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

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Speaker 1: I'm your host Lee Klaskal, Sunior Freight Transportation. Let's just

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Speaker 1: extendles a Bloomberg Intelligence, Bloomberg's in house research arm before

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Speaker 1: diving in a little public service announcement. Your support is

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Speaker 1: instrumental to keep bringing great guests on the podcast, like

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Speaker 1: when we have today. If you haven't already, please do

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Speaker 1: take a moment to follow, rate and share the Talking

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Speaker 1: Transports Podcast. We appreciate your support. I'm very excited to

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Speaker 1: have Olivia Lennox King chief Operating Officer of Sitas Maritime,

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Speaker 1: a handy sized ship owner and operator formed in twenty

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Speaker 1: twenty three as a result of a merger between Asia

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Speaker 1: Maritime Pacific and HBC Hamburg Bulk Carriers. Olivia is responsible

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Speaker 1: for the company's vessel sale, purchase, and new building activities,

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Speaker 1: and has overall responsibility for corporate matters, investor relations, compliance,

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Speaker 1: media and public relations. She also leads the company's legal

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Speaker 1: and insurance apartments from the company's Hong Kong office. She

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Speaker 1: has over a decade experience in the shipping industry. Holds

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Speaker 1: an LLB and BA degree from the University of Auckland

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Speaker 1: and New Zealand and is admitted to practice as a

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Speaker 1: solicitor in Hong Kong. Welcome to the Talking Transports podcast.

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Speaker 2: Olivia hi Ley, Thanks very much for having me.

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Speaker 1: It's great to speak to you and see you again

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Speaker 1: on camera last we spoke. Was it a Bloomberg shipping

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Speaker 1: event earlier this year in Hong Kong.

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Speaker 2: That's right. I was also an excellent event.

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Speaker 3: Thanks for that, and I think I think as a

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Speaker 3: panelist and also an audience member, I learned a lot

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Speaker 3: from that event.

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Speaker 2: So thank you.

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Speaker 1: We loved having you. So talk a little bit about Situs.

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Speaker 1: I gave a brief introduction. It's a handy sized carrier.

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Speaker 1: Can you talk about your fleet?

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Speaker 2: Sure? Sure, so.

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Speaker 3: CITAS is a relatively new name, as you mentioned, we

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Speaker 3: only came into being as CTUs Maritime in January twenty

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Speaker 3: twenty three. We have a fleet of around forty owned

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Speaker 3: and operated handy sized vessels, which vessels ranging from eighty

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Speaker 3: five hundred dead weight being our smallest to our largest

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Speaker 3: handy size at forty three thousand dead weight. Seventy percent

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Speaker 3: of the fleet is what we call eco tonnage, which

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Speaker 3: means increasingly fuel efficient and compliant with regulatory requirements, and

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Speaker 3: we trade worldwide predominantly on the spot market, so we

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Speaker 3: focus on minor bolt trades, niche trades, and the trades

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Speaker 3: that we focus on generally correlate with smaller economies or

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Speaker 3: industrializing economies and ports with less infrastructure.

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Speaker 2: Because our vessels are geared.

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Speaker 1: And when you say geared, they have cranes.

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Speaker 2: That's right.

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Speaker 3: So they have their own loading equipment so they can

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Speaker 3: load in ports or they can perform midstream loading. So

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Speaker 3: I would say shipping people aren't the most imaginative when

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Speaker 3: we name my ships. And handy size are so named

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Speaker 3: because they're very handy. They're very useful.

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Speaker 1: Oh yeah, I did not know that.

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Speaker 2: Actually, yeah, that's why.

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Speaker 3: So you know, I'm sure you know that Cape sizer

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Speaker 3: the larger size that can go around the Cape of

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Speaker 3: Good Hope and they can't fit through the Panama Canal, yep.

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Speaker 3: And Handy size are so named because they're very useful,

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Speaker 3: and they trade as tramps, and again not very imaginative,

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Speaker 3: but tramps go from port to port picking up up cargoes.

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Speaker 2: So although we do.

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Speaker 3: Do contract and contracts fraightment and forward contracts, predominantly.

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Speaker 2: Handy sized vessels are known for tramp trading.

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Speaker 1: And so when you say spot when you're in the

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Speaker 1: spot market, are you talking about you you arrange for

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Speaker 1: a ship to go from point A to point B.

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Speaker 1: Or is it like you're leasing it out for a

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Speaker 1: year where wherever you're contracting with can ticket to wherever

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Speaker 1: that they want it to go.

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Speaker 3: Well, actually, the spot market refers to the time at

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Speaker 3: which you're fixing, So spot means it's relatively prompt. Your

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Speaker 3: vessel would be opening within sort of thirty days and

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Speaker 3: you'd be looking for a cargo or a contract for

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Speaker 3: it then, So that saying that you're trading in the

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Speaker 3: spot market doesn't actually indicate whether you're putting your vessel

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Speaker 3: out as you say, on a charter or at least

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Speaker 3: to somebody else, or you're carrying your own cargoes. But

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Speaker 3: in CTUs Maritimes case, we are I wouldn't say unusual,

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Speaker 3: but we are very specific in terms of our business strategy.

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Speaker 3: We predominantly carry our own cargoes. We do not consider

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Speaker 3: ourselves a talaged provider, so we our business model is

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Speaker 3: not to rent our ships to other people. It's to

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Speaker 3: put our own cargoes on our own ships.

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Speaker 1: Okay, gotcha, And so who's your typical customer.

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Speaker 3: Well, handy size is drive boks a general rule, is

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Speaker 3: pretty fragmented, and as you go down the sizes, the

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Speaker 3: cargo the people you're contracting with become increasingly fragmented.

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Speaker 2: As the parcel sizes get larger.

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Speaker 3: So if you're looking at a cape size, obviously you're

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Speaker 3: trading with the big commodity houses and there are few

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Speaker 3: charterers and a few receivers. But when you get to

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Speaker 3: handy size, because there's such a diversity of the cargoes

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Speaker 3: that you're carrying, there's also a huge diversity in terms

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Speaker 3: of the customers that you're dealing with. So we always

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Speaker 3: say that there is no customer that makes up more

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Speaker 3: than five percent of our annual cargo volumes to give

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Speaker 3: you an idea of how fragmented it is. So it

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Speaker 3: could be anyone, you know, if we're carrying logs, we

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Speaker 3: may be dealing with log traders. We could be leading

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Speaker 3: trading with large grand commodity houses. We could be doing

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Speaker 3: cargo relettes to other ship owners. We could be perioding,

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Speaker 3: putting our vessels out on period on a charter as

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Speaker 3: you mentioned earlier, to a different shipowner. So you know,

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Speaker 3: it's a really broad range of customers for handy sized vessels.

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Speaker 1: And you know you did mention, you know, minor commodities

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Speaker 1: in terms of that's what handy's typically hauls, with the

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Speaker 1: majors being coal and iron. Or is there one specialty

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Speaker 1: that situs kind of handles or are you really diversified

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Speaker 1: across the broad minor categories.

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Speaker 2: No, we're really diversified.

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Speaker 3: I wouldn't say that we specialize in something particularly. We

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Speaker 3: we have strength in certain markets. So historically Asian Maritime Pacific,

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Speaker 3: which was the precursor Deceitus Maritime, was a very strong

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Speaker 3: in the China West African log trade, for instance. So

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Speaker 3: we are specialists in the timber trade, as most many

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Speaker 3: handy sized owners who have log fitted vessels are, but

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Speaker 3: in different different markets. So you might be looking at

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Speaker 3: the New Zealand China market, or you might be looking

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Speaker 3: at the US market. But in our case, we have

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Speaker 3: historically carried a lot of West African logs. But today

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Speaker 3: I would say that our cargos are too diverse to

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Speaker 3: really specify. We carry concentrates, we carry grains, project cargoes, fertilizers,

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Speaker 3: all sorts of things that category minor bulk. It actually

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Speaker 3: makes up forty percent of the dry bulg industry. But

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Speaker 3: it's very diverse. It could be you know, as I say,

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Speaker 3: it's a wide range and often you might be passed

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Speaker 3: different cargoes together in one shipment.

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Speaker 1: Gotcha. And you know currently you know you guys have

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Speaker 1: grown through a couple of acquisitions. Were the result of

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Speaker 1: a couple of acquisitions. You guys made one recently.

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Speaker 2: Yes, that's right.

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Speaker 3: We have been in the news a little bit in

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Speaker 3: the in shipping circles anyway. For a recent acquisition, in

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Speaker 3: March this year, we acquired a Chilean ship and operator

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Speaker 3: with a seventy year history called an a Cheaper Corps

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Speaker 3: and the Cheaper is a specialist in the South American market.

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Speaker 3: That was a strategic acquisition on our part. As I

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Speaker 3: said earlier, our business model is really an is to

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Speaker 3: operate our own cargoes and our own vessels. And in

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Speaker 3: order to do that in an industry like dry bulk

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Speaker 3: and in a sector such as handy size, you really

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Speaker 3: have to have an on the ground presence and you

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Speaker 3: have to have chartering managers. Those are the people who

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Speaker 3: are fixing the business onto the ships in the locations

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Speaker 3: who have an on the ground presence, they understand their customers,

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Speaker 3: they understand their business. So for US, South America is

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Speaker 3: a very important market, particularly in terms of grain trades,

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Speaker 3: and Nachieva really brought that expertise in combination with US.

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Speaker 1: And you you've mentioned that you know you like to

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Speaker 1: do your own cargoes. So from a from a layman standpoint,

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Speaker 1: someone might think that you actually own the cargo. Can

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Speaker 1: you explain what you're talking about when you say you

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Speaker 1: like to carry your own cargo. Are you saying versus

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Speaker 1: chartering out your ships?

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Speaker 2: Yeah?

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Speaker 3: I always think, as you mentioned at the beginning, Lee,

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Speaker 3: I don't come from I haven't always been in shipping.

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Speaker 3: I've been I was a lawyer once, and I have

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Speaker 3: to say that I always find shipping language fairly imprecise

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Speaker 3: and difficult to understand. People will use a number of

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Speaker 3: terms interchangeably to mean totally different things. So let me

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Speaker 3: try to explain that a little bit better. When we

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Speaker 3: talk about our own cargoes, we don't own our own cargoes.

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Speaker 2: We don't own any of our cargoes.

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Speaker 3: We call it our own cargo book as in that

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Speaker 3: we will have cargoes that we have that customers have

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Speaker 3: come to us from the market and say, okay, we

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Speaker 3: have you know, ten thousand metric tons of salts that

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Speaker 3: needs to be moved from A to B.

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Speaker 2: Have you got a ship that can do it?

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Speaker 3: And then we will say, yes, we have a shipment

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Speaker 3: on this day or a vessel can carry it within

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Speaker 3: this lay can and we consider that our own cargo,

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Speaker 3: whereas if we were to charter, the other way of

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Speaker 3: doing it would be to be as a tonnage provider.

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Speaker 3: So another ship owner would come to us and say, oh,

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Speaker 3: we have a requirement. Can we take that vessel at

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Speaker 3: this price per day and for this period of time,

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Speaker 3: and we say yes, okay, you take the vessel, and

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Speaker 3: then the cargo operations and the cargo is there on

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Speaker 3: their cargo book, not our cargo book. So that's what

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Speaker 3: I talk about. That's what I mean when I'm talking

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Speaker 3: about our cargo book. Is our own cargo business operation

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Speaker 3: rather than a tonnage role.

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Speaker 1: Okay, I appreciate the clarification. And you know, see this

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Speaker 1: is currently private, any plans to go public in the

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Speaker 1: nearer district future.

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Speaker 3: Yeah, that's a really interesting question and pretty timely at

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Speaker 3: the moment. You know, you mentioned our merge, but there's

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Speaker 3: a lot of talk in the dry boat market at

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Speaker 3: the moment about consolidation, particularly among listed companies. One thing

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Speaker 3: I would say is that this market is very fragmented,

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Speaker 3: and there is a movement as we see more regulations

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Speaker 3: coming in, as we see scale being more important for

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Speaker 3: companies to get bigger, and obviously in order to get

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Speaker 3: bigger and grow, one source of equity is the public markets.

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Speaker 3: So that's always been a goal for us in terms

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Speaker 3: of growth. But on the other hand, we have our

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Speaker 3: shipping Our investor base is very experienced and very patient,

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Speaker 3: so we wouldn't look for a listing event at any

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Speaker 3: time when the markets weren't ready or when the company

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Speaker 3: wasn't ready. We would only look at it to maximize

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Speaker 3: value for the existing shareholders. So I mean, always an

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Speaker 3: open question, but it's something that we watch very closely,

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Speaker 3: and I think we'll probably be seeing more listings of

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Speaker 3: shipping companies you know, the next in the medium term,

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Speaker 3: for exactly the reasons I've mentioned that shipping is becoming

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Speaker 3: more complicated, more expensive, and as entry barriers go up,

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Speaker 3: then you'll see more consolidation and therefore bigger companies with

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Speaker 3: bigger equity base.

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Speaker 1: Right investment bankers will be happy to hear that. So

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Speaker 1: how is the handy market perform relative to kind of

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Speaker 1: other types of drybull ships.

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Speaker 3: Well, generally speaking, as you're down the sizes, your earnings

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Speaker 3: become more stable, so less volatile, and that can be

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Speaker 3: good and bad. As you know, it depends on an

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Speaker 3: investor's appetite for how they would what sector they would

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Speaker 3: like to invest.

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Speaker 2: In within the bolt sector.

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Speaker 3: So for handy's I would say that the twenty twenty

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Speaker 3: three market was not great, but not terrible. I mean,

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Speaker 3: we saw very strong markets in twenty twenty one and

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Speaker 3: twenty twenty two, and the driver experience generally it's been

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Speaker 3: pretty similar but less volatile in the handy size sector

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Speaker 3: and possibly in the last I don't know, six to

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Speaker 3: twelve months, handy size has been looking more positive than

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Speaker 3: the bigger sizes and that's really part lea due to

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Speaker 3: the fact that the larger vessels trade the major bulks,

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Speaker 3: so iron ore and coal and those commodities are much

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Speaker 3: more tied to the Chinese economy slow down and the

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Speaker 3: news coming out of China, but also the general fears

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Speaker 3: about global recession, whereas smaller vessels like handy size that

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Speaker 3: trade minor bolts are more closely correlated to industrialization and

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Speaker 3: GDP growth. And so that's one factor is that there's

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Speaker 3: the demand concerns are slightly different. But the other factor,

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Speaker 3: the reason that we've seen reasonably good markets of the

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Speaker 3: last year and very good markets prior to that, was

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Speaker 3: really it's really supply driven. So although demand was disappointing

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Speaker 3: in twenty twenty three, the reason the market was not

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Speaker 3: great but not terrible was really largely due to our

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Speaker 3: supply picture. So I'm not sure how familiar your audience

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Speaker 3: is with the other shipping sectors, but tankers and containers

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Speaker 3: have had, you know, equally strong.

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Speaker 2: Years over the last few years.

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Speaker 3: And usually ship owners traditionally we have great years and

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Speaker 3: we order more ships, and that always shoots us in

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Speaker 3: the foot because as soon as we order more ships,

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Speaker 3: the market's flood would supply and rates go down. So

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Speaker 3: what we've seen this time since the end of twenty

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Speaker 3: one twenty two is that because shipyards have been full

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Speaker 3: of higher value tonnage, so gas carriers, tankers, container ships,

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Speaker 3: those all those types of vessels cost a lot more

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Speaker 3: to build than a dry bulk carrier. The yards are

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Speaker 3: full or you know, taking less or less interested in

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Speaker 3: building drive olk tanage at competitive prices, so shipowners have

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Speaker 3: held off ordering. The other factor is that we have

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Speaker 3: incoming regulations that mean that most ship owners are slightly

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Speaker 3: nervous about buying a very expensive asset that will have

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Speaker 3: a thirty year operational life but may not be regulatorily compliant.

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Speaker 2: I'm not sure if that's a word, but it is just not.

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Speaker 1: The interrupt but you said it's an expensive asset. Roughly,

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Speaker 1: if I, you know, if you and I want to

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Speaker 1: go to the store and buy a new handy, how

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Speaker 1: much would that pros us.

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Speaker 3: In the ballpark of thirty one to thirty three million

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Speaker 3: dollars depending where you build it?

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Speaker 1: All right, specification, I'll call my banker.

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Speaker 3: I mean, that's peanuts compared to you know what a

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Speaker 3: new container ship or a cruise ship, or a tanker

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Speaker 3: or a lergy gas carrier costs. So shipyards see a

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Speaker 3: lot more margin and building bigger tonnage. So sorry, coming

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Speaker 3: back to your question about you know, the markets and

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Speaker 3: why they are the where they are, is that we

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Speaker 3: do not have this this avalanche of orders coming in,

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Speaker 3: flooding the market and reducing the supply demand balance. So

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Speaker 3: at the moment, the reason the market is so volatile

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Speaker 3: is because supply and demand are fairly closely balanced, and

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Speaker 3: every time we have a demand disruption, the markets are

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Speaker 3: very volatile and they move up and down depending on

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Speaker 3: demand because we're in this finally balanced position.

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Speaker 1: So you mentioned your demand disruptions. There's been a lot

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Speaker 1: of dislocations in the market, whether it's you know, the

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Speaker 1: Ukraine Russia war, or the crisis in the Red Sea,

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Speaker 1: or low water levels and Panama Canal. What's been the

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Speaker 1: biggest impact of the handy sized.

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Speaker 3: Market it I think recently we'd probably say the Red

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Speaker 3: Sea disruption that have had the biggest impact in this

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Speaker 3: short to medium term, or perhaps we say we see

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Speaker 3: that as having the longest effect on the market, more

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Speaker 3: than the Ukrainian the Rushi Ukraine war or the Panama

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Speaker 3: But all three of those factors are pretty they all

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Speaker 3: have they all are affecting us in different ways and

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Speaker 3: will continue to affect us in different ways. So if

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Speaker 3: you want me to talk about, you know, the Red Sea,

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Speaker 3: the impact of the Red Sea.

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Speaker 1: Yeah, I'm assuming you guys, I'm assuming you guys have

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Speaker 1: avoided the Suez Canal and Red Sea altogether, well, we.

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Speaker 3: Have since since probably September last year, to be honest.

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Speaker 3: The Red Sea is really has the biggest impact on

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Speaker 3: to container vessels. But obviously if you're trading between Europe

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Speaker 3: and China, Australia, et cetera, that is a massive waterway

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Speaker 3: for us for shipping generally. So if it's closed, the

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Speaker 3: obvious answer is that shipping goes around, and it goes

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Speaker 3: around the Long Way. And if it goes around the

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Speaker 3: Long Way and voyages take longer, the impact that has

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Speaker 3: is that it takes supply out of the market. Because

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Speaker 3: vessels are taking longer to perform a voyage, there are

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Speaker 3: less vessels available to fix new business.

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Speaker 2: It means that the supply side titans. It means that

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Speaker 2: rates go up.

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Speaker 3: So in fact, short term or perhaps medium term, we

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Speaker 3: can say that the Red Sea has had a positive

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Speaker 3: impact on dry bulk in terms of the rates. Because

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Speaker 3: the shipowners will not in the medium to long term

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Speaker 3: absorb that deviation.

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Speaker 2: We will pass that cost on.

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Speaker 3: So perhaps for you know, there'll be a voyage or

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Speaker 3: two that was fixed in September where they'll do a

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Speaker 3: dispute about whose account the deviation is fond, but from

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Speaker 3: then on it will be priced in to voyages. So

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Speaker 3: what we talk about in shipping is the constant theme

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Speaker 3: is supply and demand. But what we talk about within

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Speaker 3: the supply space is latent supply, and that means vessels

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Speaker 3: taking longer to get places or slowing down, So taking

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Speaker 3: a longer route or slowing down, and that will have

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Speaker 3: a major impact on latent supply within the market. And

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Speaker 3: that's the impact that the Red Sea is having at

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Speaker 3: the moment on the dry boat market.

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Speaker 1: So you know, it's been over two years since the

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Speaker 1: Russia Ukraine War started. Did that change you know where

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Speaker 1: your ships went, because you know, I'm assuming you were

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Speaker 1: kind of involved in a lot of the exports out

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Speaker 1: of Russia and Ukraine before.

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Speaker 2: Then, we as a company had not.

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Speaker 3: I wouldn't say a huge percentage of our business had

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Speaker 3: come from Russia Ukraine just by the nature of our

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Speaker 3: you know, our trade lanes, et cetera. We do trade

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Speaker 3: worldwide and it does affect our business. But I mean,

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Speaker 3: it wasn't by any means catastrophic. But for the the

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Speaker 3: dry bog industry generally and for the minor bulks, not

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Speaker 3: just handy sized supras and the as you move up

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Speaker 3: the sizes. It has had a significant impact, I would say,

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Speaker 3: because Ukraine accounts for about ten percent of the world's

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Speaker 3: grain trade, so that was one major impact. The other

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Speaker 3: has obviously been Russian sanctions, and there are obviously a

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Speaker 3: large number of cargoes coming out of Russia.

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Speaker 2: But one I would focus on would be.

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Speaker 3: The fertilizer trade out of Russia, which is traditionally a

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Speaker 3: handy sized trade. Obviously sanctions have made that very very difficult,

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Speaker 3: if not impossible, and Ukraine and Sank for different reasons.

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Speaker 3: Grain out of Ukraine is increasingly has been very difficult,

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Speaker 3: and it's been a positive you know development, I say,

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Speaker 3: in the last three or four months that Ukraine's opened

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Speaker 3: its own grain corridor and we're seeing a lot more.

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Speaker 3: We're seeing more grain cargoes moving in the last three

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Speaker 3: months than we've seen in the entire two year war

358
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Speaker 3: due to the success of the new corridor. So that's positive,

359
00:19:59,160 --> 00:20:06,280
Speaker 3: but obviously global food security and also for the tribalk industry.

360
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Speaker 1: So so earlier you mentioned, you know, how new regulations

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Speaker 1: could quicken the consolidation of the market. There's new IMO

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Speaker 1: emission standards. I believe it's nowadays. They want to be

363
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Speaker 1: zero by twenty fifty. How is SITUS approaching these new mandates?

364
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Speaker 1: You know, are you out there buying new ships that

365
00:20:32,320 --> 00:20:35,359
Speaker 1: I don't know that operate on wind? Like, how are

366
00:20:35,400 --> 00:20:36,400
Speaker 1: you guys dealing with that?

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Speaker 2: Yeah, that's a very good question.

368
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Speaker 3: I mean, I would like to make it a kind

369
00:20:40,040 --> 00:20:45,080
Speaker 3: of broader comment to your listeners, which is that shipping

370
00:20:45,200 --> 00:20:47,439
Speaker 3: is not very good at selling itself in terms of

371
00:20:47,480 --> 00:20:50,760
Speaker 3: its emission reputation. And I think a lot of it's

372
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Speaker 3: very easy for the globe to beat up on shipping,

373
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Speaker 3: given that we carry ninety percent of the world's goods,

374
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Speaker 3: but we account for two percent of that greenhouse gases.

375
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Speaker 3: That's actually an enormous improvement from two thousand and eight,

376
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Speaker 3: which is when we started collecting data. And I think,

377
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Speaker 3: I mean, I don't have the figure off the top

378
00:21:09,040 --> 00:21:10,680
Speaker 3: of my head, but it was closer to.

379
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Speaker 2: I was going to say a bit over three and

380
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Speaker 2: a half something like that, But.

381
00:21:15,760 --> 00:21:19,359
Speaker 1: That's really you're probably right, Yeah, don't take my word

382
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Speaker 1: for it.

383
00:21:21,160 --> 00:21:23,800
Speaker 3: Well, whichever we take the poor there is a significant

384
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Speaker 3: improvement already in the measures that we've already been taking

385
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Speaker 3: So I think that's something that's important to remember that

386
00:21:30,320 --> 00:21:33,720
Speaker 3: shipping is has is very aware of its responsibilities and

387
00:21:33,800 --> 00:21:37,399
Speaker 3: has been working towards change even without the IM regulations.

388
00:21:38,240 --> 00:21:40,440
Speaker 3: My views on the IMO regulations are you know, that's

389
00:21:40,440 --> 00:21:42,600
Speaker 3: not what you asked me, So that's a separate question.

390
00:21:42,800 --> 00:21:46,879
Speaker 3: But the fact is that there are incoming regulations that

391
00:21:46,920 --> 00:21:50,520
Speaker 3: we have to comply with, and our belief is in

392
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Speaker 3: the medium to you know, short to medium, perhaps medium

393
00:21:54,359 --> 00:21:59,040
Speaker 3: long term compliance in our sector for smaller vessels and

394
00:21:59,040 --> 00:22:04,120
Speaker 3: for dry bot vessels will be through existing fuel technologies.

395
00:22:04,160 --> 00:22:07,320
Speaker 3: We will not see the dry bock fleet moving on

396
00:22:07,520 --> 00:22:10,920
Speaker 3: mass to alternative fuels, and we will not see smaller

397
00:22:11,160 --> 00:22:14,639
Speaker 3: vessels such as handy size moving on mass towards alternative fuels.

398
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Speaker 3: I'm going to say, and I mean I'm not a

399
00:22:16,640 --> 00:22:20,920
Speaker 3: betting for whatever my word is worth, I don't see

400
00:22:20,920 --> 00:22:24,200
Speaker 3: that happening on mass sort of in the next ten

401
00:22:24,240 --> 00:22:25,200
Speaker 3: to fifteen years that.

402
00:22:25,440 --> 00:22:27,280
Speaker 2: A big proportion of the fleet will most So what

403
00:22:27,320 --> 00:22:27,800
Speaker 2: does that mean.

404
00:22:27,800 --> 00:22:31,800
Speaker 3: That means that within the current fuel and technology constraints,

405
00:22:31,840 --> 00:22:35,879
Speaker 3: we have to improve our performances and that's not that

406
00:22:36,000 --> 00:22:38,040
Speaker 3: difficult to do, as in there are a lot of

407
00:22:38,080 --> 00:22:41,560
Speaker 3: efficiency to be efficiencies to be gained out of operating

408
00:22:42,359 --> 00:22:44,919
Speaker 3: what we call conventional tonnage, and what I mean by

409
00:22:44,920 --> 00:22:50,199
Speaker 3: that is fuel vessels that operate on diesel. And there

410
00:22:50,200 --> 00:22:51,919
Speaker 3: are two ways of doing that. The first is to

411
00:22:52,040 --> 00:22:56,520
Speaker 3: buy more fuel efficient vessels or better vessels, and that's

412
00:22:56,560 --> 00:23:00,439
Speaker 3: what Citas Maritime has been doing. Over the last at months.

413
00:23:00,480 --> 00:23:02,919
Speaker 3: We have sold out a lot of our older tonnage

414
00:23:02,920 --> 00:23:06,840
Speaker 3: and bought younger, modern, larger vessels. So now as it

415
00:23:06,880 --> 00:23:10,440
Speaker 3: stands today, we have seventy about seventy five percent of

416
00:23:10,440 --> 00:23:13,720
Speaker 3: our fleet would be classified as ecotonnage, which compares you know,

417
00:23:13,760 --> 00:23:15,840
Speaker 3: to the global fleet only about thirty percent of the

418
00:23:15,840 --> 00:23:18,280
Speaker 3: fleet is ecotonnage.

419
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Speaker 1: And that's a that's of the handy sized market.

420
00:23:22,160 --> 00:23:25,080
Speaker 2: That's actually the dryboup fleet generally drybulk.

421
00:23:25,600 --> 00:23:29,800
Speaker 3: Yeah, so there are a number of things that we

422
00:23:29,800 --> 00:23:31,480
Speaker 3: can do. There are a number of leavers that ship

423
00:23:31,480 --> 00:23:34,560
Speaker 3: in pull to improve our performance. The first is that

424
00:23:34,600 --> 00:23:38,920
Speaker 3: we can retrofit vessels with new technologies to improve speeding consumption,

425
00:23:39,280 --> 00:23:42,679
Speaker 3: so we can paint them with low friction paints. We

426
00:23:42,720 --> 00:23:49,199
Speaker 3: can we can install various technologies that improve turbine power

427
00:23:49,400 --> 00:23:54,680
Speaker 3: and whole performance. There are a wide range of technologies

428
00:23:54,720 --> 00:23:57,520
Speaker 3: and we are all trying them out, and we are

429
00:23:57,520 --> 00:24:02,960
Speaker 3: all trying to understand where the efficiencies are being found

430
00:24:03,600 --> 00:24:07,560
Speaker 3: and the cost benefit analysis. So that's being done actively

431
00:24:07,600 --> 00:24:09,400
Speaker 3: across the industry, and I would say that we are

432
00:24:09,520 --> 00:24:11,520
Speaker 3: very active in that space. We are trying out a

433
00:24:11,560 --> 00:24:14,679
Speaker 3: lot of different things on our vessels, and when we

434
00:24:14,720 --> 00:24:16,800
Speaker 3: buy new vessels, we spend a lot of time looking

435
00:24:16,840 --> 00:24:21,479
Speaker 3: at their emissions. You can fit these new technologies on older,

436
00:24:21,680 --> 00:24:24,680
Speaker 3: less eco vessels, but then you have a shorter runway

437
00:24:25,119 --> 00:24:29,400
Speaker 3: in terms of how long that vessel remain relevant. If

438
00:24:29,440 --> 00:24:32,240
Speaker 3: you fit them on younger vessels that are already more eco,

439
00:24:32,359 --> 00:24:34,960
Speaker 3: that vessel has a longer economic life in which it

440
00:24:35,000 --> 00:24:39,040
Speaker 3: will comply with the regulations. So that is what I

441
00:24:39,040 --> 00:24:45,080
Speaker 3: would say most larger established handy size operators that with

442
00:24:45,160 --> 00:24:47,959
Speaker 3: a strong balance sheet are doing is upgrading their fleet generally.

443
00:24:49,400 --> 00:24:51,240
Speaker 3: The other thing, there are two other things that we're doing.

444
00:24:51,240 --> 00:24:54,480
Speaker 3: One is that we are investing in voyage optimization, so

445
00:24:54,640 --> 00:25:01,639
Speaker 3: whether routing, route planning and more sophisticated commodity trading so

446
00:25:01,800 --> 00:25:05,360
Speaker 3: just in time arrivals, talking more closely with our customers

447
00:25:05,359 --> 00:25:10,679
Speaker 3: in order to reduce waiting time and congestion. And the

448
00:25:11,160 --> 00:25:13,360
Speaker 3: final one, which is probably this is not obviously an

449
00:25:13,440 --> 00:25:16,320
Speaker 3: order of efficiency, because this is what the majority of

450
00:25:16,320 --> 00:25:19,600
Speaker 3: the world fleet will be doing, is slowing down. Because

451
00:25:19,600 --> 00:25:26,080
Speaker 3: when a vessel slows down, its emissions reduce exponentially. So

452
00:25:26,480 --> 00:25:29,800
Speaker 3: a small reduction in speed can have a very significant

453
00:25:29,800 --> 00:25:31,879
Speaker 3: reduction in terms of carbon emissions.

454
00:25:32,440 --> 00:25:34,840
Speaker 1: And that will also take out supply in the market,

455
00:25:34,960 --> 00:25:37,760
Speaker 1: and I guess be a positive for rates as well.

456
00:25:38,080 --> 00:25:39,919
Speaker 2: Yeah, you read my mind. That's exactly what I was

457
00:25:39,920 --> 00:25:40,480
Speaker 2: about to say.

458
00:25:40,520 --> 00:25:43,320
Speaker 3: So we would say, you know, on a conservative estimate

459
00:25:43,359 --> 00:25:46,800
Speaker 3: over the next few years that the slowdown of vessels

460
00:25:46,880 --> 00:25:50,520
Speaker 3: to comply with IMO regulations is about will add about

461
00:25:50,520 --> 00:25:53,440
Speaker 3: two percent capacity or sorry, that's the wrong way around,

462
00:25:53,520 --> 00:25:56,360
Speaker 3: take out two percent capacity from the market.

463
00:25:56,440 --> 00:25:59,520
Speaker 1: Right. So let me ask you a question about insurance

464
00:25:59,520 --> 00:26:02,880
Speaker 1: because and your bio says you handle kind of insurance

465
00:26:02,920 --> 00:26:06,040
Speaker 1: for the company as well. What is insurance trades done

466
00:26:06,160 --> 00:26:09,119
Speaker 1: over the last year with all of these new risks

467
00:26:09,119 --> 00:26:12,600
Speaker 1: that shipping companies are facing. How much has it increased?

468
00:26:12,640 --> 00:26:13,720
Speaker 1: I'm assuming it's increased.

469
00:26:14,000 --> 00:26:17,280
Speaker 3: Yeah, that's actually a difficult question to answer because it's

470
00:26:17,920 --> 00:26:22,400
Speaker 3: very vessel dependent, it's very route dependent. So how long

471
00:26:22,440 --> 00:26:26,600
Speaker 3: you would spend in a high risk area. So additional

472
00:26:26,640 --> 00:26:30,520
Speaker 3: premium in the industry we call AP is typically calculated

473
00:26:30,560 --> 00:26:32,679
Speaker 3: on the amount of time that the vessel spends in

474
00:26:32,720 --> 00:26:34,520
Speaker 3: an area rather than the entire voyage.

475
00:26:34,840 --> 00:26:35,840
Speaker 2: But there are and.

476
00:26:35,800 --> 00:26:37,720
Speaker 3: This isn't you know, a novel feature of the market

477
00:26:37,760 --> 00:26:41,480
Speaker 3: at the moment, is that there are additional risk factors

478
00:26:41,560 --> 00:26:44,280
Speaker 3: that the insurance market is having to price in that

479
00:26:44,400 --> 00:26:48,360
Speaker 3: it previously didn't have to experience. So, for instance, vessels

480
00:26:48,359 --> 00:26:51,000
Speaker 3: trading through the Red Sea may see an increase in

481
00:26:51,040 --> 00:26:54,639
Speaker 3: their premiums if they have US connections because the Hoothy

482
00:26:54,680 --> 00:26:58,159
Speaker 3: rebels have explicitly said that they'll be targeting American vessels.

483
00:26:58,400 --> 00:27:01,280
Speaker 3: So that's another, yet another the challenge on the you know,

484
00:27:01,359 --> 00:27:04,440
Speaker 3: shipping landscape in terms of how we trade and how

485
00:27:04,480 --> 00:27:05,359
Speaker 3: we price in.

486
00:27:07,320 --> 00:27:08,720
Speaker 2: These risk factors.

487
00:27:08,760 --> 00:27:11,160
Speaker 3: And some of them aren't you know, it's not capable

488
00:27:11,160 --> 00:27:13,600
Speaker 3: of being priced and you can't you can't price in

489
00:27:13,640 --> 00:27:16,840
Speaker 3: the risk to your crew when you trade through a

490
00:27:16,840 --> 00:27:19,040
Speaker 3: war risk area such as the Red Seas. So some

491
00:27:19,760 --> 00:27:26,080
Speaker 3: some risks and some costs are quantifiable like insurance, and

492
00:27:26,200 --> 00:27:28,639
Speaker 3: others are just are not capable of being quantified and

493
00:27:28,680 --> 00:27:31,080
Speaker 3: are probably more significant.

494
00:27:32,160 --> 00:27:36,360
Speaker 1: And so we're coming up at the end of our time. Unfortunately.

495
00:27:36,600 --> 00:27:40,280
Speaker 1: You know, so you mentioned you you've been in the industry,

496
00:27:40,400 --> 00:27:42,159
Speaker 1: or maybe I mentioned it, you've been in the industry

497
00:27:42,160 --> 00:27:45,159
Speaker 1: for ten years. How did you get your start in

498
00:27:45,200 --> 00:27:47,960
Speaker 1: the shipping because sometimes people are born into it and

499
00:27:48,000 --> 00:27:50,760
Speaker 1: sometimes people stumble into it. So I've always find it

500
00:27:50,800 --> 00:27:53,959
Speaker 1: interesting to hear from folks like yourself how you got

501
00:27:54,000 --> 00:27:54,880
Speaker 1: involved in the industry.

502
00:27:55,640 --> 00:27:58,639
Speaker 3: Right, well, I certainly wasn't born into it, although my

503
00:27:58,720 --> 00:28:00,680
Speaker 3: great great grandfather was a ship builder, so it must

504
00:28:00,680 --> 00:28:06,080
Speaker 3: be in there somewhere, but certainly, but certainly, I started

505
00:28:06,240 --> 00:28:11,879
Speaker 3: my career as a lawyer, and I when I in

506
00:28:12,000 --> 00:28:16,320
Speaker 3: my undergraduate dissertation, I had written my undergrad dissertation in

507
00:28:16,400 --> 00:28:21,320
Speaker 3: salvage law, so I had some academic background in maritime.

508
00:28:21,320 --> 00:28:23,080
Speaker 3: But certainly when I started my career, I was not

509
00:28:23,119 --> 00:28:25,280
Speaker 3: involved with shipping at all. Shipping law was quite a

510
00:28:25,359 --> 00:28:30,199
Speaker 3: niche area, and I being a junior lawyer and in

511
00:28:30,240 --> 00:28:34,080
Speaker 3: those days very interested in you know, money and job security.

512
00:28:34,160 --> 00:28:36,399
Speaker 3: Going and coming out of the global financial crisis, I

513
00:28:36,440 --> 00:28:40,720
Speaker 3: went into more generalist corporate law and it just came

514
00:28:40,760 --> 00:28:45,520
Speaker 3: down to chance that I met some guys that ran

515
00:28:45,560 --> 00:28:49,560
Speaker 3: a shipping company who inspired me to come and work

516
00:28:49,600 --> 00:28:51,040
Speaker 3: for them take a risk.

517
00:28:51,120 --> 00:28:54,280
Speaker 2: I was in my twenties, and I thought I thought that.

518
00:28:56,000 --> 00:28:56,560
Speaker 2: First of all, I.

519
00:28:56,520 --> 00:28:59,840
Speaker 3: Thought shipping was particularly interesting, and I also wanted I

520
00:28:59,880 --> 00:29:02,560
Speaker 3: was frustrated with law and that I wasn't close enough

521
00:29:02,560 --> 00:29:05,080
Speaker 3: to the industrial side. I wasn't close enough to the business.

522
00:29:06,000 --> 00:29:09,520
Speaker 3: I enjoyed working with my customers and well and my clients.

523
00:29:09,560 --> 00:29:12,720
Speaker 3: I should say, sorry, that's a force of habit with

524
00:29:12,760 --> 00:29:15,440
Speaker 3: my clients in terms of solving their problems.

525
00:29:15,480 --> 00:29:16,720
Speaker 2: But then they would, you know.

526
00:29:17,200 --> 00:29:19,000
Speaker 3: Being in private practice, they would take their problems away

527
00:29:19,000 --> 00:29:22,160
Speaker 3: and I would never see the corporate ramifications or the

528
00:29:22,160 --> 00:29:28,200
Speaker 3: commercial ramifications of those problems solving you know, documents we'd

529
00:29:28,200 --> 00:29:30,480
Speaker 3: put in place. So I wanted to get closer to

530
00:29:30,520 --> 00:29:33,240
Speaker 3: a business, and shipping, you know, had always interested me.

531
00:29:34,320 --> 00:29:36,320
Speaker 3: It was a gamble, but I'm very happy to say

532
00:29:36,320 --> 00:29:38,080
Speaker 3: it was one that've paid off, you know, I've really

533
00:29:38,400 --> 00:29:41,239
Speaker 3: I can't recommend shipping highly enough to anyone. It's an

534
00:29:41,280 --> 00:29:45,240
Speaker 3: incredibly interesting industry. There are so many different facets to it.

535
00:29:45,280 --> 00:29:47,600
Speaker 3: There are so many different areas you can go into.

536
00:29:48,760 --> 00:29:51,680
Speaker 3: And what it's so interesting about what I do is

537
00:29:51,720 --> 00:29:55,280
Speaker 3: that working in drive Bolk and being really close to

538
00:29:56,640 --> 00:30:02,480
Speaker 3: you know, global trends and industrialization and developing economies, that

539
00:30:02,520 --> 00:30:06,000
Speaker 3: you really develop a wider view wide, a worldview about

540
00:30:06,040 --> 00:30:08,480
Speaker 3: what's happening in the world and how that will impact

541
00:30:08,520 --> 00:30:10,680
Speaker 3: something like shipping and supply supply demand.

542
00:30:11,120 --> 00:30:14,000
Speaker 2: So yeah, it's great, it's great business.

543
00:30:14,320 --> 00:30:16,960
Speaker 1: Yep. It's truly global and let you travel a little

544
00:30:17,000 --> 00:30:18,840
Speaker 1: bit too. I bet a lot.

545
00:30:18,920 --> 00:30:23,960
Speaker 2: Yeah, yeah, yeah.

546
00:30:21,960 --> 00:30:23,920
Speaker 1: All right, Olivia, I we got to wrap it up.

547
00:30:24,120 --> 00:30:26,160
Speaker 1: I want to really thank you for your time. I

548
00:30:26,200 --> 00:30:29,400
Speaker 1: really appreciate the conversation learning more about stas and the

549
00:30:29,440 --> 00:30:30,240
Speaker 1: handy market.

550
00:30:30,720 --> 00:30:33,400
Speaker 2: Thank you for having me. It's been a great chat.

551
00:30:34,000 --> 00:30:36,640
Speaker 1: Yep, and thanks for tuning in. If you liked the episode,

552
00:30:36,640 --> 00:30:39,320
Speaker 1: please subscribe and leave a review. We've lined up a

553
00:30:39,400 --> 00:30:41,640
Speaker 1: number of great guests for the podcast. Check back to

554
00:30:41,680 --> 00:30:45,600
Speaker 1: hear conversations but C suite executives, shippers, regulators, and decision

555
00:30:45,600 --> 00:30:48,360
Speaker 1: makers within the freight markets. Also, you have an idea

556
00:30:48,440 --> 00:30:50,240
Speaker 1: for a future episode, please hit me up on the

557
00:30:50,240 --> 00:30:53,880
Speaker 1: Blueberg terminal. We're on Twitter at logistics Lee. Thanks everyone,

558
00:30:53,920 --> 00:30:54,440
Speaker 1: and take care