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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 Glasgow, senior freight transportation logistics analysts

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Speaker 1: at Bloomberg Intelligence, Bloomberg's in house research arm. We're delighted

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Speaker 1: to have Stamatis santanis Sea Energy Maritime Holding Corporations Chairman

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Speaker 1: and CEO, which trades under the ticker SHIP on the Nasdaq.

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Speaker 1: Stamatis joined c Energy in twenty twelve and led its

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Speaker 1: significant growth to the only pure play cape size company

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Speaker 1: listed in the US. He's also a founder, chairman and

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Speaker 1: chief executive officer of United Maritime Corp, an independent, diversified

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Speaker 1: public shipping company that was initially established as a subsidiary

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Speaker 1: of C Energy. Sea Energy and United as a group

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Speaker 1: have cargo carrying capacity over four million deadweight tons. Stamatis

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Speaker 1: has over twenty four years of experience in shipping and finance,

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Speaker 1: and previously held senior management positions in prominent private and

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Speaker 1: public shipping companies and financial institutions. He's also a member

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Speaker 1: of the board of directors of Breakwave Advisors, the advisor

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Speaker 1: of e t f MG, which is the manager of

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Speaker 1: New York Stock Exchange listed bd R Y and bw e. T.

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Speaker 1: Stamatis holds a Master of Science and Shipping, Trade and

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Speaker 1: Finance from Bay's Business School in London and a Bachelor

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Speaker 1: of Science and Shipping Economics from the University of Piraeus.

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Speaker 1: He is also a Fellow of the Institute of Chartered Shipbrokers.

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Speaker 1: Stamatis Welcome to the podcast.

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Speaker 2: Hello Leith, Hello everyone, and good to be here and

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Speaker 2: to be discussing about the senior g United Maritime and

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Speaker 2: the current trendsing international shipping.

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Speaker 1: Right and you know, so everyone may not be familiar

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Speaker 1: with the energy as fleet. You know I mentioned in

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Speaker 1: your intro cape sized vessels. Can you explain to us

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Speaker 1: what exactly is a cape size vessel and you know,

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Speaker 1: talk about your fleet and what kind of commodities that

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Speaker 1: you hold.

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Speaker 2: Of course, Well, first of all, the cape sizes are

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Speaker 2: dry bulk vessels, which means that they carry they transport

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Speaker 2: dry bulk commodities mainly iron, ore, coal and box side.

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Speaker 2: These are the three major commodities that we can a sport.

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Speaker 2: We have the largest conventional size of dry bull ships

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Speaker 2: and the main trading routes are between Brazil, China Australia

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Speaker 2: and China Australia to Europe, so we are, in our opinion,

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Speaker 2: a very fundamental part of the chain for infrastructure. The

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Speaker 2: main end product of iron ore and coal is still

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Speaker 2: and as you know, steel is used in practically all

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Speaker 2: the infrastructure, infrastructure and construction projects around the world. So

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Speaker 2: I do not see that being say obsolete in anytime

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Speaker 2: in the near future. So Cape size versus has the

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Speaker 2: largest conventional size of ships transporting aron or coal and

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Speaker 2: box side.

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Speaker 1: And so how many ships of those are in your fleet?

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Speaker 1: That's the energy right now?

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Speaker 2: We have in Synergy we have seventeen ships and United

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Speaker 2: Maritime three, so total combined twenty Cape size and one

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Speaker 2: Newcastle Max. So it's which in Newcastlem is very similar.

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Speaker 2: It's just slightly bigger than the Cape size. So all

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Speaker 2: together I would say around twenty ships. We also have

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Speaker 2: five other ships that are the so called Panamaxis Comso

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Speaker 2: maxis that are around seventy two to eighty two thousand

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Speaker 2: de way tones, that is basically half the size of

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Speaker 2: a cape size. Cape size is anywhere between one hundred

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Speaker 2: and seventy thousand tones and Newcastle marks around two five

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Speaker 2: two hundred and ten thousand tones. So just to give

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Speaker 2: you an idea, of the size of the ship. We're

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Speaker 2: talking about approximately three hundred yards in length, so that's

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Speaker 2: the I deliver around one thousand feet in length its ship.

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Speaker 2: So it's really big ships, right.

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Speaker 1: And then the panamac ships that you own, are they

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Speaker 1: involved in different trades than your traditional cape size vessel.

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Speaker 2: They do pretty much the same, mostly coal, not so

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Speaker 2: much iron ore, but also a lot of grains and

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Speaker 2: soy beans, so they're also doing more, let's say, for

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Speaker 2: the nutrition of the global population, not so much for

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Speaker 2: the housing and infrastructure.

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Speaker 1: And you know, how has the cape size market been

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Speaker 1: relative to some of the smaller ship trades.

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Speaker 2: Well, historically the cape size market has been the most

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Speaker 2: volatile market. You know, the bigger the ships, the biggest,

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Speaker 2: the bigger the volatility. Historically, if you look back like

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Speaker 2: twenty five thirty years, the cape size and the new

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Speaker 2: customer axis are usually overperforming by far the smaller sizes.

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Speaker 2: The last five years have been quite consistent. But we

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Speaker 2: are seeing, you know, reverting back to the historical means

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Speaker 2: the last years or so, that the cape size are

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Speaker 2: again starting to overperform significantly the smaller sizes. And we

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Speaker 2: strongly believe that for you know, the years to come

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Speaker 2: for the following years, we will say cape size and

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Speaker 2: new customer access overperforming smaller ships quite significantly.

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Speaker 1: And you mentioned that the three largest commodities that cape

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Speaker 1: size are shipping. Is there one that's doing better than

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Speaker 1: the other right now in terms of demand?

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Speaker 2: That's an excellent question. Up until two or three years ago,

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Speaker 2: it was practically eighty percent the iron ore, and then

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Speaker 2: twenty percent was a coal and box side. Right now

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Speaker 2: it's quite even. I would say it's around forty percent

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Speaker 2: iron ore, thirty to thirty five percent coal, and the

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Speaker 2: remaining is box sized. So box side has been picking

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Speaker 2: up quite significantly in the last two or three years,

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Speaker 2: as has the coal. So coal is back in our lives,

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Speaker 2: not just as the you know, production of energy, but

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Speaker 2: also for metallurgical coal, which is used for the production

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Speaker 2: of steel. So coal is back up very significantly in

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Speaker 2: our lives, both for production of electricity and also for

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Speaker 2: the production of steel, which is you know, one of

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Speaker 2: the most important components in the still making industry. So

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Speaker 2: it's quite spread out between the three.

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Speaker 1: Right And there's been a lot of stuff going on

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Speaker 1: in the shipping world since the pandemic, you know, fast

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Speaker 1: forward to today, uh the dislocations that we're facing are

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Speaker 1: the issues in the Red Sea, low water levels in

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Speaker 1: the Panama Canal uh to, and not to mention, you

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Speaker 1: know what has the war in Ukraine done to you know,

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Speaker 1: freight flows. So can you talk about you know, those

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Speaker 1: three major things, how they've impacted the cape size market.

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Speaker 2: Of course, yes, Well, first of all, I'm going to

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Speaker 2: start with COVID. COVID obviously the first six months of

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Speaker 2: twenty twenty, the global infrastructure and deseral production came to

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Speaker 2: a big hole. So you know, rates were practically negative

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Speaker 2: to zero for the first six months of twenty twenty. However,

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Speaker 2: we have seen that from the second half of twenty

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Speaker 2: twenty onwards there was a very big rise in industrial production,

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Speaker 2: especially in China, so cape size rates started to climb

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Speaker 2: quite significantly. So from basically zero rates zero per day,

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Speaker 2: zero dollars per day that was the ten saturd equivalent

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Speaker 2: back in the first half of first quarter, especially of

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Speaker 2: twenty twenty. In September of twenty twenty one, we saw

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Speaker 2: rags picking at around eighty thousand dollars a day, So

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Speaker 2: we have seen a big reverse in demand that was

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Speaker 2: driven mainly from a number of factors. As I mentioned before,

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Speaker 2: the industrial production started to climb quite significantly, so we're

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Speaker 2: seeing the factories in China producing more and more steel

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Speaker 2: and energy, which was required. Number two had the big

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Speaker 2: pis in congestion. Any trade, whatever that may be, is

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Speaker 2: demand and supply. So demand by itself is of course

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Speaker 2: the key factor for providing transportation services. But at the

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Speaker 2: end of the days, the supply of ships. During COVID,

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Speaker 2: a big portion of the global fleet got tied up

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Speaker 2: in congestion around the world, so you know, an auto

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Speaker 2: ships got congested and that brought the rates up into

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Speaker 2: very high levels in twenty twenty one. From twenty two onwards,

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Speaker 2: we had the war of the Invasion of Russia in Ukraine.

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Speaker 2: That helped the market a lot because Russia is right

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Speaker 2: next to Europe and they have been exporting around forty

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Speaker 2: to fifty million tons of coal from Russia to Europe annually.

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Speaker 2: Now coal had to be transported from longer distances, so

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Speaker 2: instead of bringing it from the backyard of Europe, which

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Speaker 2: was Russia, now we have to bring in europe coal

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Speaker 2: from bigger distances and that was that is from Australia,

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Speaker 2: from South Africa, and even from the US. I mean,

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Speaker 2: US is actually a very big exporter of coal, especially

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Speaker 2: in the Baltimore area, so we are seeing a lot

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Speaker 2: of and of course Colombia, so we are seeing the

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Speaker 2: trading grouts changing a lot because of the wars and

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Speaker 2: other situations. Now, in twenty twenty three, the overall congestion

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Speaker 2: situation got normalized, so we saw a big dip in

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Speaker 2: the rates. Can I remind everyone that is a very

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Speaker 2: volatile and very cyclical trade, but that was reversed from

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Speaker 2: the third quarter onwards, and so far since let's say

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Speaker 2: September October of twenty twenty three, we're seeing a very

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Speaker 2: healthy market and very healthy rates in the cape size market.

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Speaker 2: So again COVID led to congestion and of course the

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Speaker 2: emergence of trade, and that led demand and trades going

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Speaker 2: you know, at quite high level high levels. Then in

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Speaker 2: twenty twenty two, the war in Ukraine led to the

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Speaker 2: rates picking up again because we had to bring coal

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Speaker 2: from longer distances. Twenty twenty three we saw it deep

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Speaker 2: because of the unwinding of congestion. And now you know,

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Speaker 2: we are back into normalized levels where we see that

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Speaker 2: we have a consistent increased demand and consistent increased rates

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Speaker 2: and that has helped our market quite significantly. Something very

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Speaker 2: important to stay here and going back to your previous

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Speaker 2: question about how cape size is compared to the smaller

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Speaker 2: sizes of the drive buck market, the most important distinguishing

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Speaker 2: factory is supply. As I mentioned before, you know, trade

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Speaker 2: is the element of supply and demand, right, So if

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Speaker 2: you have a higher supply of ships, then obviously you

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Speaker 2: have more tonnage in the water, and that leads to

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Speaker 2: a decrease in the rate. However, cape size, because the

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Speaker 2: market experienced a very negative market environment for the last

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Speaker 2: you know, six seven years priory twenty, that led to

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Speaker 2: a very low ordering of ships. So right now, the

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Speaker 2: ordering of new buildings in the cape size market is

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Speaker 2: actually the lowest among all the mainstream shipping categories. So

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Speaker 2: cape size is now standing around let's say the global

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Speaker 2: order book is around altogether twenty a half three percent,

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Speaker 2: and that's the lowest of the last twenty twenty five years,

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Speaker 2: and that, in our opinion, is going to be the

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Speaker 2: dominant factor going forward as to why cape size rates

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Speaker 2: are expected to climb even further, because there's going to

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Speaker 2: be a depleting vessel supply you know, the current det

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Speaker 2: ware torments existing in the water is going to get

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Speaker 2: older and older is going to be hit by environmental

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Speaker 2: regulations which are coming into play, and there's no new

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Speaker 2: supply coming in, so as you can imagine, you know,

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Speaker 2: even if demand is zero or climbs at very small levels,

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Speaker 2: if the supply of ships is declining, that is going

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Speaker 2: to create huge opportunities in our segment. And that's why

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Speaker 2: we believe the kpsize market has the best fundamentals historically

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Speaker 2: best fundamentals among all the mainstream shipping categories right now.

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Speaker 1: Right and well also when you mentioned Russia and Ukraine,

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Speaker 1: I mean they're both also big exporters of grain, and

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Speaker 1: that grain least, the Russia grain and the Russia commodities

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Speaker 1: need to find new homes, you know, outside their traditional

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Speaker 1: markets and limitations that you know most of the world

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Speaker 1: has put on their exports and a lot of the

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Speaker 1: grain that people might have been importing from Ukraine. Uh,

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Speaker 1: those importers need to find new sources because of the

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Speaker 1: inability of Ukraine to you know, properly export their their

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Speaker 1: harvest either because they don't have the man power to

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Speaker 1: you know, to work the fields because they're in the

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Speaker 1: battlefield or because some of the crops were ruined due

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Speaker 1: to the war.

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Speaker 2: You know.

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Speaker 1: You mentioned you know the order book, and I agree

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Speaker 1: that's extremely important. It can get people excited about the

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Speaker 1: prospects for the dry bulk market, you know, and you

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Speaker 1: mentioned it is very volatile. How long does it take

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Speaker 1: from a time that you put in an order with

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Speaker 1: the shipbuilder until you receive your cape sized vessel? How

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Speaker 1: long does that take.

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Speaker 2: That's a great question because the last two or three years,

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Speaker 2: the height that we have experienced in other shipping sectors,

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Speaker 2: namely the l zs, the container ships and the tankers,

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Speaker 2: that has literally tied up a big percentage of the

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Speaker 2: global ship building capacity. So even if someone wanted to

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Speaker 2: place an order for a cape size to day, the

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Speaker 2: earliest delivery that the shipyards in China, South Korea and

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Speaker 2: Japan are courting took about second half of twenty twenty seven,

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Speaker 2: which is three years down the road. So even if

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Speaker 2: there is a cancelation or a postponement or anything on

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Speaker 2: the other categories that may lead to a new let's say,

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Speaker 2: order is still not going to be significant enough to

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Speaker 2: compensate for the loss of supply that we're going to

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Speaker 2: experience going forward. So the loss of supply that we

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Speaker 2: are experiencing and it's going to accelerate going forward, is twofold.

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Speaker 2: Number one, the existing age of the cape size fleet

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Speaker 2: is going to get older and older, so you will

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Speaker 2: have older ships, you know, operating the waters. That's one thing.

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Speaker 2: The second is the environmental regulations, so the initiation of

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Speaker 2: the acronym I CII, the European Carbon tax and all that.

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Speaker 2: This is going to recuse the effective vessel supply. So

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Speaker 2: you know, ships will get older, they will get slower

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Speaker 2: because of the emissions, and you know some of them

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Speaker 2: may not be in a position to operate. That is

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Speaker 2: going to lead into an accelerated decline which we are

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Speaker 2: already seeing in twenty twenty four, but it's going to

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Speaker 2: get more and more relevant in twenty five and twenty

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Speaker 2: six with all these new regulations you know, happening and

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Speaker 2: being in place. So even again, as I mentioned before,

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Speaker 2: even if demand is zero, which you know historically demand

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Speaker 2: has always been increasing, the actual supply of ships and

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Speaker 2: the effective supply of ships is going to especially in

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Speaker 2: the capes. That's the biggest, you know, the best fundamentals

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Speaker 2: here that's going to lead into big squeezes because there's

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Speaker 2: not going to be enough supply of vessels and you

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Speaker 2: cannot place in order with delivery. Prior to twenty twenty seven.

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Speaker 1: You know, you mentioned new mission standards and you know

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Speaker 1: the IMO has come out with some you're trying to

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Speaker 1: get to zero als the energy dealing with those new rules.

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Speaker 1: Are you buying dual fuel ships? Are you just using

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Speaker 1: you know, are you looking to add after treatments to

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Speaker 1: your current ships? Can you talk about, you know, your

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Speaker 1: strategy to meet those pretty aggressive targets for zero missions.

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Speaker 2: Well, since twenty fifteen, that's almost ten years ago, we

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Speaker 2: have been one of the pioneer shipping companies around the

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Speaker 2: world in trying to improve the environmental footprint all the

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Speaker 2: existing vessels. We do not believe in the so called

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Speaker 2: vessel of tomorrow because that thing does not exist. Everybody's

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Speaker 2: kind of a trial and network situation where the trying methanol, ammonia,

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Speaker 2: hydrogen ln Z and all these dual fuel situations, and

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Speaker 2: in my opinion, that has not led into any prevailing solution.

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Speaker 2: Right now, there are thirteen thousand dry bull vessels in

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Speaker 2: the water. It is impossible to replace that huge amount

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Speaker 2: of ships, it's impossible. So we have decided since ten

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Speaker 2: years ago to try and improve the existing vessels to

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Speaker 2: the extend possible, and we have been quite successful in that.

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Speaker 2: Number One with electronic systems, you know, with telemetry, with

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Speaker 2: improving the voyage rooting and all that. We have been

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Speaker 2: one of the first companies to implement that on board

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Speaker 2: our ships. Number two scrubbers that we have in more

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Speaker 2: than half of our fleet right now. And also energy

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Speaker 2: saving devices. Our company has been one of the first

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Speaker 2: companies globally in a partnership with some of the world's

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Speaker 2: major charters like Cargill, like many other big shipping chartering

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Speaker 2: companies to implement energy saving devices. Number Three paints. Now

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Speaker 2: with the new paints, the so called Silicon pains, we're

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Speaker 2: seeing massive improvements in efficiency and the reduction of consumption

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Speaker 2: on board a vessels. So that has been working enormously

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Speaker 2: on the fleet that we operate right now. And also

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Speaker 2: most important, Synergy is the first and only Greek shipping

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Speaker 2: company to participate in the European Union funded We announced

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Speaker 2: it very recently European Union funded scheme that is going

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Speaker 2: to test hydrogen propulsion with a subgenerator on board one

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Speaker 2: of our existing vessels and it's going to be twelve

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Speaker 2: to thirteen years old. So we are testing all these

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Speaker 2: methods on existing tonnels because we believe that the actual

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Speaker 2: carbon impact on a new building vessel is quite significant

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Speaker 2: and nobody talks about I mean, think about it. If

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Speaker 2: you're out there to build a ship, you need still,

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Speaker 2: you need aron, or you need to blast Furnas of

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Speaker 2: about twenty twenty four thousand of steel construction equipment, all that, nobody,

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Speaker 2: you know, estimates what is the carbon impact of a

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Speaker 2: new building. If an existing vessel can become more efficient

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Speaker 2: by you know, ten to fifteen percent or sometimes even more,

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Speaker 2: you know that by itself is a major improvement. So

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Speaker 2: we have been extremely sensitive in becoming more and more

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Speaker 2: carbon neutral, and we have been one of the most

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Speaker 2: active companies in trying to implement all prevailing methods into

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Speaker 2: the existing fleet. And then you know, when we're not

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Speaker 2: google to invent the wheel here, you know, the modern

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Speaker 2: will or something like that. We're a seeping company, we

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Speaker 2: will wag it will be the prevailing solution in the future.

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Speaker 2: Right now, we are not convinced that any of the

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Speaker 2: proposed propulsion fuels is safe number one, and efficient and

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Speaker 2: cost effective. So if you don't have sufficient safety, if

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Speaker 2: you don't have energyency, you know, availability, and if you

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Speaker 2: need more energy to produce let's say methanol or ammonia,

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Speaker 2: what's the point at the end of the day. So

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Speaker 2: let's make the existing vessels more efficient and then when

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Speaker 2: the prevailing solution comes across, we will do it.

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Speaker 1: But we'll just do You think the current IMO regulations

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Speaker 1: are going to get pushed out further to get to zero.

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Speaker 2: I think that we're all in. It's a combination. I

321
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Speaker 2: think that yes, there will be some postponements and some

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Speaker 2: let's say adjustments, because you know, trying to implement that

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Speaker 2: on a number of international vessels is kind of difficult,

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Speaker 2: and I fully respect the fact that it's you know,

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Speaker 2: you have so many jurisdictions in ports out the jurisdictions

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Speaker 2: of the vessels, you know, so many countries members, so

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Speaker 2: it's impossible to implement on that. You know, on so

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Speaker 2: many things. It's not like a country, and even in

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Speaker 2: the country need the dictatorship to applies something, you know,

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Speaker 2: efficiently on the population. So it's going to take years.

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Speaker 2: We're going to get there but we are on the

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Speaker 2: right path. But it's a combination of things. Number one,

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Speaker 2: what the technology is going to look like in the future,

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Speaker 2: and number two, how you improve the existing ships. That's

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Speaker 2: what we're doing where we we believe that we are

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Speaker 2: among the most innovative companies to be implementing well known

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Speaker 2: technologists improven technologies on the existing ships. Right.

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Speaker 1: All right, So we've been talking for a little more

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Speaker 1: in twenty minutes now, and I can't believe we haven't

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Speaker 1: mentioned or really haven't talked much about the Red Sea.

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Speaker 1: You know, that's you know, of top of mind for

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Speaker 1: a lot of people that are looking at shipping. Are

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Speaker 1: you guys totally avoiding the area or are you still

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Speaker 1: running ships to the cus Canal?

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Speaker 2: Well, the answer is yes, we are avoiding the see area.

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Speaker 2: We had six of our out of our twenty five

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Speaker 2: fleet in total, was scheduled one way or another to

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Speaker 2: pass through the Red Sea sometime in Q one and

349
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Speaker 2: dearly Q two of twenty twenty four. All of these

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Speaker 2: ships would now not pass from that at sea, either

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Speaker 2: by us taking the initiative to tell our chapters, either

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Speaker 2: by our chatters telling us that they have decided and

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Speaker 2: you know, we're talking about some very very long voyages.

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Speaker 2: For example, we have right now one ship which is

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Speaker 2: in Southeast Australia and that vessel is going to come

356
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Speaker 2: to Europe. So imagine the diversion if it doesn't pass

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Speaker 2: and it's not going to pass that at sea to

358
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Speaker 2: go around the Cape of Good Hope, there's about twenty

359
00:22:46,840 --> 00:22:52,040
Speaker 2: additional sea days, So it's huge. And a lot of

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Speaker 2: ships that we have that are aloading let's say in

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Speaker 2: Seven Islands, Canada, or even in Baltimore in the US,

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Speaker 2: and they're going to India, they will not be passing,

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Speaker 2: you know, the Red Sea, will not be passing the

364
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Speaker 2: Swiss Canal, that will be going around the Cape of

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Speaker 2: Good Hope. Having said that, that increases significantly the TNMA.

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Speaker 2: We're not certain what the impact is on the global

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Speaker 2: cap SIS fleet yet, but if it's six out of

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Speaker 2: twenty five in our case, you know, which is a

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Speaker 2: very good percentage of our fleet. If even if it's

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Speaker 2: half of that or a third of that in the

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Speaker 2: global fleet, it's still a significant vessel supply reduction that

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Speaker 2: is going to have an effect in rates, not right now,

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Speaker 2: but it's going to have a big effect in rates.

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Speaker 2: In March and April this year. So even if the

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Speaker 2: situation of the Red Sea is reversed tomorrow, all these

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Speaker 2: diversions that have happened already will start to show the

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Speaker 2: impact in the next couple of months, and that's where

378
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Speaker 2: we're going to see another big gap in supply. So

379
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Speaker 2: the Red Sea is a big issue. We're a US

380
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Speaker 2: listed company. We have two US listed companies. Another US

381
00:24:04,359 --> 00:24:07,760
Speaker 2: listed company has been targeted twice on their ship. So

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Speaker 2: we're not taking any risk. We're not taking any you know,

383
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Speaker 2: unnecessary burdens here. We don't want to risk the health

384
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Speaker 2: and safety of our crew members and of course the

385
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Speaker 2: health and safety of the ship and the you know,

386
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Speaker 2: in the countries in the net C. So we have

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Speaker 2: decided to avoid passing through the dot C right.

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Speaker 1: You know, obviously you want to protect your crew and

389
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Speaker 1: the cargo and all that stuff. But the ship itself

390
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Speaker 1: is pretty expensive. What what a new if I wanted to

391
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Speaker 1: buy Cape size today, what would that cost?

392
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Speaker 2: Well, you know, a cape size let's say ten year

393
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Speaker 2: old cape sizes right now around mid thirty around thirty

394
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Speaker 2: four thirty five million dollars and new buildings around seventy

395
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Speaker 2: million dollars, So it's an expensive asset. And at the

396
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Speaker 2: end of the day, you have also a cargo that

397
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Speaker 2: you know, if you carry one hundred and eighty thousand

398
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Speaker 2: tons of I don't or you know, that's one hundred

399
00:24:59,520 --> 00:25:03,200
Speaker 2: dollars per on that's even another eighteen million dollars worth

400
00:25:03,200 --> 00:25:06,479
Speaker 2: of carriage. So that's a very expensive exercise altogether. So

401
00:25:06,680 --> 00:25:09,119
Speaker 2: I don't want to get into a situation where we

402
00:25:09,280 --> 00:25:13,280
Speaker 2: are considering risking, you know, the cost of the ship,

403
00:25:13,280 --> 00:25:16,520
Speaker 2: but most importantly the health and safety of our crew members,

404
00:25:16,520 --> 00:25:18,359
Speaker 2: which is quite significant here.

405
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Speaker 1: And who pays for you know, so it's twenty extra days.

406
00:25:21,800 --> 00:25:24,920
Speaker 1: Rates also might go up a little bit, as you mentioned,

407
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Speaker 1: So who pays for that the extra the extra days

408
00:25:29,480 --> 00:25:34,040
Speaker 1: is that the time trotter, the shipper, the customer.

409
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Speaker 2: All of our ships are on time chartter, so we

410
00:25:37,760 --> 00:25:42,120
Speaker 2: don't pay for the diversion. It's actually paid by our charters,

411
00:25:42,320 --> 00:25:45,520
Speaker 2: you know, so they undertake the cost of that. But ultimately,

412
00:25:45,720 --> 00:25:49,239
Speaker 2: you know, if the transportation cost becomes more expensive, that

413
00:25:49,480 --> 00:25:53,479
Speaker 2: ultimately hits the consumer you know, or the client. Now

414
00:25:53,640 --> 00:25:55,840
Speaker 2: you know, if the client is you know, a power

415
00:25:55,840 --> 00:25:59,600
Speaker 2: factor in Europe or a still mill in China or whatever,

416
00:26:00,000 --> 00:26:03,680
Speaker 2: you know, producing all that and basically, as you can imagine,

417
00:26:04,359 --> 00:26:10,320
Speaker 2: the ultimate consumer or client pays the cost of increased transportation.

418
00:26:10,880 --> 00:26:14,600
Speaker 2: So that's how it works, you know. And yeah, it's

419
00:26:14,640 --> 00:26:17,760
Speaker 2: not only that, let's see diversion right now, but all

420
00:26:17,800 --> 00:26:21,720
Speaker 2: these new environmental regulations and all this need for slow

421
00:26:21,880 --> 00:26:25,840
Speaker 2: down and you know, renewal of the fleet that is

422
00:26:25,920 --> 00:26:29,200
Speaker 2: actually going to be hit. There's a big hit to

423
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Speaker 2: the end consumer no matter what.

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Speaker 1: Just so because a lot of people that listen to

425
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Speaker 1: the podcast, they might enter shipping that well, the slower

426
00:26:37,560 --> 00:26:39,960
Speaker 1: you go, the more fuel efficient and ship is. And

427
00:26:40,040 --> 00:26:43,119
Speaker 1: can you explain, because again some people might not know

428
00:26:43,160 --> 00:26:45,320
Speaker 1: the terminology. What is the time charter?

429
00:26:46,359 --> 00:26:49,240
Speaker 2: Time circle means that you rent the ship to your

430
00:26:49,320 --> 00:26:53,480
Speaker 2: client for a period of time. The other way, which

431
00:26:53,520 --> 00:26:56,200
Speaker 2: is the spot is usually the so called dollars per ton.

432
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Speaker 2: So you say, I'm going to rent you that boat

433
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Speaker 2: and the income will be on a dollars perton basis.

434
00:27:02,640 --> 00:27:05,800
Speaker 2: So I'm going to be you know, my revenues will

435
00:27:05,840 --> 00:27:09,639
Speaker 2: be based on a dollars perton basis of transported cargo. However,

436
00:27:09,680 --> 00:27:11,840
Speaker 2: a time shutter is that I'm renting the ship to

437
00:27:11,920 --> 00:27:14,600
Speaker 2: you or you know, to a third party for a

438
00:27:14,600 --> 00:27:17,720
Speaker 2: certain period of time. So you know, you don't care

439
00:27:17,840 --> 00:27:20,800
Speaker 2: how many tones you transport or where you go. That's

440
00:27:20,840 --> 00:27:24,000
Speaker 2: the responsibility of the chartter. You just get a rent

441
00:27:24,200 --> 00:27:27,240
Speaker 2: income for the period that you're renting the ship to

442
00:27:27,480 --> 00:27:28,360
Speaker 2: that third party.

443
00:27:28,760 --> 00:27:31,320
Speaker 1: And a time traider is like a valet, like you know,

444
00:27:31,359 --> 00:27:34,400
Speaker 1: a big, a big commodity player, right.

445
00:27:35,359 --> 00:27:40,760
Speaker 2: Yeah, val of course. But our biggest charters are Cargill,

446
00:27:40,880 --> 00:27:44,080
Speaker 2: which is a US company, n y K which is

447
00:27:44,119 --> 00:27:49,280
Speaker 2: a major Japanese company, Glencore, a major European commodities trader,

448
00:27:49,600 --> 00:27:51,159
Speaker 2: and then of course we do a lot of business

449
00:27:51,160 --> 00:27:54,399
Speaker 2: with traffic with Anglo American, with some of the world's

450
00:27:54,440 --> 00:27:59,480
Speaker 2: biggest minors and trade traders of driball commodity.

451
00:28:00,200 --> 00:28:04,600
Speaker 1: And so it's your ship, you and your crew, and

452
00:28:04,640 --> 00:28:07,560
Speaker 1: then the time startter pretty much pays for everything else, right.

453
00:28:07,760 --> 00:28:10,960
Speaker 2: Yes, yes, we pay for We pay for the so

454
00:28:11,119 --> 00:28:15,760
Speaker 2: called vessel operating expenses, so that the crew, the insurance,

455
00:28:16,280 --> 00:28:19,560
Speaker 2: you know, the maintenance, if person mentals know that anything

456
00:28:19,680 --> 00:28:22,320
Speaker 2: associated to voyage, which is you know, the cost of

457
00:28:22,359 --> 00:28:26,760
Speaker 2: the fuel, the canals, the port, coast and all that

458
00:28:26,760 --> 00:28:30,080
Speaker 2: that is paid by our client. So we don't participate in.

459
00:28:30,040 --> 00:28:34,560
Speaker 1: That, right, great, and you know, you know you mentioned

460
00:28:34,840 --> 00:28:37,160
Speaker 1: a new cap costs in the seventy million I think

461
00:28:37,160 --> 00:28:40,920
Speaker 1: said seventy four million dollars. So we're in a higher

462
00:28:40,960 --> 00:28:45,280
Speaker 1: interest rate environment. When someone's buying a new ship, how

463
00:28:45,320 --> 00:28:47,160
Speaker 1: much do they have to put down? How much are

464
00:28:47,280 --> 00:28:51,600
Speaker 1: banks or you know, whatever financial institutions that the shipping

465
00:28:51,640 --> 00:28:55,479
Speaker 1: industries tend to leaning on today, how much are they

466
00:28:55,480 --> 00:28:56,600
Speaker 1: willing to underwrite?

467
00:28:57,240 --> 00:29:00,440
Speaker 2: Well, that's an excellent question. The fact of the is

468
00:29:00,480 --> 00:29:04,600
Speaker 2: that a higher interest rate environment has not deterred people

469
00:29:04,640 --> 00:29:07,920
Speaker 2: from ordering news ships, not drybulk, but I'm referring to

470
00:29:08,080 --> 00:29:11,320
Speaker 2: llen Zis containers, tankers and all that. So higher interest

471
00:29:11,400 --> 00:29:15,200
Speaker 2: rates and more expensive bunking costs have not really deterred

472
00:29:15,200 --> 00:29:18,719
Speaker 2: people from ordering more and more ships. So, even though

473
00:29:18,800 --> 00:29:23,080
Speaker 2: the interstate has been you know a big component of

474
00:29:23,080 --> 00:29:27,520
Speaker 2: our cost, the financial cost of the company, it's still

475
00:29:28,360 --> 00:29:33,200
Speaker 2: highly profitable to buy or order reip, not order recip

476
00:29:34,080 --> 00:29:37,920
Speaker 2: on capes, but to buyicepar right now, it makes perfect

477
00:29:38,000 --> 00:29:41,640
Speaker 2: economic sense even on a higher interest rate environment. Right.

478
00:29:41,880 --> 00:29:44,320
Speaker 1: We talked a lot about on the supply side, on

479
00:29:44,360 --> 00:29:47,200
Speaker 1: the demand side, do you have an outlook on demand

480
00:29:47,240 --> 00:29:50,880
Speaker 1: for this year for the commodities or just in general

481
00:29:50,880 --> 00:29:51,840
Speaker 1: and dryable demand.

482
00:29:52,920 --> 00:29:57,160
Speaker 2: Well, the biggest misconception of twenty twenty three last year

483
00:29:57,920 --> 00:30:01,840
Speaker 2: was that the Chinese economy will in you know, severe

484
00:30:02,000 --> 00:30:05,360
Speaker 2: problems due to the housing crisis. And that's actually quite

485
00:30:05,400 --> 00:30:07,920
Speaker 2: true because you know, you had the bankrupt of every

486
00:30:08,000 --> 00:30:11,080
Speaker 2: Grande and a number of other major developers in China

487
00:30:11,120 --> 00:30:15,400
Speaker 2: went into big financial stress and the housing market in China.

488
00:30:15,480 --> 00:30:19,680
Speaker 2: You know, there's no question of how challenging it is

489
00:30:19,760 --> 00:30:26,480
Speaker 2: right now. However, in that challenging environment, China imported one

490
00:30:26,560 --> 00:30:30,160
Speaker 2: hundred million tons one hundred million tons of driver back

491
00:30:31,200 --> 00:30:35,000
Speaker 2: iron or coal and box side commodities in twenty twenty three.

492
00:30:35,040 --> 00:30:38,640
Speaker 2: So the actual tournmil increase in China for twenty twenty

493
00:30:38,640 --> 00:30:41,440
Speaker 2: three has been around five percent. So it was a

494
00:30:41,640 --> 00:30:46,840
Speaker 2: massive increase of turn miil demand arising from China in

495
00:30:46,880 --> 00:30:50,640
Speaker 2: twenty twenty three, and that in turn led to a

496
00:30:50,720 --> 00:30:55,360
Speaker 2: higher rate of exports. So China not only imported a

497
00:30:55,480 --> 00:31:00,280
Speaker 2: higher number of raw materials like karen or coal and

498
00:31:00,360 --> 00:31:04,560
Speaker 2: box side, but also exported more still, so the finished

499
00:31:04,560 --> 00:31:07,840
Speaker 2: still exports out of China were by around five percent,

500
00:31:08,280 --> 00:31:11,600
Speaker 2: which is a very significant amount. So even though they

501
00:31:11,600 --> 00:31:17,280
Speaker 2: didn't use still for the domestic housing market because obviously

502
00:31:17,280 --> 00:31:20,840
Speaker 2: the housing market has been in a challenging situation, they

503
00:31:21,160 --> 00:31:25,719
Speaker 2: did export a big amount of finished still products and

504
00:31:25,760 --> 00:31:30,720
Speaker 2: that shows a very healthy market altogether and a smaller

505
00:31:31,080 --> 00:31:36,720
Speaker 2: reliance on the Chinese housing housing market, which is good

506
00:31:36,760 --> 00:31:39,440
Speaker 2: for US. We don't rely just on how many houses

507
00:31:39,440 --> 00:31:42,600
Speaker 2: they're built in China, so they make still the export

508
00:31:42,640 --> 00:31:47,600
Speaker 2: still and we calculate right now that the global infrastructure

509
00:31:47,680 --> 00:31:51,120
Speaker 2: projects that they will require a big amount of steel

510
00:31:51,800 --> 00:31:54,760
Speaker 2: is in the region of around two trillion dollars. The

511
00:31:54,840 --> 00:31:58,920
Speaker 2: majority comes from the Middle East area like UAE, Saudi

512
00:31:58,960 --> 00:32:01,560
Speaker 2: Arabia and all that, where as you know, it's a

513
00:32:01,640 --> 00:32:05,080
Speaker 2: massive infrastructure drive over there. But at the same time,

514
00:32:05,120 --> 00:32:07,440
Speaker 2: in the US and the number of other countries in Africa,

515
00:32:07,680 --> 00:32:12,160
Speaker 2: you have massive infrastructure projects. So despite China being in

516
00:32:12,240 --> 00:32:16,680
Speaker 2: such a difficult situation, we believe that infrastructure projects will

517
00:32:16,760 --> 00:32:21,640
Speaker 2: continue to drive demand for raw materials in the near future.

518
00:32:22,320 --> 00:32:26,480
Speaker 1: All right, fingers crossed, So you know, just to change

519
00:32:26,520 --> 00:32:29,520
Speaker 1: cares a little bit. You know, I know you've been

520
00:32:29,520 --> 00:32:31,000
Speaker 1: doing this for a long time. How did you get

521
00:32:31,040 --> 00:32:31,840
Speaker 1: into shipping?

522
00:32:33,120 --> 00:32:35,480
Speaker 2: Well, you know, first of all, my father was a

523
00:32:35,560 --> 00:32:39,680
Speaker 2: captain on board the small dry bog ships. So the

524
00:32:39,720 --> 00:32:42,240
Speaker 2: first time I went on board the ship, I must

525
00:32:42,280 --> 00:32:45,200
Speaker 2: have been like maybe one years old or something like that.

526
00:32:45,240 --> 00:32:48,520
Speaker 2: So all my life I've been in ships. And when

527
00:32:48,560 --> 00:32:51,880
Speaker 2: I was fifteen, I got my Siemens book, and concurrently

528
00:32:51,960 --> 00:32:55,720
Speaker 2: with my studies, I have been, you know, making small

529
00:32:55,800 --> 00:33:00,920
Speaker 2: voyages on commercial vessels myself, especially in the summers as

530
00:33:01,000 --> 00:33:04,880
Speaker 2: part of my training. Then I did the finance degrees

531
00:33:04,920 --> 00:33:08,480
Speaker 2: and all that, but always in relation to shipping. So

532
00:33:09,000 --> 00:33:11,520
Speaker 2: I did shipping apos. I took a lot of shipping

533
00:33:11,520 --> 00:33:14,600
Speaker 2: companies public in the New York sockety Change, like twenty

534
00:33:14,720 --> 00:33:18,000
Speaker 2: twenty three years ago, and then I started to say, okay,

535
00:33:18,200 --> 00:33:22,240
Speaker 2: you know, investment banking in Greece is not so prominent

536
00:33:22,280 --> 00:33:24,000
Speaker 2: as it is in the United States. I had to

537
00:33:24,320 --> 00:33:27,640
Speaker 2: look for, you know, the industry that I was feeling

538
00:33:27,680 --> 00:33:30,120
Speaker 2: closer to, and that was shipping. And I started as

539
00:33:30,120 --> 00:33:33,480
Speaker 2: a CFO many many years ago, and I became CEO

540
00:33:33,480 --> 00:33:37,000
Speaker 2: of Synergy in twenty twelve. So one thing literally another.

541
00:33:37,040 --> 00:33:39,800
Speaker 2: It was a natural thing. I never looked of becoming

542
00:33:39,880 --> 00:33:42,960
Speaker 2: let's say, an architect or a doctor or a lawyer

543
00:33:43,040 --> 00:33:46,360
Speaker 2: or things like that. I always liked ships and round that,

544
00:33:46,600 --> 00:33:49,800
Speaker 2: and you know, I was in finance first and then

545
00:33:49,840 --> 00:33:52,840
Speaker 2: I ended up the last twelve years now as CEO

546
00:33:53,280 --> 00:33:56,239
Speaker 2: running this company which we started out of nothing and

547
00:33:56,280 --> 00:33:59,840
Speaker 2: we became one of the most prominent cape size pure

548
00:34:00,200 --> 00:34:02,320
Speaker 2: companies around the world.

549
00:34:02,400 --> 00:34:06,200
Speaker 1: So when you were spending your summers on ships, you know,

550
00:34:06,400 --> 00:34:09,200
Speaker 1: what did you like most about that experience?

551
00:34:10,239 --> 00:34:12,600
Speaker 2: Well, it's so one of a kind experience, you know,

552
00:34:12,640 --> 00:34:16,839
Speaker 2: because it's very international and you meet the trade, you

553
00:34:16,880 --> 00:34:20,720
Speaker 2: see the cargo itself. You know, sometimes when we sit down,

554
00:34:21,160 --> 00:34:24,360
Speaker 2: you know, on the dinner table and you look at food,

555
00:34:25,040 --> 00:34:27,520
Speaker 2: we don't realize where that food is coming from, how

556
00:34:27,560 --> 00:34:31,919
Speaker 2: many you know, miles of distances it has struggled. Or

557
00:34:31,960 --> 00:34:35,480
Speaker 2: when we get a still to build a house, you know,

558
00:34:35,719 --> 00:34:38,920
Speaker 2: a piece of steel, we don't realize how that has happened,

559
00:34:39,200 --> 00:34:41,720
Speaker 2: you know, to become you know the still of building

560
00:34:41,719 --> 00:34:45,400
Speaker 2: houses and bridges and all that. You just become part

561
00:34:45,480 --> 00:34:49,440
Speaker 2: of the global logistics chain, you know, and you feel

562
00:34:49,880 --> 00:34:53,040
Speaker 2: how the commodity is starting from, you know, the basic

563
00:34:53,080 --> 00:34:56,719
Speaker 2: raw materials like colon or and box side become the

564
00:34:56,719 --> 00:35:03,440
Speaker 2: finished products like doors, you know, houses, roads, you know,

565
00:35:03,880 --> 00:35:06,680
Speaker 2: rail tracks and all that. Which is quite significant. So

566
00:35:06,760 --> 00:35:09,960
Speaker 2: the biggest and the best experience is that you feel

567
00:35:10,160 --> 00:35:14,239
Speaker 2: part of a global chain of events that lead into

568
00:35:14,480 --> 00:35:19,640
Speaker 2: you know, how we spend our lives every day, food, transportation,

569
00:35:20,160 --> 00:35:23,520
Speaker 2: infrastructure and all that with just you know, don't think

570
00:35:23,560 --> 00:35:26,640
Speaker 2: about it. We believeing in a magic way.

571
00:35:27,120 --> 00:35:31,000
Speaker 1: And they give people like maybe a better taste for

572
00:35:31,200 --> 00:35:33,880
Speaker 1: you know, the marine shipping industry. Is there a book

573
00:35:33,920 --> 00:35:36,000
Speaker 1: that you've read in the past, whether it's fiction or

574
00:35:36,000 --> 00:35:40,240
Speaker 1: non fiction, that you think that gives a really good

575
00:35:40,440 --> 00:35:42,960
Speaker 1: insight into what the shipping industry is like?

576
00:35:44,120 --> 00:35:48,640
Speaker 2: Well, I like to see. You know, my first professor

577
00:35:48,680 --> 00:35:52,479
Speaker 2: in the University of Perels taught us all of us.

578
00:35:52,560 --> 00:35:56,560
Speaker 2: You know that demand for sipun transportation services is a

579
00:35:56,560 --> 00:35:59,319
Speaker 2: derivative demand. You know, you do not transport anything if

580
00:35:59,360 --> 00:36:02,440
Speaker 2: there's not global trade, and it does not global demand

581
00:36:02,480 --> 00:36:06,439
Speaker 2: for these commodities. So I try to understand how that

582
00:36:06,640 --> 00:36:10,120
Speaker 2: works globally. I mean, one of the books that I

583
00:36:10,160 --> 00:36:12,680
Speaker 2: love and I keep reading and I'm reading again right

584
00:36:12,719 --> 00:36:16,200
Speaker 2: now is called Silk Roads and talks about you know,

585
00:36:16,360 --> 00:36:19,640
Speaker 2: how Europe, Middle East and Asia have become what it

586
00:36:19,760 --> 00:36:23,000
Speaker 2: is today through the centuries, and how trade has become

587
00:36:23,960 --> 00:36:27,239
Speaker 2: a dominant part of our lives. So I try to

588
00:36:27,280 --> 00:36:29,840
Speaker 2: look at the forest and then try to understand the

589
00:36:29,840 --> 00:36:33,239
Speaker 2: ship itself and why and why it goes from point

590
00:36:33,320 --> 00:36:34,560
Speaker 2: day to point B to put it this.

591
00:36:34,560 --> 00:36:37,480
Speaker 1: Way right, Well, Stomatis, I really want to thank you

592
00:36:37,520 --> 00:36:40,400
Speaker 1: for your time and this is a great conversation.

593
00:36:40,880 --> 00:36:44,680
Speaker 2: Thank you, Lee. It's been great catching up and I'm

594
00:36:44,680 --> 00:36:48,000
Speaker 2: at your disposal and your listener's disposal. If there any

595
00:36:48,040 --> 00:36:51,120
Speaker 2: follow up things that you want to explain about, you know,

596
00:36:51,480 --> 00:36:54,040
Speaker 2: I believe we you know, went through the whole thing

597
00:36:54,160 --> 00:36:56,799
Speaker 2: very quickly, but if there's anything in particular that you

598
00:36:56,800 --> 00:36:59,000
Speaker 2: want to discuss in the future, I'm there for you

599
00:36:59,080 --> 00:36:59,880
Speaker 2: and for you listening.

600
00:37:00,120 --> 00:37:01,920
Speaker 1: Thank you very much. Well, I want to also thank

601
00:37:01,960 --> 00:37:03,959
Speaker 1: you for tuning in. If you liked the episode, please

602
00:37:03,960 --> 00:37:06,959
Speaker 1: subscribe and leave a review. We've lined up a number

603
00:37:07,000 --> 00:37:09,319
Speaker 1: of great guests for the podcast. Check back to hear

604
00:37:09,440 --> 00:37:14,520
Speaker 1: conversations with C suite executive, shippers, regulators, and decision makers

605
00:37:14,520 --> 00:37:17,080
Speaker 1: within the freight markets. Also, if you have any ideas

606
00:37:17,080 --> 00:37:19,680
Speaker 1: for future episodes, please hit me up on the terminal

607
00:37:19,920 --> 00:37:29,319
Speaker 1: or on Twitter at Logistics Lee. Thanks everyone, be safe,