1 00:00:07,200 --> 00:00:11,160 Speaker 1: Hi everyone, and welcome to Bloomberg Intelligence Talking Transport Podcast. 2 00:00:11,320 --> 00:00:14,319 Speaker 1: I'm your host Lee Klasgaw, Senior Freight Transportation. Let's just 3 00:00:14,320 --> 00:00:18,320 Speaker 1: sux analysts at Bloomberg Intelligence, Bloomberg's in house research arm. 4 00:00:18,640 --> 00:00:22,000 Speaker 1: We're delighted to have Robert Bugby, President and Director of 5 00:00:22,120 --> 00:00:25,640 Speaker 1: Scorpio Tankers as our guest on the podcast. He has 6 00:00:25,720 --> 00:00:28,960 Speaker 1: been in the role since the closing of Scorpio's IPO 7 00:00:29,120 --> 00:00:32,520 Speaker 1: in April of twenty ten. He has more than thirty 8 00:00:32,600 --> 00:00:35,680 Speaker 1: six years of experience in the shipping industry. For those 9 00:00:35,680 --> 00:00:39,360 Speaker 1: that don't know, Scorpio is a publicly traded product tanker 10 00:00:39,400 --> 00:00:44,920 Speaker 1: operator under the ticker stnng space US on the Bloomberg Terminal, 11 00:00:45,159 --> 00:00:48,560 Speaker 1: with a market cap of around three point five billion dollars. 12 00:00:49,159 --> 00:00:51,480 Speaker 1: The stock has done pretty well over the last five years. 13 00:00:51,479 --> 00:00:54,640 Speaker 1: It's up around two hundred and twenty five percent versus 14 00:00:54,680 --> 00:00:58,040 Speaker 1: the SMP which was up ninety four percent, and it's 15 00:00:58,200 --> 00:01:00,960 Speaker 1: had a good start to the year. In twenty twenty 16 00:01:01,000 --> 00:01:05,520 Speaker 1: four and it's up around seven percent. Also, Robert has 17 00:01:05,520 --> 00:01:08,880 Speaker 1: a Master's of International Business from the Norwegian School of 18 00:01:08,920 --> 00:01:14,080 Speaker 1: Economics and Business Administration in Bergen. He has a BA 19 00:01:14,120 --> 00:01:18,040 Speaker 1: with honors from the London University. So welcome to the podcast, Robert. 20 00:01:18,120 --> 00:01:21,000 Speaker 2: I thank you very much, appreciate being on here. 21 00:01:22,920 --> 00:01:25,399 Speaker 1: Yeah, it's great to have you. I've been a fan 22 00:01:25,440 --> 00:01:27,679 Speaker 1: of yours for a while. I always heard you at 23 00:01:27,720 --> 00:01:31,000 Speaker 1: conferences and I find you know not to stroke your 24 00:01:31,000 --> 00:01:33,680 Speaker 1: ego too much at the beginning here, but very insightful 25 00:01:34,360 --> 00:01:37,640 Speaker 1: when it comes to the shipping industry. Can you give 26 00:01:37,959 --> 00:01:41,880 Speaker 1: folks a better understanding of what Scorpio Tanker is. I said, 27 00:01:41,880 --> 00:01:45,280 Speaker 1: it's a product tanker operator, but a lot of people 28 00:01:45,360 --> 00:01:47,560 Speaker 1: might not know what that actually means and kind of 29 00:01:47,560 --> 00:01:47,880 Speaker 1: the market. 30 00:01:47,960 --> 00:01:52,240 Speaker 3: Chase sir, Yeah, we're a clean petroleum product tanking company, 31 00:01:52,600 --> 00:01:59,360 Speaker 3: and so what that means is that vessels coated, meaning 32 00:01:59,440 --> 00:02:03,800 Speaker 3: that the tanks are coated with paint, special paints, as 33 00:02:03,840 --> 00:02:09,440 Speaker 3: well as the pipes that enable us to carry gasoline, 34 00:02:10,120 --> 00:02:14,320 Speaker 3: jet fuel, nap there the refined products as well as 35 00:02:14,560 --> 00:02:19,919 Speaker 3: a lot of vegetable and palm oils for for example, 36 00:02:20,040 --> 00:02:24,480 Speaker 3: makeup industry or human consumption, cooking, et cetera. 37 00:02:25,600 --> 00:02:29,959 Speaker 1: Gotcha, and can you talk a little about Scorpio's fleet. 38 00:02:30,080 --> 00:02:32,160 Speaker 1: How many ships do you operate and what kind of 39 00:02:32,160 --> 00:02:36,080 Speaker 1: ships in terms of sizes are they so. 40 00:02:36,639 --> 00:02:41,800 Speaker 3: We operate one hundred and twelve vessels. Average age is 41 00:02:41,919 --> 00:02:45,040 Speaker 3: less than eight years. That makes us, I think, the 42 00:02:45,080 --> 00:02:50,960 Speaker 3: youngest fleet in the public company market. They are split 43 00:02:51,040 --> 00:02:56,079 Speaker 3: between handy sized vessels they're around thirty thirty five thousand deadweight, 44 00:02:57,000 --> 00:03:02,640 Speaker 3: to mrs which are range product tankers which are around 45 00:03:02,639 --> 00:03:06,200 Speaker 3: forty five fifty thousand dead weight, all the way up 46 00:03:06,240 --> 00:03:12,120 Speaker 3: to long range two carriers so out there called l 47 00:03:12,240 --> 00:03:17,720 Speaker 3: R two's, which are over one hundred thousand tons deadweight. 48 00:03:17,880 --> 00:03:21,120 Speaker 3: That know, or as they describe, they're the largest product 49 00:03:21,120 --> 00:03:23,760 Speaker 3: tankers and they're the long range product tankers. 50 00:03:24,520 --> 00:03:27,880 Speaker 1: And just for people out there, could you because a 51 00:03:27,880 --> 00:03:30,600 Speaker 1: lot of people don't know what that means in terms 52 00:03:30,600 --> 00:03:34,280 Speaker 1: of the tonnage size, could you like equate to one 53 00:03:34,320 --> 00:03:36,880 Speaker 1: of those ships to like how many barrels or how 54 00:03:36,920 --> 00:03:39,560 Speaker 1: many gallons that it can they can they can haul? 55 00:03:39,680 --> 00:03:40,840 Speaker 1: I don't know if it's easy to do. 56 00:03:42,240 --> 00:03:44,200 Speaker 3: Yeah, So the big one is about seven hundred and 57 00:03:44,200 --> 00:03:47,160 Speaker 3: fifty thousand barrels and then they go down, you know, 58 00:03:47,280 --> 00:03:50,840 Speaker 3: four hundred thousand barrels, the. 59 00:03:49,880 --> 00:03:52,120 Speaker 2: Two fifty three hundred thousand barrels. 60 00:03:52,480 --> 00:03:55,880 Speaker 3: Right, So the smaller vessels are about a tenth of 61 00:03:55,920 --> 00:04:01,800 Speaker 3: the size of a VLS big modern VLCC and the 62 00:04:01,880 --> 00:04:04,680 Speaker 3: largest vessels are the same size as and from ex 63 00:04:04,760 --> 00:04:05,920 Speaker 3: crude oil tanker. 64 00:04:07,680 --> 00:04:09,560 Speaker 1: Right in the v v l c CS for those 65 00:04:09,560 --> 00:04:12,080 Speaker 1: that don't know, that's a very large crude carrier. They're 66 00:04:12,120 --> 00:04:15,040 Speaker 1: the largest some of the largest tankers that are on 67 00:04:15,200 --> 00:04:20,000 Speaker 1: the on the oceans that are delivering crude crude oil. 68 00:04:20,320 --> 00:04:23,479 Speaker 1: Can you talk about who your major customers are? 69 00:04:24,920 --> 00:04:27,360 Speaker 2: The major customers would be the oil majors in. 70 00:04:27,320 --> 00:04:33,520 Speaker 3: The world and the sovereign states. A lot of a 71 00:04:33,520 --> 00:04:39,320 Speaker 3: lot of production of clean petroleum, new refineries in the 72 00:04:39,320 --> 00:04:46,080 Speaker 3: Middle East, Kuwait, u A and Saudi Arabia as well 73 00:04:46,120 --> 00:04:52,240 Speaker 3: as you know growing refinery capacity out in Korea and China. 74 00:04:53,080 --> 00:04:57,840 Speaker 1: So are the major trade routes from the refineries to 75 00:04:58,880 --> 00:05:02,000 Speaker 1: the end user like the refineries in the Middle East 76 00:05:02,000 --> 00:05:04,600 Speaker 1: and maybe the Gulf coast of the United States to Asia. 77 00:05:05,120 --> 00:05:07,039 Speaker 2: Yeah, yes, so think of it. 78 00:05:07,120 --> 00:05:11,320 Speaker 3: What we do is link a refinery to the end 79 00:05:11,400 --> 00:05:15,520 Speaker 3: user to the consumer. So exactly as you pointed out, 80 00:05:15,560 --> 00:05:20,520 Speaker 3: the major areas exports of product from the US, golf, 81 00:05:21,680 --> 00:05:25,680 Speaker 3: exports of product from the Middle East, exports from products 82 00:05:26,000 --> 00:05:32,680 Speaker 3: from North Asia, and you know, before the conflict in 83 00:05:32,839 --> 00:05:39,200 Speaker 3: Ukraine from Russia and major importers the United States excluding 84 00:05:39,320 --> 00:05:44,880 Speaker 3: the US, Golf, Europe, Latin America, Africa, Asia and Australasia. 85 00:05:46,640 --> 00:05:49,200 Speaker 1: Got ya. I mean since the pandemic, there's been a 86 00:05:49,240 --> 00:05:52,800 Speaker 1: lot of disruptions and supply chains in the product anchor market. 87 00:05:52,839 --> 00:05:55,360 Speaker 1: It was not immune to that. You know, over the 88 00:05:55,440 --> 00:05:58,520 Speaker 1: last two years, we've had the Ukraine War, We've had 89 00:05:58,560 --> 00:06:02,280 Speaker 1: low water levels the Panama Canal and obviously now the 90 00:06:02,880 --> 00:06:07,360 Speaker 1: rising conflict in the Red Sea. Could you talk about 91 00:06:07,560 --> 00:06:13,719 Speaker 1: how those events are impacting the industry as it relates 92 00:06:13,760 --> 00:06:20,160 Speaker 1: to delivering petroleum products or palm oil to customers and 93 00:06:20,240 --> 00:06:24,480 Speaker 1: maybe which one is maybe has been the most disruptive 94 00:06:24,600 --> 00:06:26,240 Speaker 1: to the industry, if you can talk to that. 95 00:06:28,760 --> 00:06:33,480 Speaker 3: Sure, I think that unfortunately, we're going along as an industry. 96 00:06:33,600 --> 00:06:37,440 Speaker 3: Most of our growth in ten miles, which is how 97 00:06:37,480 --> 00:06:40,880 Speaker 3: we measure demand. There's the distance over the or the 98 00:06:40,880 --> 00:06:43,839 Speaker 3: amount of cargo carried over a distance. Has been improving 99 00:06:43,839 --> 00:06:48,760 Speaker 3: on fundamentals, and those fundamentals have been driven by closures, 100 00:06:48,800 --> 00:06:52,800 Speaker 3: for example, of older refineries in the United States, like 101 00:06:52,880 --> 00:06:59,359 Speaker 3: the US East Coast, closures in Europe, and that is 102 00:06:59,720 --> 00:07:03,799 Speaker 3: an opening of refineries far away from the consumer such 103 00:07:03,839 --> 00:07:06,560 Speaker 3: as the Middle East. Seeing in the product market is 104 00:07:06,600 --> 00:07:12,000 Speaker 3: you're seeing that there's a requirement to refine more products. 105 00:07:12,040 --> 00:07:17,520 Speaker 3: I headline, demand for products has increased, but refinery capacity 106 00:07:17,600 --> 00:07:22,239 Speaker 3: itself has been growing in areas that are far away 107 00:07:22,240 --> 00:07:27,200 Speaker 3: from the consumer and closing in areas. 108 00:07:26,800 --> 00:07:29,560 Speaker 2: That are close to the consumer. And that's the disparacy. 109 00:07:30,560 --> 00:07:33,920 Speaker 3: Now you have had the dislocations that you're pointing out, 110 00:07:35,240 --> 00:07:40,720 Speaker 3: such as Russia. Russia used to be a great exporter 111 00:07:40,880 --> 00:07:46,880 Speaker 3: of product and then that's been partly curtailed by sanctions. 112 00:07:48,120 --> 00:07:53,000 Speaker 3: We ourselves don't do any of the sanctioned trade obviously, 113 00:07:53,360 --> 00:07:58,360 Speaker 3: but Russia is still able to export products on product 114 00:07:58,440 --> 00:08:03,840 Speaker 3: anchors that have been bought by individuals or by countries 115 00:08:03,920 --> 00:08:07,440 Speaker 3: that really don't care about the sanctions at all. So 116 00:08:08,360 --> 00:08:11,840 Speaker 3: you know, it's a big headline, but it's not affecting. 117 00:08:12,120 --> 00:08:15,040 Speaker 3: It's still the fundamental that I pointed out that's driving 118 00:08:15,080 --> 00:08:19,280 Speaker 3: the industry, and that's helped by low inventories of products. 119 00:08:19,440 --> 00:08:23,160 Speaker 3: People do down on their inventories during products and haven't 120 00:08:23,200 --> 00:08:27,200 Speaker 3: replaced them since. One that is helping the market right 121 00:08:27,240 --> 00:08:32,840 Speaker 3: now is the Panama Canal. Vessels that went through the 122 00:08:32,840 --> 00:08:37,200 Speaker 3: Panama Canal and now having to expand their sea routs 123 00:08:37,320 --> 00:08:40,920 Speaker 3: or take So if you want to get product into 124 00:08:40,960 --> 00:08:46,200 Speaker 3: the West coast of the Americas, you either have to 125 00:08:46,200 --> 00:08:49,720 Speaker 3: get lucky and pay an extraordinary amount of money to 126 00:08:49,760 --> 00:08:53,440 Speaker 3: get a ticket to go through the Panama Canal, or 127 00:08:54,120 --> 00:08:56,760 Speaker 3: you have to go around the cape much longer distance, 128 00:08:56,880 --> 00:09:00,840 Speaker 3: much longer time, therefore more capacities used up. Or you 129 00:09:00,960 --> 00:09:04,959 Speaker 3: have to get cargo from all the way across the Pacific, 130 00:09:05,240 --> 00:09:06,680 Speaker 3: again a greater ton mile. 131 00:09:08,320 --> 00:09:11,400 Speaker 2: It's significant and it's a nice to. 132 00:09:11,320 --> 00:09:12,800 Speaker 4: Have, right, but. 133 00:09:14,800 --> 00:09:18,360 Speaker 3: The majority of the product market doesn't go through the 134 00:09:18,400 --> 00:09:19,320 Speaker 3: Panama Canal. 135 00:09:19,400 --> 00:09:21,040 Speaker 2: It's a smaller area. 136 00:09:22,000 --> 00:09:25,920 Speaker 3: An area that could have an effect is what's going 137 00:09:25,920 --> 00:09:28,160 Speaker 3: on in the Red Sea. It hasn't really had an 138 00:09:28,160 --> 00:09:31,880 Speaker 3: effect to us yet because it hasn't been going on 139 00:09:32,000 --> 00:09:35,160 Speaker 3: long enough. So in a couple of weeks, if we 140 00:09:35,240 --> 00:09:39,800 Speaker 3: continue to see what we're seeing, you are going to start. 141 00:09:39,520 --> 00:09:40,120 Speaker 2: To have. 142 00:09:41,960 --> 00:09:45,280 Speaker 3: A less vessels coming back to the Middle East to 143 00:09:45,360 --> 00:09:46,760 Speaker 3: load for the future dates. 144 00:09:47,400 --> 00:09:49,880 Speaker 2: And it's that's what's going to drive the rates up. 145 00:09:50,040 --> 00:09:53,240 Speaker 2: So the markets at the moment in products are not 146 00:09:53,520 --> 00:09:59,280 Speaker 2: where they are because of because of the Red Sea. 147 00:09:59,360 --> 00:10:03,959 Speaker 3: Yet they if if the Red Sea, obviously the seers 148 00:10:04,000 --> 00:10:06,800 Speaker 3: canal gets closed or we have to go into convoys, 149 00:10:07,679 --> 00:10:11,760 Speaker 3: or the powers that be are unable to make those 150 00:10:11,800 --> 00:10:15,120 Speaker 3: transits safe and the product tanker community as a whole 151 00:10:15,240 --> 00:10:19,600 Speaker 3: decides to not transit is at all. Then you're going 152 00:10:19,640 --> 00:10:23,240 Speaker 3: to see a significant jump in rates happen. But it 153 00:10:23,240 --> 00:10:30,839 Speaker 3: hasn't happened. Convoys now will slow everything down. 154 00:10:30,840 --> 00:10:35,800 Speaker 1: Right, And so what what have you seen with regards 155 00:10:36,000 --> 00:10:38,679 Speaker 1: to rate? So you're not seeing the huge jump that like, 156 00:10:38,920 --> 00:10:40,120 Speaker 1: you know, we're nothing in the. 157 00:10:40,360 --> 00:10:43,640 Speaker 3: In the the the rates are strong, but the rates 158 00:10:43,679 --> 00:10:46,560 Speaker 3: are just strong as a result of the seasonal You know, 159 00:10:46,640 --> 00:10:50,200 Speaker 3: this is we're coming into our stronger season now where 160 00:10:50,240 --> 00:10:54,480 Speaker 3: the northern hemisphere is requiring heating, in the southern hemisphere 161 00:10:54,559 --> 00:10:59,240 Speaker 3: is requiring driving. And you know vessels are harder to 162 00:10:59,280 --> 00:11:00,720 Speaker 3: get around and way because of. 163 00:11:00,760 --> 00:11:03,000 Speaker 2: Weather, congestion and all. 164 00:11:03,080 --> 00:11:07,240 Speaker 3: This is against the background of very very low new 165 00:11:07,360 --> 00:11:10,240 Speaker 3: supply deliveries. So your supply side is not growing, but 166 00:11:10,280 --> 00:11:14,320 Speaker 3: your demand side is. You know, if you if you 167 00:11:14,400 --> 00:11:19,400 Speaker 3: actually have either convoys or people avoiding so is you know, 168 00:11:19,720 --> 00:11:20,720 Speaker 3: the rates will. 169 00:11:20,520 --> 00:11:21,679 Speaker 2: Move up significantly. 170 00:11:22,520 --> 00:11:26,720 Speaker 3: They would easily expect them to be but fifty percent 171 00:11:26,800 --> 00:11:29,120 Speaker 3: higher from here, And. 172 00:11:29,040 --> 00:11:32,120 Speaker 1: So you know we we've heard you know, a lot 173 00:11:32,120 --> 00:11:34,000 Speaker 1: of the I know it's not your industry, but the 174 00:11:34,000 --> 00:11:37,000 Speaker 1: container liner industry have been in the headlines a lot lately, 175 00:11:37,080 --> 00:11:39,920 Speaker 1: with some announcing that they're going to avoid the Suez 176 00:11:40,320 --> 00:11:44,760 Speaker 1: Canal altogether. Why hasn't the product tanker industry done that? 177 00:11:44,800 --> 00:11:48,000 Speaker 1: Is it because most of the ports that they're calling 178 00:11:48,559 --> 00:11:50,200 Speaker 1: they kind of have to go through the Suez. 179 00:11:51,880 --> 00:11:55,200 Speaker 3: No, you may have it going on, it's just that 180 00:11:55,280 --> 00:12:00,120 Speaker 3: the product tank coronas quieter than the container tank corowna 181 00:12:00,360 --> 00:12:06,600 Speaker 3: owners are. You've seen announcements from the customers, from VP, 182 00:12:06,960 --> 00:12:10,599 Speaker 3: from Chevron, from Shell, people like this, trying to avoiding 183 00:12:11,120 --> 00:12:15,080 Speaker 3: the situation. So you can pretty well guess that that. 184 00:12:16,800 --> 00:12:18,800 Speaker 3: You know, there are a lot of things going on 185 00:12:19,360 --> 00:12:23,120 Speaker 3: under the surface. But we and our we on our 186 00:12:23,240 --> 00:12:27,440 Speaker 3: side see, you know, we see very little benefits in 187 00:12:27,600 --> 00:12:29,240 Speaker 3: commenting on this at all. 188 00:12:29,440 --> 00:12:33,120 Speaker 1: Gotcha? And so what is the added cost if you 189 00:12:33,240 --> 00:12:36,440 Speaker 1: have to divert from the sus Canale if you're going 190 00:12:36,480 --> 00:12:38,559 Speaker 1: around the tip of Africa? 191 00:12:39,679 --> 00:12:40,920 Speaker 2: I don't think it's better. 192 00:12:41,200 --> 00:12:44,000 Speaker 3: You know, it's spectacular on the containers that the container 193 00:12:44,040 --> 00:12:47,720 Speaker 3: market was in terrible shape, really low rates, so they're 194 00:12:47,920 --> 00:12:51,320 Speaker 3: partly I guess doing this to drum up their own rates. 195 00:12:51,760 --> 00:12:56,640 Speaker 2: But the cost is not a cost issue for us. 196 00:12:56,679 --> 00:13:05,360 Speaker 3: With the con the you could quadruple I've freaks, We've 197 00:13:05,360 --> 00:13:07,760 Speaker 3: got up ten times and it's not going to have 198 00:13:07,800 --> 00:13:14,400 Speaker 3: a material effect on the pricing of a gallon of 199 00:13:15,200 --> 00:13:21,400 Speaker 3: gasoline at the pump as opposed to in containers. You know, 200 00:13:21,880 --> 00:13:25,600 Speaker 3: your your cost of shipment on some of the commodities 201 00:13:25,640 --> 00:13:28,960 Speaker 3: carried can as a ratio to their value, can be 202 00:13:29,040 --> 00:13:29,600 Speaker 3: much higher. 203 00:13:30,520 --> 00:13:33,480 Speaker 1: Right, And do you have any kind of thoughts because 204 00:13:33,520 --> 00:13:35,680 Speaker 1: you've been in the industry for quite some time about 205 00:13:35,760 --> 00:13:37,800 Speaker 1: you know how this is going to play out, and 206 00:13:38,200 --> 00:13:40,839 Speaker 1: you know when things will quote unquote back go back 207 00:13:40,880 --> 00:13:47,520 Speaker 1: to normal in the Red Sea. 208 00:13:48,120 --> 00:13:50,480 Speaker 3: I know that in the past, in the nineteen eighties, 209 00:13:50,840 --> 00:13:56,080 Speaker 3: and you know it was around during that time that 210 00:13:56,480 --> 00:14:00,599 Speaker 3: it was very effective the transit transit that time of 211 00:14:00,640 --> 00:14:05,880 Speaker 3: the Straits of Homos, when vessels were put into convoy, 212 00:14:07,679 --> 00:14:11,320 Speaker 3: when they were in convoys following like a group of 213 00:14:11,360 --> 00:14:15,040 Speaker 3: little ducklings behind an aircraft carrier squadron, because then the 214 00:14:15,080 --> 00:14:19,520 Speaker 3: actual naval ships were in position to properly defend the 215 00:14:19,600 --> 00:14:27,120 Speaker 3: vessel itself. The at the moment you can see from 216 00:14:27,120 --> 00:14:29,840 Speaker 3: the container. You can see model themselves mess they tried, 217 00:14:30,400 --> 00:14:33,440 Speaker 3: and now they're saying again. They're saying, no, we're not 218 00:14:33,480 --> 00:14:39,280 Speaker 3: going to do this because you know, it's it's hard. 219 00:14:39,720 --> 00:14:43,080 Speaker 3: At the moment, there's no guarantee. All you've got is 220 00:14:43,160 --> 00:14:47,040 Speaker 3: people telling the Hootie rebels to stop doing what they're doing. 221 00:14:47,760 --> 00:14:49,800 Speaker 3: You know, it's a little bit like a teacher who's 222 00:14:50,040 --> 00:14:54,480 Speaker 3: gradually losing control of a classroom. We've heard this same 223 00:14:54,560 --> 00:14:57,760 Speaker 3: message now three or four times, and today we've even 224 00:14:57,800 --> 00:15:01,920 Speaker 3: heard that they're making a stern statement. It's like, well, 225 00:15:02,440 --> 00:15:04,600 Speaker 3: you know, what are the other statements being so far? 226 00:15:06,400 --> 00:15:12,640 Speaker 3: So we're not seeing anything that we see could create 227 00:15:12,680 --> 00:15:16,800 Speaker 3: a safer situation. In fact, one could argue that what 228 00:15:16,840 --> 00:15:22,480 Speaker 3: we're seeing since the seventh is a steady, week by 229 00:15:22,600 --> 00:15:27,400 Speaker 3: week increase in the uncertainty of actually what's going on 230 00:15:27,520 --> 00:15:30,240 Speaker 3: out there and an escalation of all the issues. 231 00:15:32,280 --> 00:15:38,160 Speaker 1: Right. Hopefully this is de escalates quickly and resolves. 232 00:15:37,680 --> 00:15:40,800 Speaker 2: We hope, because it's not good for anybody. 233 00:15:40,840 --> 00:15:41,600 Speaker 4: At the end of the year. 234 00:15:42,600 --> 00:15:47,600 Speaker 3: We're doing very well on the fundamentals, and you know, 235 00:15:48,200 --> 00:15:49,000 Speaker 3: any form. 236 00:15:48,800 --> 00:15:51,880 Speaker 2: Of war is. 237 00:15:52,320 --> 00:15:58,120 Speaker 3: Obviously creates uncertainty and good for tanker rates in the beginning, 238 00:15:58,240 --> 00:16:02,640 Speaker 3: but it's war which is uncertain and doesn't normally lead 239 00:16:02,640 --> 00:16:03,960 Speaker 3: to a pretty ending after. 240 00:16:05,160 --> 00:16:07,840 Speaker 1: Right, And that's that's where I'd like to switch to fundamentals. 241 00:16:08,080 --> 00:16:10,240 Speaker 1: You know, you mentioned you have some good fundamentals both 242 00:16:10,320 --> 00:16:13,320 Speaker 1: under the demand and the supply side. Can you talk 243 00:16:13,360 --> 00:16:19,000 Speaker 1: about the order book where that stands now compared to 244 00:16:19,040 --> 00:16:22,120 Speaker 1: where it has been historically, and why that might be 245 00:16:22,200 --> 00:16:23,880 Speaker 1: good for the product anchor industry. 246 00:16:25,040 --> 00:16:28,520 Speaker 3: So, so the order book, if we somewhere between ten 247 00:16:28,560 --> 00:16:31,120 Speaker 3: and twelve percent of all the orders that were taken 248 00:16:31,200 --> 00:16:33,680 Speaker 3: up or taken up, and we'll look at it on 249 00:16:33,720 --> 00:16:37,520 Speaker 3: that worst case in many of the lrtwos that are 250 00:16:37,640 --> 00:16:42,040 Speaker 3: ordered may not end up being LRTs. They're just given 251 00:16:42,080 --> 00:16:45,760 Speaker 3: the option to do that coating to become LRTs prior 252 00:16:45,800 --> 00:16:47,800 Speaker 3: to when they're built. But some of the owners may 253 00:16:47,800 --> 00:16:50,200 Speaker 3: not want to pay the extra expense or just want 254 00:16:50,280 --> 00:16:54,040 Speaker 3: to have them trading in crude oil. But if we 255 00:16:54,120 --> 00:17:00,680 Speaker 3: took it as it's extreme, twelve percent over two twenty four, 256 00:17:01,000 --> 00:17:04,199 Speaker 3: twenty five, twenty six, and part of twenty seven, so 257 00:17:04,240 --> 00:17:07,399 Speaker 3: we're about three and a half percent a year is 258 00:17:07,480 --> 00:17:13,120 Speaker 3: extremely low in a historical context. One way to think 259 00:17:13,160 --> 00:17:16,520 Speaker 3: about this is that if you know, a ship would 260 00:17:16,600 --> 00:17:22,080 Speaker 3: last around twenty years before scrapping. So even on that basis, 261 00:17:22,119 --> 00:17:25,240 Speaker 3: even if you didn't have growing demand, you know, you 262 00:17:25,280 --> 00:17:30,320 Speaker 3: would need four or five percent because many of the ships, 263 00:17:30,480 --> 00:17:33,720 Speaker 3: sorry as they aid towards twenty don't trade in clean 264 00:17:33,840 --> 00:17:37,160 Speaker 3: they start moving into dirty areas. 265 00:17:38,560 --> 00:17:40,040 Speaker 2: So that's it's extremely low. 266 00:17:40,119 --> 00:17:44,879 Speaker 3: And in addition to that, we have increase in regulations 267 00:17:44,920 --> 00:17:45,359 Speaker 3: that come. 268 00:17:46,040 --> 00:17:47,400 Speaker 2: You know, vessels are going to have. 269 00:17:47,359 --> 00:17:51,040 Speaker 3: To be more environmentally compliant, which is going to put 270 00:17:51,040 --> 00:17:54,080 Speaker 3: a burden on the older vessels, so they may actually 271 00:17:54,119 --> 00:17:58,320 Speaker 3: start to scrap or disappear from the market earlier and 272 00:17:58,440 --> 00:18:01,600 Speaker 3: be unable to trade effectively much. 273 00:18:01,440 --> 00:18:04,200 Speaker 2: Beyond fifteen sixteen years in the product market. 274 00:18:06,440 --> 00:18:11,840 Speaker 1: And what's Scorpio's approach to meeting these new emission standards 275 00:18:11,840 --> 00:18:16,359 Speaker 1: that the IMO is putting out? Can you talk about 276 00:18:16,520 --> 00:18:20,119 Speaker 1: increasing scrubbers or you do fuels? What are you what 277 00:18:20,440 --> 00:18:21,160 Speaker 1: are you guys doing? 278 00:18:22,119 --> 00:18:22,399 Speaker 2: Well? 279 00:18:22,400 --> 00:18:26,120 Speaker 3: First, the vessels are all modern, they're all what they 280 00:18:26,160 --> 00:18:33,480 Speaker 3: call eco vessels, so they by definition and have been 281 00:18:33,560 --> 00:18:38,959 Speaker 3: fitted with what's required that by definition they already comply 282 00:18:39,160 --> 00:18:43,600 Speaker 3: with what's going to be required over the next four 283 00:18:43,680 --> 00:18:49,840 Speaker 3: or five years. And you know they have lower fuel 284 00:18:49,840 --> 00:18:58,840 Speaker 3: consumption than most vessels, and the vessels have you know, 285 00:18:58,880 --> 00:19:03,480 Speaker 3: they have scrubbers as well. The scrubbers is not necessarily 286 00:19:03,920 --> 00:19:09,080 Speaker 3: related to environments. Scrubbers are more or directly related to 287 00:19:09,200 --> 00:19:13,000 Speaker 3: an environment. They're more able. Enables you to have a 288 00:19:13,960 --> 00:19:18,040 Speaker 3: wider fuels choice and use a cheaper fuel because you 289 00:19:18,119 --> 00:19:20,800 Speaker 3: can scrub out the sulfur. 290 00:19:21,920 --> 00:19:26,800 Speaker 1: Right, are you guys ordering dual fuel ships? 291 00:19:27,800 --> 00:19:33,520 Speaker 3: We have taken part in a small order of dual 292 00:19:33,600 --> 00:19:40,040 Speaker 3: fuel or methanol, not dual fuel single methanol vessels really 293 00:19:40,080 --> 00:19:44,640 Speaker 3: to just to understand the technology going forward. But as 294 00:19:44,640 --> 00:19:48,399 Speaker 3: a whole, we we we're not really that interested in 295 00:19:48,520 --> 00:19:56,320 Speaker 3: ordering vessels. We think that in our fleets. You know, 296 00:19:56,400 --> 00:19:58,719 Speaker 3: it is new enough, as I said, for the foreseeable 297 00:19:58,760 --> 00:20:05,399 Speaker 3: future that they're very expensive new vessels to order. Now, 298 00:20:06,040 --> 00:20:09,760 Speaker 3: I'm not the best return for our shareholders. It would 299 00:20:09,800 --> 00:20:13,679 Speaker 3: be better to buy our shares a discount, better to 300 00:20:14,280 --> 00:20:17,879 Speaker 3: increase dividends. To order a vessel, you wouldn't get it 301 00:20:17,920 --> 00:20:21,080 Speaker 3: until twenty twenty seven. You're having to put your capital 302 00:20:21,160 --> 00:20:25,640 Speaker 3: down straight away and at pretty expensive prices. 303 00:20:25,840 --> 00:20:29,560 Speaker 2: So your capital goes down with no earnings for a 304 00:20:29,640 --> 00:20:31,600 Speaker 2: minimum of three years. 305 00:20:32,320 --> 00:20:35,919 Speaker 1: Right, and do you think like the standards that the 306 00:20:35,960 --> 00:20:38,520 Speaker 1: IMO is set, you know, to get to zero is 307 00:20:38,560 --> 00:20:43,840 Speaker 1: that do you think it's attainable where we are today 308 00:20:43,880 --> 00:20:45,040 Speaker 1: in today's technologies. 309 00:20:48,359 --> 00:20:51,000 Speaker 3: I think that there's not a debate that I worry 310 00:20:51,000 --> 00:20:55,480 Speaker 3: about too much. I think, you know, it's because the 311 00:20:57,040 --> 00:20:59,399 Speaker 3: you know, we need new technologies that we know we 312 00:20:59,440 --> 00:21:03,840 Speaker 3: can rely right, and that will come. So I'm fairly 313 00:21:03,880 --> 00:21:09,520 Speaker 3: sure that you know, the standards are ideal standards generally, 314 00:21:09,680 --> 00:21:14,119 Speaker 3: take you know, we were the first to adopt eco vessels. 315 00:21:14,200 --> 00:21:16,280 Speaker 3: I was in a company before then that were the 316 00:21:16,320 --> 00:21:21,760 Speaker 3: first to adopt double hull, and generally the industry is, 317 00:21:22,160 --> 00:21:24,119 Speaker 3: you know, saves as much as it can till the 318 00:21:24,200 --> 00:21:28,480 Speaker 3: last moment. It's a little bit like you know, YK 319 00:21:28,600 --> 00:21:33,120 Speaker 3: two thousand, right, there's not many people that got prepared 320 00:21:33,160 --> 00:21:35,240 Speaker 3: for it. We are prepared for it for what was 321 00:21:35,240 --> 00:21:38,639 Speaker 3: happening at the moment, and we fully expect that the 322 00:21:38,720 --> 00:21:43,480 Speaker 3: standards going forward will get tougher and regulations will get tougher, 323 00:21:44,160 --> 00:21:48,879 Speaker 3: and we expect that, you know, the engineers and the 324 00:21:48,920 --> 00:21:51,840 Speaker 3: scientists will find the right solution. 325 00:21:52,160 --> 00:21:55,760 Speaker 2: Right now, we're not sure what what vessels will. 326 00:21:55,560 --> 00:22:00,960 Speaker 3: Be driven by in the future, and you know, certainly 327 00:22:01,000 --> 00:22:03,240 Speaker 3: before we make any major investment. 328 00:22:03,440 --> 00:22:06,320 Speaker 2: I think we need to know that. 329 00:22:06,640 --> 00:22:10,080 Speaker 1: Absolutely a lot of uncertainties about how how the industry 330 00:22:10,119 --> 00:22:13,639 Speaker 1: is going to get there, but hopefully they'll reach the goal. 331 00:22:14,440 --> 00:22:16,880 Speaker 1: You know, the rate environment for product tankers have been 332 00:22:17,080 --> 00:22:19,919 Speaker 1: really strong over the last two years. Do you think 333 00:22:19,960 --> 00:22:25,240 Speaker 1: that's more of a supply issue in terms of, you know, 334 00:22:25,320 --> 00:22:27,399 Speaker 1: the supply of tankers on the water, or do you 335 00:22:27,440 --> 00:22:30,480 Speaker 1: think it's coming from more of the demand side or 336 00:22:30,480 --> 00:22:32,320 Speaker 1: maybe a mixture of both. 337 00:22:35,520 --> 00:22:36,120 Speaker 2: I think that. 338 00:22:38,160 --> 00:22:45,880 Speaker 5: Clearly, you know that the lack of supply glowth is 339 00:22:45,920 --> 00:22:48,159 Speaker 5: the silver lining that COVID gave us. 340 00:22:48,600 --> 00:22:50,280 Speaker 4: The horrors of COVID. 341 00:22:50,000 --> 00:22:53,960 Speaker 2: And the lack of demand and the terrible you know. 342 00:22:53,960 --> 00:22:57,440 Speaker 3: The worst historical rates that possibly you know that there 343 00:22:57,440 --> 00:23:05,159 Speaker 3: were resulted in like no buildings whatsoever for quite a period, 344 00:23:05,440 --> 00:23:10,520 Speaker 3: which has resulted across shipping itself, not just products, a. 345 00:23:12,040 --> 00:23:13,439 Speaker 2: Tight yard capacity. 346 00:23:14,080 --> 00:23:17,000 Speaker 3: And because at the same time shipyards, when they weren't 347 00:23:17,040 --> 00:23:20,320 Speaker 3: getting orders, some of their capacity went away. So the 348 00:23:20,480 --> 00:23:25,440 Speaker 3: supply so that fixed supply or that fixed ability and 349 00:23:25,480 --> 00:23:31,200 Speaker 3: that inelastic supply side, and it will be it will 350 00:23:31,240 --> 00:23:33,760 Speaker 3: be elastic in the long term. Obviously if you keep 351 00:23:33,800 --> 00:23:37,800 Speaker 3: having super high rates, then you'll end up having deliveries 352 00:23:37,840 --> 00:23:40,680 Speaker 3: eventually that will will be an access to the demand. 353 00:23:41,280 --> 00:23:44,640 Speaker 3: That's the history of the industry. But in a situation 354 00:23:44,800 --> 00:23:48,080 Speaker 3: we are now, you have the classic situation where supply 355 00:23:48,520 --> 00:23:53,240 Speaker 3: for the short medium term so now to you know, 356 00:23:53,840 --> 00:23:55,960 Speaker 3: what we can see going forward at least the next 357 00:23:56,000 --> 00:23:59,760 Speaker 3: three years is really tight and demand. 358 00:24:01,520 --> 00:24:02,960 Speaker 2: It's got this post. 359 00:24:03,840 --> 00:24:09,200 Speaker 3: COVID movement upwards with people starting to you know, we 360 00:24:09,600 --> 00:24:12,080 Speaker 3: can see a lot of our industry just on TV 361 00:24:12,240 --> 00:24:15,240 Speaker 3: where you see airline companies bookings up. 362 00:24:15,440 --> 00:24:16,840 Speaker 2: We see more traffic. 363 00:24:16,480 --> 00:24:17,240 Speaker 4: On our roads. 364 00:24:17,320 --> 00:24:21,160 Speaker 2: We see people wanting to go on cruisers, more, wanting 365 00:24:21,240 --> 00:24:22,600 Speaker 2: to go on holidays more. 366 00:24:23,320 --> 00:24:28,159 Speaker 3: We all of those things that beneficial obviously to product 367 00:24:28,160 --> 00:24:31,520 Speaker 3: tanker demand. And then we've got this other accelerant put 368 00:24:31,560 --> 00:24:34,600 Speaker 3: on top with the changes in refineries where they are 369 00:24:34,720 --> 00:24:38,359 Speaker 3: in the world and how they're you know, the the 370 00:24:38,520 --> 00:24:43,480 Speaker 3: new product is is it's just running at a higher 371 00:24:43,640 --> 00:24:48,440 Speaker 3: ton mile multiplier. Combined with another thing that's been happening 372 00:24:48,480 --> 00:24:51,920 Speaker 3: as we were talking about environmental change before, is that 373 00:24:52,240 --> 00:24:55,400 Speaker 3: countries like Australia and New Zealand that used to import 374 00:24:55,440 --> 00:25:00,640 Speaker 3: crude oil refine it into their own domestic product product 375 00:25:01,480 --> 00:25:09,159 Speaker 3: use have now for environmental reasons, closing those refineries and 376 00:25:09,200 --> 00:25:17,520 Speaker 3: they're importing the refined product petroleum products themselves, and that's 377 00:25:17,520 --> 00:25:22,920 Speaker 3: a huge change. So suddenly you've got a terrifically long 378 00:25:22,960 --> 00:25:27,280 Speaker 3: distance from the Arabian Gulf to Australia is now opened 379 00:25:27,280 --> 00:25:30,320 Speaker 3: a new trade route for products that otherwise wasn't there. 380 00:25:31,560 --> 00:25:34,200 Speaker 3: So it's a combination of all of the above really 381 00:25:34,600 --> 00:25:40,520 Speaker 3: combined with this drawdown of inventories too. So inventries around 382 00:25:40,560 --> 00:25:46,800 Speaker 3: the world are low, significantly lower than where they were 383 00:25:46,960 --> 00:25:53,280 Speaker 3: prior to when COVID started, even though demand is already 384 00:25:53,320 --> 00:25:57,040 Speaker 3: starting to get to a point that's pretty close to 385 00:25:57,119 --> 00:26:00,399 Speaker 3: pre COVID, and we'll probably go through that over the 386 00:26:00,440 --> 00:26:02,760 Speaker 3: next few months. 387 00:26:03,280 --> 00:26:03,440 Speaker 4: Right. 388 00:26:03,480 --> 00:26:05,040 Speaker 1: I don't want to put words in your mouth, but 389 00:26:05,680 --> 00:26:08,320 Speaker 1: excluding you know, any impacts in the Red Sea, it 390 00:26:08,359 --> 00:26:11,880 Speaker 1: seems like you think this high rate environment can continue 391 00:26:11,880 --> 00:26:13,120 Speaker 1: for most of twenty twenty four. 392 00:26:14,240 --> 00:26:19,439 Speaker 3: Yeah, and I think that's supported by the customers. You know, 393 00:26:19,520 --> 00:26:22,800 Speaker 3: in our industry, we have some visibility or third party 394 00:26:24,359 --> 00:26:27,159 Speaker 3: you know, referee to a discussion of whether or not 395 00:26:27,200 --> 00:26:30,120 Speaker 3: we think rates are going up or not. By the 396 00:26:30,160 --> 00:26:33,440 Speaker 3: forward time Chotter rate, this is where someone books a ship. 397 00:26:33,320 --> 00:26:35,440 Speaker 4: Not for a voids, but they book it for one. 398 00:26:35,280 --> 00:26:38,200 Speaker 2: Year, two years, three years, and both the one. 399 00:26:38,119 --> 00:26:43,000 Speaker 3: Year, two year and three year time charter markets, which 400 00:26:43,040 --> 00:26:45,720 Speaker 3: is obviously set you know, the interest to that is 401 00:26:45,760 --> 00:26:50,080 Speaker 3: set by the customer are very healthy. 402 00:26:49,760 --> 00:26:53,440 Speaker 1: Indeed, and so how much of your fleet are you 403 00:26:53,520 --> 00:26:56,840 Speaker 1: repricing a year in terms of renewing or going out 404 00:26:56,920 --> 00:26:57,719 Speaker 1: after a new contract. 405 00:26:57,800 --> 00:26:58,720 Speaker 4: We only have. 406 00:27:00,160 --> 00:27:02,960 Speaker 3: You know, the ten to eleven of our vessels, ten 407 00:27:03,040 --> 00:27:07,679 Speaker 3: percent of our vessel on contract. It's not really we 408 00:27:07,680 --> 00:27:09,720 Speaker 3: don't have them on a on a rate. Cause is 409 00:27:09,760 --> 00:27:13,480 Speaker 3: we're very happy and confident that the markets will remain strong. 410 00:27:14,480 --> 00:27:18,639 Speaker 3: Normally you have to pay a discount to the spot 411 00:27:18,760 --> 00:27:24,800 Speaker 3: market for a for the term period, like in any 412 00:27:24,800 --> 00:27:29,679 Speaker 3: sort of leased market, and we're very confident that the 413 00:27:29,680 --> 00:27:32,040 Speaker 3: spot market will give a higher return over. 414 00:27:31,880 --> 00:27:32,800 Speaker 4: The forward period. 415 00:27:32,920 --> 00:27:37,040 Speaker 3: The reason we have the ten percent out is there 416 00:27:37,080 --> 00:27:42,800 Speaker 3: are certain relationships, certain customers that have extremely a high 417 00:27:42,920 --> 00:27:45,840 Speaker 3: number of cargoes or valuable cargoes. 418 00:27:45,400 --> 00:27:46,200 Speaker 4: Out there. 419 00:27:47,600 --> 00:27:50,359 Speaker 3: That it's worth us having a relationship with so to 420 00:27:50,400 --> 00:27:53,080 Speaker 3: the extent that one of those says, look, we really 421 00:27:53,200 --> 00:27:56,520 Speaker 3: like one of your ships. We'd like to tie in 422 00:27:56,640 --> 00:28:04,280 Speaker 3: some secure cargo. It's fine. We're absolutely happy, you know, 423 00:28:04,400 --> 00:28:08,120 Speaker 3: giving it to them on that basis, the relationship basis. 424 00:28:09,560 --> 00:28:12,000 Speaker 1: And is that high exposure to the spot market. Is 425 00:28:12,000 --> 00:28:14,199 Speaker 1: that just in the current rate environment or is that 426 00:28:14,320 --> 00:28:18,600 Speaker 1: a long kind of term strategy that scorpedoes through the cycle. 427 00:28:21,520 --> 00:28:24,240 Speaker 3: But we haven't really you know, the market hasn't been 428 00:28:24,480 --> 00:28:28,000 Speaker 3: that kind for the last you know, seven, eight, nine, 429 00:28:28,040 --> 00:28:31,600 Speaker 3: ten years. It's only been the last two three years 430 00:28:31,600 --> 00:28:36,600 Speaker 3: you've got these exceptional returns. The strategy long term hasn't 431 00:28:36,640 --> 00:28:43,400 Speaker 3: been fully tested, but it's it's simply right now. 432 00:28:43,680 --> 00:28:45,200 Speaker 2: We believe that they. 433 00:28:48,240 --> 00:28:52,040 Speaker 3: That the fundamentals are strong enough that we don't wish 434 00:28:52,080 --> 00:28:58,040 Speaker 3: to discount the present the actual spot market in order 435 00:28:58,080 --> 00:29:02,880 Speaker 3: to seek security. The company has low leverage, is continuing 436 00:29:02,920 --> 00:29:09,040 Speaker 3: to drive down its leverage, and so therefore we don't 437 00:29:09,120 --> 00:29:14,440 Speaker 3: require let's say, the security of income for bank loans 438 00:29:14,680 --> 00:29:16,720 Speaker 3: or peace of mind at night. 439 00:29:18,600 --> 00:29:21,960 Speaker 1: Right you know, you know, you mentioned the high rate 440 00:29:22,080 --> 00:29:25,760 Speaker 1: environment and which has generated strong earnings. You know, on 441 00:29:25,760 --> 00:29:30,840 Speaker 1: the Bloomberg terminal, it says that the southside pretty bullish. 442 00:29:30,840 --> 00:29:33,760 Speaker 1: And you guys on Scorpio, seventeen out of eighteen analysts 443 00:29:33,760 --> 00:29:36,560 Speaker 1: of a buy rating with an average price target around 444 00:29:36,640 --> 00:29:40,240 Speaker 1: seventy eight, which I think is about twenty percent versus 445 00:29:40,280 --> 00:29:43,640 Speaker 1: current levels, and they have your earnings per share going 446 00:29:43,720 --> 00:29:47,760 Speaker 1: up around four percent, just over ten dollars and seventy 447 00:29:47,760 --> 00:29:50,360 Speaker 1: five cents. What are you guys doing with all that 448 00:29:50,480 --> 00:29:53,120 Speaker 1: cash that you're generating in the good. 449 00:29:52,960 --> 00:29:54,920 Speaker 2: Times right now? 450 00:29:54,960 --> 00:29:59,800 Speaker 3: Well, we've done a fair amount. We reduced the debt 451 00:29:59,840 --> 00:30:02,720 Speaker 3: b one point four billion, and we brought back over 452 00:30:02,800 --> 00:30:06,000 Speaker 3: four hundred and fifty million dollars worth of our stock. 453 00:30:07,840 --> 00:30:10,680 Speaker 3: As I said, we're not investing in new buildings. We 454 00:30:10,760 --> 00:30:16,120 Speaker 3: have enough vessels that we own ourselves, and. 455 00:30:17,600 --> 00:30:19,760 Speaker 4: So we are we have. 456 00:30:20,040 --> 00:30:26,560 Speaker 3: In the last months we have chosen to really focus 457 00:30:26,640 --> 00:30:31,440 Speaker 3: on driving the debt down, and partly because of the 458 00:30:31,520 --> 00:30:33,320 Speaker 3: uncertainty that's out there. 459 00:30:33,600 --> 00:30:35,720 Speaker 4: I mean, you know, you're very. 460 00:30:35,600 --> 00:30:38,400 Speaker 3: Confident, as we've said before, of that. Let's say the 461 00:30:38,480 --> 00:30:42,720 Speaker 3: little box, the product tanker market, Scorpio. In the little box, 462 00:30:42,760 --> 00:30:46,720 Speaker 3: the product tanker market is is good, nicely confident. 463 00:30:48,040 --> 00:30:48,520 Speaker 4: Scorpia. 464 00:30:48,640 --> 00:30:50,920 Speaker 3: However, this little box has to play in the big 465 00:30:50,960 --> 00:30:55,640 Speaker 3: world box. And you know, if you went back to 466 00:30:55,840 --> 00:30:59,720 Speaker 3: July August, we had the Russian Ukraine conflict, but we 467 00:30:59,760 --> 00:31:02,280 Speaker 3: also had interest rates rising all the time, we had 468 00:31:02,320 --> 00:31:06,000 Speaker 3: a great fear of recession in the world, how high 469 00:31:06,040 --> 00:31:09,840 Speaker 3: with interest rates go. So we've made an announcement in 470 00:31:09,880 --> 00:31:13,520 Speaker 3: September that we were focusing on paying down debt. Now 471 00:31:14,080 --> 00:31:16,280 Speaker 3: since that point, the world got a little bit more 472 00:31:16,360 --> 00:31:20,280 Speaker 3: uncertain with the you know, the the Guas or Israel conflict. 473 00:31:20,400 --> 00:31:23,280 Speaker 3: Then you know whether or not that expands or not. 474 00:31:24,000 --> 00:31:27,880 Speaker 3: But we've also commented that we believe that we will 475 00:31:27,920 --> 00:31:32,640 Speaker 3: be able to get to a place fairly shortly where 476 00:31:33,360 --> 00:31:36,920 Speaker 3: we believe that our debt is being taken down to 477 00:31:37,000 --> 00:31:37,960 Speaker 3: a point. 478 00:31:37,560 --> 00:31:39,360 Speaker 4: That everybody would would say that. 479 00:31:39,360 --> 00:31:44,840 Speaker 3: We're very low leveraged, and then we will start to look, 480 00:31:45,880 --> 00:31:46,240 Speaker 3: you know. 481 00:31:46,240 --> 00:31:46,880 Speaker 4: Look at. 482 00:31:48,200 --> 00:31:51,320 Speaker 3: A shareholder return, return of capital and shareholders in one 483 00:31:51,360 --> 00:31:52,000 Speaker 3: form or another. 484 00:31:53,920 --> 00:31:56,440 Speaker 1: Have you gotten out with a leverage target that you're 485 00:31:56,440 --> 00:31:57,000 Speaker 1: trying to get to. 486 00:31:57,640 --> 00:32:03,720 Speaker 3: No, we have said that we would. The comments that 487 00:32:03,800 --> 00:32:07,280 Speaker 3: we have made have been in the following way. We've 488 00:32:07,320 --> 00:32:10,600 Speaker 3: said that everyone would, we believe in the whole industry 489 00:32:10,720 --> 00:32:13,040 Speaker 3: would say that if you ever got down to net 490 00:32:13,080 --> 00:32:16,760 Speaker 3: debt that was at or around your scrap value, which 491 00:32:16,760 --> 00:32:20,280 Speaker 3: is around eight hundred nine hundred million dollars, that everybody. 492 00:32:19,840 --> 00:32:22,000 Speaker 2: Would say that that's completely low leverage. 493 00:32:23,200 --> 00:32:27,640 Speaker 3: We have since said that at eight hundred nine hundred 494 00:32:27,760 --> 00:32:30,920 Speaker 3: is not a fixed target. You know, it is about 495 00:32:30,960 --> 00:32:35,080 Speaker 3: what is the world. I know, if for example, you 496 00:32:35,160 --> 00:32:37,920 Speaker 3: were in March and you may be above eight hundred 497 00:32:38,040 --> 00:32:41,480 Speaker 3: nine hundred, But if at that point it is clear 498 00:32:41,560 --> 00:32:44,840 Speaker 3: that interest rates are not going to be rising, that 499 00:32:45,160 --> 00:32:50,000 Speaker 3: the world, you know, the US economy particularly will create 500 00:32:50,040 --> 00:32:54,200 Speaker 3: a soft landing, then you know, a figure above eight 501 00:32:54,280 --> 00:32:55,360 Speaker 3: hundred nine hundred. 502 00:32:55,400 --> 00:32:57,480 Speaker 2: Million may be perfectly acceptable. 503 00:32:58,920 --> 00:33:04,800 Speaker 3: If you got to mark, you know, you had still 504 00:33:05,040 --> 00:33:09,840 Speaker 3: this uncertainty, then you may wish to to get down 505 00:33:09,840 --> 00:33:11,880 Speaker 3: to the eight hundred and nine hundred if you hadn't 506 00:33:11,880 --> 00:33:13,680 Speaker 3: already reached that point. 507 00:33:15,840 --> 00:33:18,920 Speaker 1: Right, And then once you get down and that maybe 508 00:33:19,000 --> 00:33:24,320 Speaker 1: you do more share buy backs. 509 00:33:24,600 --> 00:33:27,040 Speaker 3: All three are available there, you know, all three dependent 510 00:33:27,160 --> 00:33:29,880 Speaker 3: upon largely on where the stock price. 511 00:33:29,720 --> 00:33:35,720 Speaker 1: Is, right, gotcha? And uh, you know, just changing gears 512 00:33:35,720 --> 00:33:37,640 Speaker 1: a little bit, a little b about yourself. How did 513 00:33:37,680 --> 00:33:41,720 Speaker 1: you get into shipping? You know, because as we talked earlier, 514 00:33:41,760 --> 00:33:46,360 Speaker 1: you've been in the industry for thirty five some years. 515 00:33:46,680 --> 00:33:48,440 Speaker 4: Uh. I grew up by. 516 00:33:48,320 --> 00:33:52,160 Speaker 3: The sea in Devon, and Devon was a place that 517 00:33:53,960 --> 00:33:56,680 Speaker 3: you know, there was a port very nearby where I lived, 518 00:33:56,880 --> 00:33:58,239 Speaker 3: called Plymouth. 519 00:33:57,720 --> 00:33:59,680 Speaker 4: Where many of the. 520 00:33:59,480 --> 00:34:04,360 Speaker 3: Adventures sail from, including the Mayflt. The Mayflower to the 521 00:34:04,440 --> 00:34:10,080 Speaker 3: United States, and so in that kind of that area, 522 00:34:10,239 --> 00:34:12,680 Speaker 3: there wasn't that much to do. You're either in the army, 523 00:34:12,760 --> 00:34:15,480 Speaker 3: you were in the navy, you were in farming, you 524 00:34:15,520 --> 00:34:17,600 Speaker 3: were in tourism, or you better get out of there. 525 00:34:19,280 --> 00:34:23,959 Speaker 3: And my, you know, but I saw the sea every day, 526 00:34:25,920 --> 00:34:29,200 Speaker 3: and you know, that was let's say, I would think 527 00:34:29,239 --> 00:34:38,239 Speaker 3: a great influence. And yeah, my both my father and 528 00:34:38,239 --> 00:34:41,719 Speaker 3: my grandfather worked for Exon, but I guess I was 529 00:34:41,760 --> 00:34:43,879 Speaker 3: the more rebellious child that I didn't want to work 530 00:34:43,920 --> 00:34:46,600 Speaker 3: for the customer. I wanted to work for the ship owner. 531 00:34:48,239 --> 00:34:52,720 Speaker 3: So I started kind of a pretty much at the bottom. 532 00:34:53,280 --> 00:34:59,080 Speaker 3: In nineteen eighty four, my first job was post fixture 533 00:34:59,480 --> 00:35:06,520 Speaker 3: charter assistant trainee, which is a wonderfully glorified name for 534 00:35:07,040 --> 00:35:10,120 Speaker 3: going to get the trading guys and going to get 535 00:35:10,160 --> 00:35:13,200 Speaker 3: at that time, their talaxis and taking their talxis to 536 00:35:13,280 --> 00:35:15,440 Speaker 3: the trading room. 537 00:35:15,880 --> 00:35:18,360 Speaker 1: You know, when you're when you're about to go to sleep, 538 00:35:18,440 --> 00:35:20,680 Speaker 1: is there anything that keeps you up at night when 539 00:35:20,680 --> 00:35:23,640 Speaker 1: you think about Scorpio tankers and you know your role 540 00:35:23,840 --> 00:35:24,720 Speaker 1: as the president. 541 00:35:31,520 --> 00:35:37,000 Speaker 2: It's a difficult. I guess that I've accepted a lot 542 00:35:37,040 --> 00:35:40,759 Speaker 2: over the years. So now Scorpio Tankers. 543 00:35:40,480 --> 00:35:44,400 Speaker 3: Is in really good shape. You know, it could withstand 544 00:35:45,560 --> 00:35:52,840 Speaker 3: a even a very large adverse situation. You know, we 545 00:35:52,920 --> 00:35:56,480 Speaker 3: have over a billion dollars of liquidity, So even if 546 00:35:56,520 --> 00:35:59,879 Speaker 3: we repeated COVID, which is the worst thing that I've seen, 547 00:36:00,800 --> 00:36:04,000 Speaker 3: you know in my career, where literally you look out 548 00:36:04,000 --> 00:36:07,239 Speaker 3: the window and there are no planes flying, and there 549 00:36:07,239 --> 00:36:10,279 Speaker 3: are no class driving around, and ay you're hearing his ambulances. 550 00:36:11,160 --> 00:36:15,759 Speaker 3: That was pretty bad on many levels, both operationally for 551 00:36:15,880 --> 00:36:23,319 Speaker 3: people as well as economically. So in that sense, I 552 00:36:23,320 --> 00:36:29,799 Speaker 3: can sleep fairly easily. And what I have learned is 553 00:36:29,880 --> 00:36:34,720 Speaker 3: that all of the things that I was worrying about 554 00:36:35,560 --> 00:36:39,759 Speaker 3: before when I went to sleep was pointless because I 555 00:36:39,880 --> 00:36:42,360 Speaker 3: never predicted any of the things that actually I should 556 00:36:42,360 --> 00:36:48,239 Speaker 3: have been worried about. So never predicted COVID, never predicted 557 00:36:48,640 --> 00:36:57,480 Speaker 3: two thousand and one with the twin towers, we had 558 00:36:57,600 --> 00:37:00,640 Speaker 3: fortunately sold the company I was working with. The four 559 00:37:00,680 --> 00:37:03,240 Speaker 3: two thousand and eight coming came along, but it probably 560 00:37:03,280 --> 00:37:08,080 Speaker 3: wouldn't have predicted that one and nineteen ninety seven Asian 561 00:37:09,040 --> 00:37:16,200 Speaker 3: currency crisis nor July nineteen ninety when Sadi Mussein went 562 00:37:16,280 --> 00:37:20,000 Speaker 3: into Kuwait, in the aftermath of that and the triggering 563 00:37:20,440 --> 00:37:24,280 Speaker 3: of a world recession that followed. None of those things 564 00:37:24,360 --> 00:37:30,000 Speaker 3: were ever in a boardroom or any department of the company, 565 00:37:30,120 --> 00:37:34,200 Speaker 3: or any lunch or any presentation I'd ever seen by 566 00:37:34,520 --> 00:37:39,040 Speaker 3: any analyst or thinker in the industry. So I've kind 567 00:37:39,080 --> 00:37:44,719 Speaker 3: of assumed now that as long as we're well prepared 568 00:37:44,840 --> 00:37:53,359 Speaker 3: for it in terms of staff, training, staff and capital resources, 569 00:37:56,280 --> 00:37:59,000 Speaker 3: my expectation is the next thing that will take the 570 00:37:59,040 --> 00:38:02,480 Speaker 3: industry down be yet another thing that was unpredictable. 571 00:38:03,320 --> 00:38:05,799 Speaker 1: Okay, well, I don't want to end this on a 572 00:38:05,840 --> 00:38:09,600 Speaker 1: gloomy note. So what do you have a book about 573 00:38:09,600 --> 00:38:11,879 Speaker 1: shipping that you kind of love that for someone that's 574 00:38:11,960 --> 00:38:15,080 Speaker 1: kind of interested in the industry, doesn't really maybe know much, 575 00:38:15,120 --> 00:38:17,400 Speaker 1: and it could be a fiction or nonfiction book that 576 00:38:17,520 --> 00:38:20,560 Speaker 1: kind of gives you a great perspective of what the 577 00:38:20,600 --> 00:38:23,279 Speaker 1: marine shipping or the tanker industry is all about. 578 00:38:23,640 --> 00:38:26,080 Speaker 2: I like to give two books. 579 00:38:26,840 --> 00:38:32,960 Speaker 3: If one is one is a book by doctor Martin Stotford, 580 00:38:33,440 --> 00:38:37,480 Speaker 3: who actually elected me when I was a youngster, and 581 00:38:37,520 --> 00:38:42,160 Speaker 3: that's on maritime economics, and that will tell you all 582 00:38:42,200 --> 00:38:45,680 Speaker 3: you need to understand in terms of how shipping works 583 00:38:45,719 --> 00:38:48,720 Speaker 3: in an economic way, and you know why a ship 584 00:38:48,760 --> 00:38:51,480 Speaker 3: makes money, why a market goes up, and you know 585 00:38:51,520 --> 00:38:56,719 Speaker 3: why it goes up quicker than most markets do. And 586 00:38:56,760 --> 00:39:01,440 Speaker 3: another book about what you cannot learn in a book 587 00:39:02,239 --> 00:39:07,680 Speaker 3: about shipping, how shipping actually works in life. And it's 588 00:39:07,680 --> 00:39:10,880 Speaker 3: a fiction series actually, it's the first book in the 589 00:39:10,920 --> 00:39:17,359 Speaker 3: series is called The Shipping Man by Matt McCleary, and 590 00:39:17,400 --> 00:39:19,840 Speaker 3: then there is a few series of books after that, 591 00:39:19,920 --> 00:39:24,520 Speaker 3: and it's all about the journey of a very highly 592 00:39:24,680 --> 00:39:31,440 Speaker 3: educated person who's working on Wall Street, who who is 593 00:39:31,480 --> 00:39:35,200 Speaker 3: given an education the hard way on what it is 594 00:39:35,239 --> 00:39:38,759 Speaker 3: to become a shipping man. And it's very entertaining as 595 00:39:38,800 --> 00:39:42,440 Speaker 3: well as very worthwhile to in terms of learning. 596 00:39:44,960 --> 00:39:46,920 Speaker 1: All Right, well, I have a long flight in a 597 00:39:46,920 --> 00:39:49,160 Speaker 1: couple of weeks and maybe i'll pick that one up. 598 00:39:50,120 --> 00:39:50,360 Speaker 4: Ry Er. 599 00:39:50,360 --> 00:39:52,040 Speaker 1: I just want to really thank you for your time, 600 00:39:52,760 --> 00:39:58,000 Speaker 1: which you continue success at Scorpio and Light in general. 601 00:39:58,560 --> 00:40:03,320 Speaker 1: Thanks for being Thank you, Summer, and I want to 602 00:40:03,360 --> 00:40:05,640 Speaker 1: thank you for tuning in. If you liked the episode, 603 00:40:05,680 --> 00:40:08,840 Speaker 1: please subscribe and leave a review. We've lined up a 604 00:40:08,920 --> 00:40:11,799 Speaker 1: number of great guests for the podcast check back to 605 00:40:11,840 --> 00:40:16,600 Speaker 1: hear conversations with C suite executives, shippers, regulators, and decision 606 00:40:16,680 --> 00:40:20,200 Speaker 1: makers within the freight transportation markets. Also, if you have 607 00:40:20,280 --> 00:40:22,920 Speaker 1: an idea for a future episode, please hit me up 608 00:40:22,960 --> 00:40:26,160 Speaker 1: on the Bloomberg terminal or on Twitter at logistics Late. 609 00:40:26,520 --> 00:40:28,359 Speaker 1: Thanks everyone, be safe out there.