879 efficient modern tonnage, and that's also why we have invested 0:20:01.920 --> 0:20:06.200 around two billion dollars in fleeting new So the fleet 0:20:06.280 --> 0:20:10.000 portfolio that you have been looking at in twenty twenty 0:20:10.080 --> 0:20:16.480 one was roughly seventy vessels. None of the vessels was 0:20:16.520 --> 0:20:19.639 echo and today you have pretty much the same vessel 0:20:19.880 --> 0:20:22.840 count including the new bills, and you have closed to 0:20:22.920 --> 0:20:27.920 eighty percent of the vessels being echo and more efficient. 0:20:28.400 --> 0:20:30.800 And that is obviously we have two a few vessels 0:20:30.960 --> 0:20:33.720 running on methanol or having your capability of running on methanol. 0:20:33.960 --> 0:20:37.280 You have the latest and greatest designs on conventional new bills. 0:20:37.359 --> 0:20:40.040 You have the latest and greatest designs on secondhand vessels. 0:20:40.480 --> 0:20:43.959 But we have also quite significantly invested on older vessels 0:20:43.960 --> 0:20:48.080 in the fleet through retrofits, installing new bulbous bone propellers 0:20:48.119 --> 0:20:50.560 and increasing the efficiency of those vessels by more than 0:20:50.560 --> 0:20:52.879 twenty percent. So it's quite remarkable what you can achieve 0:20:53.320 --> 0:20:57.600 also with older vessels by investing in them. So we 0:20:57.640 --> 0:21:00.919 have really made sure that our flee and also looking 0:21:01.000 --> 0:21:04.240 you know, looking across the peer group, I think it's 0:21:04.280 --> 0:21:06.480 fair to say that NPCC today has one of the 0:21:06.520 --> 0:21:11.000 most the most modern fleets and that is already paying off, 0:21:11.000 --> 0:21:13.480 and it will also pay off in the future by 0:21:13.520 --> 0:21:19.879 being able to demand higher rates longer durations. But also 0:21:19.920 --> 0:21:23.680 you know, being the vessels being the being picked up first, 0:21:24.320 --> 0:21:26.800 having vessels being picked up first by by by land 0:21:26.840 --> 0:21:27.440 of companies. 0:21:27.800 --> 0:21:29.400 And like when you when you when you have these 0:21:29.440 --> 0:21:32.320 new you know, when you when you kind of went 0:21:32.760 --> 0:21:36.240 towards the the echo ship, the eco ships, you know, 0:21:36.600 --> 0:21:40.639 relative to the non ego ships, what what is the 0:21:40.640 --> 0:21:43.320 fuel efficiency benefit to those? 0:21:44.000 --> 0:21:48.399 It's it It obviously heavily depends on on assumptions that 0:21:48.440 --> 0:21:50.800 you make, So what's the trading resion, what's the sort 0:21:50.840 --> 0:21:55.840 of the base speed that you're using. But setting that aside, obviously, 0:21:56.119 --> 0:21:59.240 you know, the larger the better, because broken down to 0:21:59.359 --> 0:22:03.639 the box, the cost saving is better on larger vessels 0:22:03.680 --> 0:22:07.040 relative to the smaller vessel. But let's say across the board, 0:22:07.400 --> 0:22:12.560 our latest eco vessels that we acquired, relative to the 0:22:12.640 --> 0:22:18.320 vessels that have been mostly produced pre Lehman, efficiency increases 0:22:18.320 --> 0:22:21.240 are significant. Let's call it fifty to sixty percent on 0:22:22.359 --> 0:22:25.600 a TU basis. It's it's it's massive. It's really a 0:22:25.640 --> 0:22:30.760 big difference. And we have been operating and particular liners 0:22:30.760 --> 0:22:35.080 because they have the fuel bill eventually operating in an 0:22:35.160 --> 0:22:40.359 environment where bunker and fuel has been relatively achievable. And 0:22:40.440 --> 0:22:42.960 these days, you know, with the closure of straight off 0:22:43.000 --> 0:22:46.680 amos and raising energy prices, et cetera, it becomes even 0:22:46.680 --> 0:22:49.359 more important to you know, having vessels and a fleet 0:22:49.400 --> 0:22:53.040 that are efficient because then again demand from liner companies 0:22:53.119 --> 0:22:55.000 is even better these days. 0:22:55.680 --> 0:22:57.920 And so you know, you know, these new ships, as 0:22:57.960 --> 0:23:01.320 you kind of alluded to, their their dual fuel. Are 0:23:01.320 --> 0:23:03.679 you running any of the alternative fuels? Is there an 0:23:03.680 --> 0:23:07.080 alternative fuel that you guys are focused on? And I 0:23:07.119 --> 0:23:12.440 guess what's you know, the challenges of converting to these 0:23:12.480 --> 0:23:13.800 alternative fuels. 0:23:14.080 --> 0:23:17.719 Yeah, we have three vessels, two trading, one being delivered 0:23:17.720 --> 0:23:21.960 in August. They are due to fuel methanol vessels. We 0:23:24.200 --> 0:23:27.439 don't dare to be sort of the experts as to 0:23:27.560 --> 0:23:30.600 what will be the alternative fuel of the future. Some 0:23:30.640 --> 0:23:33.680 people suggest it's methanols, some people suggest it's ammonia, some 0:23:33.720 --> 0:23:38.200 say it's lerg ideally we have exposure to all three 0:23:39.400 --> 0:23:42.840 propulsion technologies, just you know, to learn and have some exposure. 0:23:43.400 --> 0:23:45.560 So far, we haven't found the right project on the 0:23:45.560 --> 0:23:49.440 ammonia and the LERG side. Only on the methanol side. 0:23:49.800 --> 0:23:52.320 It obviously comes to the cost, so ordering dew fuel 0:23:52.320 --> 0:23:55.560 technology is usually ten to fifteen percent more expensive than 0:23:55.600 --> 0:23:59.600