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

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Speaker 1: I'm your host, Lee Klascaw, senior Freight, transportation and Logistics

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Speaker 1: analysts at Bloomberg Intelligence, Bloomberg's in house research arm of

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Speaker 1: almost five hundred analysts and strategists. Before diving in a

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Speaker 1: little public service announcement, your support is instrumental to keep

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Speaker 1: bringing great guests onto the podcast like the one we

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Speaker 1: have today. If you haven't already, please do take a

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Speaker 1: moment to follow rate and share the Talking Transports Podcast

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Speaker 1: with your colleagues, families and friends. We appreciate your support.

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Speaker 1: I'm very excited to have Ole Hairtaker SFL Corpse CEO

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Speaker 1: onto the podcast today. He's been in that role since

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Speaker 1: two thousand and nine. He joined the company in two

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Speaker 1: thousand and six as at CFO. Prior to joining SFL,

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Speaker 1: he was employed in the corporate finance division of DNB Markets,

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Speaker 1: a leading shipping and offshore bank. Ola also serves as

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Speaker 1: chairman of nor M Drilling and a director of Frontline.

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Speaker 1: He holds a Masters of Science degree from the Norwegian

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Speaker 1: School of Economics and Business Administration. And for those that

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Speaker 1: are not familiar, SFL Corp trades under the symbol SFL

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Speaker 1: and has a market cap of around one point nine

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Speaker 1: billion dollars. Consensus expects sfl's earnings to increase seventy three

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Speaker 1: percent this year to a dollar zh nine per share

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Speaker 1: on a nineteen percent increase in revenue. Welcome to the

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Speaker 1: Talking Transports podcast, Oli.

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Speaker 2: Thank you very much. I'm so excited to join your podcast.

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Speaker 1: Glad you're here. You know SFL might not be a

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Speaker 1: household name. Can you please give a brief description of

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Speaker 1: what SFL does.

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Speaker 2: Yes, SFL is an owner of maritime assets. We provide

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Speaker 2: infrastructure to logistics companies and have as what unusual business

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Speaker 2: model compared to most shipping companies out there. I'm sure

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Speaker 2: we can go more into the details, but in short,

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Speaker 2: what we look for our long term charters to very

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Speaker 2: strong counterparties, which enables us to pay long term, predictable

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Speaker 2: dividends to our investors. So, over the twenty years the

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Speaker 2: company has been in existence, now, we've paid more than

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Speaker 2: thirty dollars per share in dividends and it's been on average,

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Speaker 2: you know, the annualized return on that investment has been

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Speaker 2: around thirteen percent, so so far in an industry that's

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Speaker 2: generally throwing off mid single digit returns. You know, it

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Speaker 2: looks like this business model actually works over time.

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Speaker 1: So at the crux, you're almost like a leasing company.

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Speaker 1: You buy the assets and you lease them out.

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Speaker 2: Correct we are, And at the outset in two thousand

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Speaker 2: and four, when the company was started, it was really

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Speaker 2: more of a finance arm or frontline you know, the

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Speaker 2: tanker owner where all the hard assets were moved out

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Speaker 2: into SFL and and then chartered out the front line

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Speaker 2: and that way they managed to release a lot of

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Speaker 2: capital that the owners at that time could reinvest elsewhere.

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Speaker 2: So it was a captive financing arm in reality, with

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Speaker 2: one customer and one asset type. And then in two

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Speaker 2: thousand and six that's when I joined a CFO. That's

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Speaker 2: when a management team was hired and the and the

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Speaker 2: with the with really the mandate to do something with

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Speaker 2: this company, develop it into you know, you know, build it.

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Speaker 3: So so that's what we've been doing.

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Speaker 1: And so you know, Frontlines it's a tanker operator and

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Speaker 1: so you know, you mentioned you have a lot of

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Speaker 1: different marine shipping assets that you lease out. What other

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Speaker 1: types of vessels are in your portfolio and kind of

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Speaker 1: can you talk about your overall portfolio, like what do

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Speaker 1: you what are you most exposed to?

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Speaker 2: As we that, yeah, absolutely so. Going from a pure

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Speaker 2: tanker owner back in two thousand and four, we started

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Speaker 2: diversifying into other assets where we could see long term

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Speaker 2: chartering opportunities in the In the beginning, we were looking

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Speaker 2: more for dry leases or bare boat as they're called

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Speaker 2: in the maritime term, i e. Where we buy the

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Speaker 2: asset and we rented out, but where customers you know,

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Speaker 2: provides the crew and does operational management, does maintenance, et

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Speaker 2: cetera on the assets. What we have discovered over the years,

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Speaker 2: and you could say the hard way is that you know,

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Speaker 2: while dry these works well in the airline industry, it

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Speaker 2: doesn't really work so well in the marine industry.

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Speaker 3: And a couple of reasons for that.

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Speaker 2: One is that the airline industry has a much more

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Speaker 2: rigorous you know, rules and regulations on maintenance for instance,

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Speaker 2: so it's difficult to cheat on maintenance and skimp on

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Speaker 2: it or delay it. But also in the maritime space,

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Speaker 2: I mean these are ships they go in the you know,

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Speaker 2: in the in the oceans, you know, sometimes really rough weather,

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Speaker 2: it rusts, so you have to be at it and

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Speaker 2: make sure you maintain your vessels all alone. So god

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Speaker 2: we have done you know, over the twenty years. The

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Speaker 2: first ten years we were more dry lease focused or

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Speaker 2: bare boats, and now we have switched to be almost

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Speaker 2: solely time charters or wet leaves, where we provide, we

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Speaker 2: buy the asset, we we charter it out to a

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Speaker 2: customer and we provide it's our crew, and we do

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Speaker 2: the maintenance, we do upgrades, and we think it's a

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Speaker 2: much more sustainable model, you know, going forward. Also, because

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Speaker 2: what we have seen is that end users in the

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Speaker 2: maritime world, they typically don't charter in vessels on a

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Speaker 2: dry lease basis. They want someone to take care of

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Speaker 2: their transportation need. So therefore, if you know, if we

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Speaker 2: do a time chartter, we can take care of the

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Speaker 2: whole transportation leg from A to B and our customer

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Speaker 2: doesn't have to worry about that. So our asset base

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Speaker 2: have migrated from being primarily tanker driven or tanker focused,

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Speaker 2: and now we have mainly liner assets, container ships and

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Speaker 2: car carriers in our portfolio, but we also have tanker vessels.

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Speaker 2: We have eighteen vessels. None of the original feed is left.

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Speaker 2: We have no vessels with front one anymore. These are

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Speaker 2: all other customers. We have two drilling rigs. We have

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Speaker 2: fifteen dry book vessels, so it's a it's a mixed

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Speaker 2: portfolio of more than eighty vessels now right.

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Speaker 1: And could you talk about who your customers are. Are

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Speaker 1: they the shippers, are they the you know, the container liners,

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Speaker 1: who's renting or leasing or time treading in your vessels?

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Speaker 2: Yeah, our largest customer is MRSK with around forty percent

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Speaker 2: of our charter backlog. And with backlog, I mean fixed

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Speaker 2: rate charters going forward. It's not including call it value

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Speaker 2: after the charter is you know, is over. So this

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Speaker 2: is just what we have locked in. It's five billion

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Speaker 2: dollar backlog.

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Speaker 3: A lot of that is MRSK.

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Speaker 2: We started with four vessels back ten years ago and

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Speaker 2: now we have built that.

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Speaker 3: To you know, nearly twenty vessels.

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Speaker 2: With them, we have alcohol bag, Lloyd which is also

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Speaker 2: a big liner company, and MSc, which is the largest

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Speaker 2: in the market. So these are all top tier, you know,

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Speaker 2: market leaders in the segments. On the drilling side, we

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Speaker 2: have a long term contract with Conoco Phillips, again a

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Speaker 2: household name, very strong counter party. We have a rig

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Speaker 2: with a charter to twenty twenty eight with them. We

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Speaker 2: have Volkswagen Group with four vessels doing so for for

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Speaker 2: anyone in the US, if you own a Volkswagen Bentley

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Speaker 2: or Lamborghini or Porsche, there is a pretty high likelihood

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Speaker 2: that they have been transported with one of our vessels

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Speaker 2: going back and forth over the Atlantic.

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Speaker 3: As an example, that's where my Bentley came from, but

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Speaker 3: that is probably where your Bentley came from. Exactly.

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Speaker 2: We have we have vessels with cock who is you know,

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Speaker 2: a US you know, privately owned but investment, the great

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Speaker 2: industrial conglomerate. We have Traffic, Gura, we have Vitto, Nilsen.

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Speaker 2: You know, we have a number of Phillips sixty six.

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Speaker 2: We have we have migrated from you know a lot

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Speaker 2: of counter party names that many investors haven't really heard

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Speaker 2: about because they weren't top tier when we did beer.

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Speaker 3: Boats or drylies.

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Speaker 2: And now we are we are dealing with you know,

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Speaker 2: really high end the customers, which of course we are

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Speaker 2: excited too because we believe the risk profile has changed

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Speaker 2: dramatically over the years.

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Speaker 1: Right, So you know, these these assets are are are

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Speaker 1: pretty expensive, a little more expensive than a Bentley as well.

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Speaker 1: So you know, how long are these time charter contracts?

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Speaker 1: I would assume you want to secure really long contracts

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Speaker 1: with these third parties.

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Speaker 2: Yeah, so typically we do between five and ten year

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Speaker 2: charters with our counterparties. We have done as long as

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Speaker 2: fifteen years at the longest, but sweet spot is tend

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Speaker 2: to five to ten years. The reason why we prefer

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Speaker 2: not to go too long is that when we then

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Speaker 2: run and operate the vessels, we have to make sure

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Speaker 2: that there aren't you know, either regulatory shifts or other

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Speaker 2: issues that could cause the cost of running them to

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Speaker 2: be higher than we expect. At the same time, you know,

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Speaker 2: we want it long enough so we get real benefit

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Speaker 2: out of financing them. You know they call it the

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Speaker 2: bank or the asset financing that we can optimize that

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Speaker 2: because that's an integral part when you own maritime assets,

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Speaker 2: is that to be competitive, it's.

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Speaker 3: Impossible to be all equity.

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Speaker 2: You have to use financing to effectively get to the

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Speaker 2: equity returns you really want to have, and you have

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Speaker 2: to make sure that that financing is not exposed from

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Speaker 2: a from a risk perspective. So that's a that's a

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Speaker 2: that's an important part. I think if you look at

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Speaker 2: most shipping companies out there, it's unfortunately you know, it

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Speaker 2: has been over time a difficult segment to invest in

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Speaker 2: for many investors. And the reason why is that it's

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Speaker 2: been a boom bust type market. It's a market where

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Speaker 2: you really need to be a really be a specialist

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Speaker 2: to follow. If you're not a specialist, you know, and

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Speaker 2: you don't you know, pay attention, you know, sort of

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Speaker 2: every day you may be caught out and and and

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Speaker 2: lose a lot because you know, market can turn so quickly.

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Speaker 2: And and the part of the reason is that because

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Speaker 2: financing and asset financing is a readily available in this segment,

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Speaker 2: you are combining to you can say potentially toxic element.

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Speaker 2: It's a financial leverage and operational leverage if you run

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Speaker 2: them in the spot market. So you know, the finan

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Speaker 2: financial cost I mean you have to pay interest, you

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Speaker 2: have to advertise the financing irrespectable of the what the

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Speaker 2: vessel earns in the market. And when the markets are

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Speaker 2: markets rough, when the markets are down, there is not

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Speaker 2: much revenues and you have to pay you know, up

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Speaker 2: on the financing. So that's where we try to balance.

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Speaker 2: So we have low what we call operational leverage, i e.

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Speaker 2: We have long term charters with very strong counter parties,

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Speaker 2: which reduces the risk of not being paid sufficiently to

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Speaker 2: cover the funding. And what this has really enabled us

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Speaker 2: to do over twenty years is to stay profitable every

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Speaker 2: single quarter from operations, and we pay dividends every single quarters,

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Speaker 2: you know, since our initiation in two thousand and four,

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Speaker 2: which is quite unusual in shipping, which is as I said,

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Speaker 2: it's a boom bust you know, everybody likes to write

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Speaker 2: about it and talk about it in the boom, you know,

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Speaker 2: in boom years, and nobody you know, pays much attention

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Speaker 2: in bust years. But we've been sort of a daddy

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Speaker 2: player along the way. And as I said, you know,

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Speaker 2: over twenty years now you know the model works. But

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Speaker 2: again we're not the most exciting when when the tanker

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Speaker 2: market you know, goes you know rock like the rocket

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Speaker 2: ship you know, over a couple of months, or like

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Speaker 2: you had the squeeze and the tanker market after the

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Speaker 2: invasion in Ukraine for instance, when when that market skyrocketed.

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Speaker 2: You know, we have our vessels and long term charters,

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Speaker 2: we don't get the full benefit of that, but we're

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Speaker 2: also isolated from the bust piece of it. If there

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Speaker 2: is an over supply of vessels or if demand goes down,

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Speaker 2: you know, we're not hit the same way.

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Speaker 3: Yeah.

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Speaker 1: So, you know you mentioned you know the financing aspect

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Speaker 1: of and you have to take debt. I know, during

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Speaker 1: since the financial crisis, the number of banks that are

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Speaker 1: in marine shipping have kind of dwindled down. Can you

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Speaker 1: talk about, you know, the financing of a ship, how

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Speaker 1: much you know of it? Are you taking debt out

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Speaker 1: like or how much eech? What are you putting down?

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Speaker 1: How does the financing of a ship typically work from

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Speaker 1: sfl's perspective.

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Speaker 2: Yeah, So the financing market for marine assets has changed

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Speaker 2: quite fundamentally over the last fifteen years. If you go

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Speaker 2: before that, anyone with a vessel could go to a

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Speaker 2: bank and they would get a mortgage on the vessel

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Speaker 2: and then they could go out and rent it out

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Speaker 2: in the spot market and hope that they would make

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Speaker 2: more money in and be able to repay that loan.

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Speaker 2: That has changed a bit, and what we have seen,

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Speaker 2: you know, is that the whole market has changed and

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Speaker 2: it's becoming much more favorable and much more bankable, you

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Speaker 2: could say, for larger companies compared to smaller sort of

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Speaker 2: one man shops or family owned businesses like shipping used

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Speaker 2: to be where you had companies owning say two tankers

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Speaker 2: and two bulkers and that was it. So you know,

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Speaker 2: in a relatively small pond if you can call marine

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Speaker 2: shipping maritime shipping, you know, a pond, we're a bigger fish,

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Speaker 2: simple as that. So we get more attention from whoever

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Speaker 2: is the financiers of these type of assets. But what

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Speaker 2: we also see in we've seen from for us, we

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Speaker 2: migrated away from being funded. I mean now I'm talking

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Speaker 2: about this, the bank funding piece of it. It used

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Speaker 2: to be funded more out of Scandinavia and Northern Europe,

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Speaker 2: and now we are funding much more in Asia, particularly

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Speaker 2: in Japan, where we see better terms for long term

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Speaker 2: charters with the structures that we have quite interestingly enough,

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Speaker 2: so you could say, you know, in all respects, it's

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Speaker 2: a it's a it's a mix of of greed and paranoia.

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Speaker 2: You always have to be a little bit paranoid here.

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Speaker 2: You have to make sure that you you you cover

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Speaker 2: your risks and and and you have to be mindful

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Speaker 2: of you know, what could go wrong. But at the

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Speaker 2: same time, you know, be a bit big greedy and

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Speaker 2: try to grab as much on the opside as to

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Speaker 2: you can out of it and and always have always

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Speaker 2: have alternatives. So while we have well we all so

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Speaker 2: we try to always monitor the markets and try to

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Speaker 2: look for where we get the best risk adjusted return

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Speaker 2: not only on when we buy assets, but also for

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Speaker 2: how we finance the assets. So so it's a it's

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Speaker 2: an interesting sumbiosis over time.

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Speaker 1: How much has the higher interest rate environment change the

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Speaker 1: economics of buying and time chartering out of ships? Are

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Speaker 1: you just able to pass on that in that extra

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Speaker 1: interest costs toever chartering it in.

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Speaker 3: Yeah.

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Speaker 2: Typically what we do when we when we buy an asset,

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Speaker 2: say we buy you know, some container.

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Speaker 3: Ships for instance, or a car carriers.

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Speaker 2: And we charter it out, charter them out. We typically

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Speaker 2: try to match financing and and you know and hedge

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Speaker 2: interest rates. We try to look in interest during the

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Speaker 2: charter because a charter, you could say, a charter contry

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Speaker 2: whether the daily rate is twenty thousand dollars per day

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Speaker 2: or thirty thousand dollars per day or whatever it may

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Speaker 2: be for a specific vessel. You know, the charter it

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Speaker 2: is also reflective of you know, cost of capital. You know,

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Speaker 2: in the market and you know, both cost of the

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Speaker 2: hardware or the asset itself and the cost of the funding.

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Speaker 2: So by doing that, we are insulating ourselves from you know,

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Speaker 2: interest rate volatility. Of course, when we when we typically

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Speaker 2: hedge out when the when the interest rates came crashing down,

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Speaker 2: you know, we had all, we had everything locked in

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Speaker 2: on them relatively higher interest rates, so we didn't necessarily

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Speaker 2: get a great benefit out of a falling interest rate environment.

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Speaker 2: But on the other side, now when interest rates have

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Speaker 2: come up, we are we are you know, insulated from

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Speaker 2: the same again risks. So for us it's been really neutral.

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Speaker 2: But what I find quite interesting is that if you

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Speaker 2: look at from look at it from the investment side,

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Speaker 2: in in SFL, you know, as as a company with

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Speaker 2: with the with the profile we have, my sense is

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Speaker 2: that made for many investors who invest in this space,

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Speaker 2: it's more about absolute return than relative return. So when

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Speaker 2: investment when interest rates were close to zero, they still

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Speaker 2: wanted roughly the same total return on investing in a

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Speaker 2: company like SFL as they do now when you have

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Speaker 2: interest rates in the four to fives based interest rates

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Speaker 2: in the four to fives, So it's more of absolute

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Speaker 2: returns than relative returns. So in a way you can

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Speaker 2: say that our capital or we are becoming more competitive

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Speaker 2: now in a way, you know, because because the spread

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Speaker 2: between the funding costs and equity yield is lower now

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Speaker 2: than it was when the interest.

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Speaker 3: Rates was low.

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Speaker 1: Right, So you know, you do You mentioned you have

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Speaker 1: a bunch of different kinds of assets that you're involved in.

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Speaker 1: Is there one type of asset that has a better

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Speaker 1: return from a structural standpoint than the other, like as

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Speaker 1: a liner better better than than than a car carrier

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Speaker 1: from from a return standpoint?

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Speaker 2: Not not necessarily, I mean what we what we say,

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Speaker 2: we we we we try to be greedy bastards. So

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Speaker 2: we try to get as much return as we as

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Speaker 2: we can, but to optimize it. But but again we

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Speaker 2: have to be mindful of of that. We work with

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Speaker 2: with some very strong counterparty who have access to capital

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Speaker 2: also themselves.

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Speaker 3: So you have to balance it.

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Speaker 2: So so we we try to maximize that. And uh,

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Speaker 2: and you know, and what we offer is is more

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Speaker 2: than just a cost of capital arbitrage play. What we

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Speaker 2: also offer to our customers is high quality transportation service

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Speaker 2: or logistics operations, call it an infrastructure provider for them.

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Speaker 2: Where we do where we do the c part of it,

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Speaker 2: and we take care of everything for them, so and

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Speaker 2: and and part of what we do is to optimize

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Speaker 2: vessel performance. So as an example, we have six vessels

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Speaker 2: to Hapagloid. Now there have been ten years to a

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Speaker 2: Taiwanese operator called Evergreen going.

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Speaker 3: Out to hamp Agloyd.

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Speaker 2: We're upgrading the vessels, you know, with around ten million

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Speaker 2: dollars apiece. But and what we're doing, we are sort

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Speaker 2: of changing bulbous boa, changing the propeller, doing you know,

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Speaker 2: structural we're increasing the dead weight or cargo capacity, increasing

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Speaker 2: the number of containers you could put on. So we

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Speaker 2: are effectively it's becoming much more efficient from an energy perspective.

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Speaker 2: So you know, the same vessel now has a twenty

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Speaker 2: percent lower effective consumption per loaded box than it had before,

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Speaker 2: and that is passed directly onto our customer effectively because

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Speaker 2: they pay for the fuel.

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Speaker 3: So and we both.

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Speaker 2: Benefit from it because per ton of fuel, you know,

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Speaker 2: you have a three ton reduction in CO two. You know,

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Speaker 2: so doing that, you know you are while you know,

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Speaker 2: so while you reduce the tons, you know, from a

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Speaker 2: CEO two perspective or a mission perspective, it's a much

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Speaker 2: more you know, substantial, you know benefit, So that is

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Speaker 2: something that we do. We're also doing it on other vessels,

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Speaker 2: so that is something how we work together with our customer.

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Speaker 2: We try to look for what you know, we try

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Speaker 2: to solve for how they want to optimize performance of

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Speaker 2: these vessels, and thereby we help each other because they

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Speaker 2: have a reduced fuel bill, they have lower emissions, so

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Speaker 2: do we and we have a much more valuable asset

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Speaker 2: at the end of the charter period where we look

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Speaker 2: for a new charter with maybe them or someone else

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Speaker 2: at that time.

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Speaker 1: So you know, you mentioned emissions before, and the IMO

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Speaker 1: has some pretty difficult targets that I would say are

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Speaker 1: difficult for the industry to reach. You know, you know,

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Speaker 1: they'd like the industry to be zero zero emissions. You know,

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Speaker 1: what is a s fl's approach to reaching IM as

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Speaker 1: a mission stands.

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Speaker 2: Yeah, we are or target is to stay well ahead

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Speaker 2: of those I m O targets. The main impact today

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Speaker 2: from the I m O rules is that there is

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Speaker 2: a premium on more modern and energy efficient ships. So

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Speaker 2: that's also where we are focused our investments. But there

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Speaker 2: are no fines or penalties in reality, so it's more

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Speaker 2: a question of speed and operational efficiency. We have this

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Speaker 2: this concept of CII you know, ratings, which is sort

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Speaker 2: of the metric that we use that get gradually stricter,

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Speaker 2: which means that older vessels will have to be phased

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Speaker 2: out or upgraded at significant cost to stay within So

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Speaker 2: because we have, you know, such a modern fleet, it's

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Speaker 2: not it's not really material for us in reality, And

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Speaker 2: because of the vessel upgrades I mentioned and the free denewal,

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Speaker 2: you know, we believe that we will stay well ahead,

384
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Speaker 2: you know, you know currently you know why why I

385
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Speaker 2: had until the twenty thirty at least, and of course

386
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Speaker 2: a lot will happen before that. And we've also invested

387
00:22:05,040 --> 00:22:10,159
Speaker 2: in in dual fuel, you know, the type propulsion. So

388
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Speaker 2: we have four car carriers with dual fuel. We're just

389
00:22:13,640 --> 00:22:19,680
Speaker 2: taking delivery now of of two chemical carriers with dual fuel,

390
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Speaker 2: and ordered five very large container ships for delivery you know,

391
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Speaker 2: in twenty twenty eight. Also with the with the LNG

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Speaker 2: dual fuel, and we believe and what what looks to

393
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Speaker 2: be quite promising is the is the biomethane type fuel

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Speaker 2: which you know, which which could prove to be a

395
00:22:40,760 --> 00:22:45,280
Speaker 2: very interesting and it's both sustainable and properly green fuel

396
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Speaker 2: for for marine transportation. The dilemma we have in the

397
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Speaker 2: in the shipping world, you can say, and this is

398
00:22:51,920 --> 00:22:54,280
Speaker 2: this is not only you know for us, but this

399
00:22:54,400 --> 00:22:58,159
Speaker 2: is the general industry. Is that shipping is currently the

400
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Speaker 2: by far most energy efficient way of moving goods of size.

401
00:23:02,920 --> 00:23:05,359
Speaker 2: There is there is no other way to move in

402
00:23:05,440 --> 00:23:08,919
Speaker 2: more energy efficient than ships, you know, with current technology.

403
00:23:09,640 --> 00:23:13,000
Speaker 2: And the other problem is that you know, you're looking at,

404
00:23:13,040 --> 00:23:16,440
Speaker 2: you know, several other fuel alternatives. You know, it could

405
00:23:16,520 --> 00:23:19,200
Speaker 2: be you know, LNG as we as we're talking about

406
00:23:20,359 --> 00:23:23,159
Speaker 2: which is you know which isn't green? You know that

407
00:23:23,320 --> 00:23:29,800
Speaker 2: the standard LERG is oil based, but biomethane is green.

408
00:23:30,280 --> 00:23:33,960
Speaker 2: You have methanol, you have ammonia, and you have hydrogen.

409
00:23:34,280 --> 00:23:36,800
Speaker 2: The problem with most of these fuels is that they

410
00:23:36,840 --> 00:23:42,679
Speaker 2: are extremely energy inefficient. So the problem is should you

411
00:23:42,720 --> 00:23:47,080
Speaker 2: really use all these energy you know, to reduce emissions

412
00:23:47,080 --> 00:23:51,200
Speaker 2: of ships that are already very low relative to volume

413
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Speaker 2: transport it or would it be better use to reduce

414
00:23:55,200 --> 00:23:58,919
Speaker 2: it first on land where the effect of using that

415
00:23:59,080 --> 00:24:02,320
Speaker 2: energy is much high. So so this is something we

416
00:24:02,400 --> 00:24:06,360
Speaker 2: battle with all the time. But I think the upgrades

417
00:24:06,400 --> 00:24:09,040
Speaker 2: I mentioned is sort of a low hanging fruit that

418
00:24:09,240 --> 00:24:13,280
Speaker 2: shipping definitely can can can do and where we see

419
00:24:13,480 --> 00:24:17,199
Speaker 2: like a direct economic benefit as well because you have

420
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Speaker 2: a reduced fuel bill and with and alongside reduced emissions.

421
00:24:21,080 --> 00:24:24,600
Speaker 2: So you know, we are very focused on it, and

422
00:24:24,600 --> 00:24:28,000
Speaker 2: and I think most most companies in our little industry

423
00:24:28,560 --> 00:24:31,880
Speaker 2: is also you know, focused on it. And certainly if

424
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Speaker 2: we if we want to be a supplier to high

425
00:24:34,520 --> 00:24:38,199
Speaker 2: end customers like MRSK or Volkswagen and others, we just

426
00:24:38,280 --> 00:24:40,960
Speaker 2: have to stay you know ahead, you know, at the

427
00:24:41,080 --> 00:24:43,800
Speaker 2: very front of the pack, so to speak, in terms

428
00:24:43,840 --> 00:24:44,760
Speaker 2: of the efficiencies.

429
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Speaker 1: So when when SFL orders a new ship, is there

430
00:24:49,320 --> 00:24:53,560
Speaker 1: a time charter associated with that before it's ordered.

431
00:24:54,560 --> 00:24:57,840
Speaker 2: Yes, that's what we do typically, not always, but but

432
00:24:57,960 --> 00:25:01,359
Speaker 2: it's either we we have that time charter you know,

433
00:25:01,400 --> 00:25:05,040
Speaker 2: aligned up alongside it, or we think that we can

434
00:25:05,119 --> 00:25:09,199
Speaker 2: find it relatively easily at the level that where we

435
00:25:09,240 --> 00:25:12,200
Speaker 2: are comfortable taking on call it, the risk of ordering

436
00:25:12,200 --> 00:25:15,720
Speaker 2: a vessel without having a charter alongside.

437
00:25:16,240 --> 00:25:18,480
Speaker 1: And does the company like if you have a charter

438
00:25:18,560 --> 00:25:23,560
Speaker 1: associated with the order, Uh, does does that charter say, oh,

439
00:25:23,600 --> 00:25:25,159
Speaker 1: I want you to use the dual fuel and I

440
00:25:25,200 --> 00:25:26,800
Speaker 1: want it to be like methane or I want to

441
00:25:26,840 --> 00:25:29,000
Speaker 1: be LNG. Do they have an input or you just

442
00:25:29,160 --> 00:25:30,520
Speaker 1: you just tell them what you're buying.

443
00:25:31,080 --> 00:25:34,240
Speaker 2: No, this is typically, you know, a discussion we're having.

444
00:25:34,320 --> 00:25:37,240
Speaker 2: If we're ordering a new ship from a shipyard, you know,

445
00:25:37,359 --> 00:25:40,040
Speaker 2: then we can we can discuss, we can sort of

446
00:25:40,080 --> 00:25:43,159
Speaker 2: we can have alternatives. So a shipyard may say, okay,

447
00:25:43,680 --> 00:25:48,879
Speaker 2: here's a price without with just conventional propulsion. Here's a

448
00:25:48,960 --> 00:25:52,080
Speaker 2: price with LNG dual fuel, and here is a price

449
00:25:52,240 --> 00:25:56,359
Speaker 2: with the with the you know, LNG dual fuel. And

450
00:25:56,400 --> 00:25:59,080
Speaker 2: then we go and then we discuss with the charter

451
00:25:59,160 --> 00:26:03,000
Speaker 2: and say, hey, charter, I can hear are the vessels

452
00:26:03,080 --> 00:26:05,400
Speaker 2: you know, I can charter a vessel with this kind

453
00:26:05,400 --> 00:26:08,160
Speaker 2: of size to you at this price with that kind

454
00:26:08,160 --> 00:26:11,280
Speaker 2: of technology, and this price with that technology, and then

455
00:26:11,520 --> 00:26:14,120
Speaker 2: we can sort of agree on which technology to go for.

456
00:26:15,280 --> 00:26:18,600
Speaker 2: What we are mindful of when we invest in these assets,

457
00:26:18,600 --> 00:26:21,919
Speaker 2: and particularly with new technology, is that we don't know

458
00:26:22,200 --> 00:26:28,119
Speaker 2: currently what will be the really the long term you know,

459
00:26:28,320 --> 00:26:32,400
Speaker 2: system or solution out there. So what we are focused

460
00:26:32,440 --> 00:26:35,600
Speaker 2: on is to ensure that if we pay up, say

461
00:26:35,640 --> 00:26:38,920
Speaker 2: for a large containership, maybe maybe the add on cost

462
00:26:39,040 --> 00:26:42,639
Speaker 2: is you know, twenty five to thirty million dollars more

463
00:26:43,359 --> 00:26:46,640
Speaker 2: for a dual fuel technology ship. You know, we want

464
00:26:46,640 --> 00:26:49,520
Speaker 2: to make sure that a lot of that is captured

465
00:26:49,600 --> 00:26:53,600
Speaker 2: back effectively, you know, through the charter period, so that

466
00:26:53,640 --> 00:26:56,359
Speaker 2: we're not so exposed when it's going to be out

467
00:26:56,359 --> 00:26:59,280
Speaker 2: to be rechartered, because it could be that we need

468
00:26:59,320 --> 00:27:03,439
Speaker 2: to defy or do other adjustments on the ship, you know,

469
00:27:03,480 --> 00:27:07,880
Speaker 2: for the next charter to make it economically liable. You know, say,

470
00:27:07,920 --> 00:27:10,119
Speaker 2: for instance, the vessels that we just ordered, you know,

471
00:27:10,480 --> 00:27:14,480
Speaker 2: you know, sixteen tho eight hundred tu very large, you know,

472
00:27:14,520 --> 00:27:17,320
Speaker 2: container ships you know, deliver in twenty twenty eight, and

473
00:27:17,359 --> 00:27:20,520
Speaker 2: then with ten year charters, means that our risk point

474
00:27:20,600 --> 00:27:23,680
Speaker 2: is really in twenty thirty eight, you know, so who

475
00:27:23,720 --> 00:27:27,119
Speaker 2: knows what will be developed, you know by then, but

476
00:27:27,200 --> 00:27:29,199
Speaker 2: we have at least amortized down a lot of the

477
00:27:29,280 --> 00:27:30,080
Speaker 2: incremental cost.

478
00:27:31,080 --> 00:27:33,359
Speaker 1: So when you're when you're ordering a new container ship today,

479
00:27:33,480 --> 00:27:35,560
Speaker 1: it's about four years until you get delivery.

480
00:27:35,880 --> 00:27:39,600
Speaker 2: Yeah, for large container ships, it's typically for four years

481
00:27:39,640 --> 00:27:41,960
Speaker 2: to get any size. You may be able to get

482
00:27:42,000 --> 00:27:45,560
Speaker 2: an odd ship earlier. But this is also a combination

483
00:27:45,680 --> 00:27:47,960
Speaker 2: of you know, it's not only getting a ship early,

484
00:27:48,200 --> 00:27:50,200
Speaker 2: but you also want it to be the right ship,

485
00:27:50,560 --> 00:27:54,040
Speaker 2: you know, and this has to do with vessel specifications.

486
00:27:54,119 --> 00:27:57,280
Speaker 2: You know, how wide it is which gives stability, how

487
00:27:57,320 --> 00:28:00,000
Speaker 2: many containers you can load on, et cetera. There are

488
00:28:00,240 --> 00:28:02,960
Speaker 2: there are many factors that goes into a ship and

489
00:28:03,960 --> 00:28:06,680
Speaker 2: for some, you know, save some of the liner companies,

490
00:28:07,240 --> 00:28:09,840
Speaker 2: you know, it's more important for them to have a

491
00:28:09,920 --> 00:28:13,919
Speaker 2: long term workhorse that really performs over time than just

492
00:28:14,000 --> 00:28:16,960
Speaker 2: getting get the quicker ship, you know. But if you're

493
00:28:16,960 --> 00:28:20,320
Speaker 2: in the spot market, then getting the earlier ship may

494
00:28:20,320 --> 00:28:24,920
Speaker 2: be valuable. If your plan is really just to flip it.

495
00:28:24,359 --> 00:28:26,320
Speaker 1: Is there is there a type of ship that's easier

496
00:28:26,320 --> 00:28:29,360
Speaker 1: to get right now with the shipyards or it's all

497
00:28:29,400 --> 00:28:31,480
Speaker 1: about like it's a tanker take four years to get

498
00:28:31,520 --> 00:28:33,000
Speaker 1: as well, or is that a shorter time.

499
00:28:33,320 --> 00:28:36,480
Speaker 2: Well yeah, so so typically, you know, the smaller the

500
00:28:36,520 --> 00:28:39,600
Speaker 2: ship is, the more shipyards can build it and therefore

501
00:28:39,720 --> 00:28:43,200
Speaker 2: you can get it sooner. And the larger they are,

502
00:28:43,040 --> 00:28:46,040
Speaker 2: the longer it takes because the shipyards need to have

503
00:28:46,840 --> 00:28:50,960
Speaker 2: at dock and building facilities that can accommodate really large vessels.

504
00:28:51,000 --> 00:28:54,960
Speaker 2: So that's why these vessels we just ordered, they are

505
00:28:55,440 --> 00:28:57,880
Speaker 2: going to be delivered in twenty twenty eight, but you

506
00:28:57,880 --> 00:29:00,320
Speaker 2: can probably get ships now in twenty twenty six. If

507
00:29:00,320 --> 00:29:02,560
Speaker 2: you're looking for a very small bulker or a small

508
00:29:02,600 --> 00:29:06,240
Speaker 2: tanker where where where which can be built elsewhere?

509
00:29:06,560 --> 00:29:06,760
Speaker 3: Right?

510
00:29:07,280 --> 00:29:10,480
Speaker 1: And are there when you buy your ships? Do you

511
00:29:10,520 --> 00:29:13,200
Speaker 1: do you just work with a couple of shipbuilders or

512
00:29:13,240 --> 00:29:16,200
Speaker 1: you just you bed it out to the whole industry

513
00:29:16,200 --> 00:29:18,680
Speaker 1: and and try to get the you try to get

514
00:29:18,680 --> 00:29:19,160
Speaker 1: it that way.

515
00:29:19,480 --> 00:29:23,400
Speaker 2: Yeah, typically you have a handful for for SA again

516
00:29:23,560 --> 00:29:26,480
Speaker 2: using these large container ships as an example, you really

517
00:29:26,520 --> 00:29:30,840
Speaker 2: have a handful of of suppliers or shipyard who can

518
00:29:30,880 --> 00:29:34,640
Speaker 2: build those vessels with a quality we want and with

519
00:29:34,800 --> 00:29:38,400
Speaker 2: equipment and maker of of the various equipment that we want.

520
00:29:38,520 --> 00:29:41,280
Speaker 2: So so it's not really a very wide market. You

521
00:29:41,360 --> 00:29:45,680
Speaker 2: have maybe two companies in Japan, you have two in Korea,

522
00:29:45,960 --> 00:29:49,840
Speaker 2: and then three, four, five, maybe five in China? Who

523
00:29:49,880 --> 00:29:52,000
Speaker 2: who who are sort of who can build these So

524
00:29:52,480 --> 00:29:53,960
Speaker 2: it's not a it's not a it's.

525
00:29:53,800 --> 00:29:56,840
Speaker 3: Not a it's really wide market. It's it's a relatively

526
00:29:56,960 --> 00:29:57,560
Speaker 3: narrow one.

527
00:29:58,520 --> 00:30:01,760
Speaker 1: Right, So you did you what are new what are

528
00:30:01,800 --> 00:30:04,360
Speaker 1: a lot of new vessels? Do you also buy vessels

529
00:30:04,360 --> 00:30:05,120
Speaker 1: in the aftermarket?

530
00:30:05,520 --> 00:30:05,960
Speaker 3: Oh yeah.

531
00:30:06,360 --> 00:30:11,680
Speaker 2: So the two chemical vessels that we that we recently announced,

532
00:30:12,040 --> 00:30:15,240
Speaker 2: these are thirty three thousand deadweight on you know, stain

533
00:30:15,320 --> 00:30:19,040
Speaker 2: and steel chemical carriers that can carry any chemical goods.

534
00:30:19,080 --> 00:30:23,080
Speaker 2: They're pretty pretty sophisticated ships against stain. The steel tanks

535
00:30:23,080 --> 00:30:27,080
Speaker 2: so expensive to build with dual fuel. They are you know,

536
00:30:27,280 --> 00:30:30,240
Speaker 2: one and one and a half years old. So that

537
00:30:30,480 --> 00:30:34,080
Speaker 2: there we there, we saw, we managed to find, you know,

538
00:30:34,160 --> 00:30:37,600
Speaker 2: we saw that there was a potential seller, and then

539
00:30:37,720 --> 00:30:40,760
Speaker 2: we worked with a charterer who could be interested in it,

540
00:30:40,800 --> 00:30:44,600
Speaker 2: and and we were able to sort of to negotiate

541
00:30:44,640 --> 00:30:47,960
Speaker 2: a purchase alongside with a charter contract that makes sense

542
00:30:47,960 --> 00:30:50,480
Speaker 2: for us. So that's also typically what we do. And

543
00:30:50,640 --> 00:30:53,160
Speaker 2: of course our preference if we can, is to have

544
00:30:53,240 --> 00:30:56,400
Speaker 2: vessels that are underwater or produces cash flow near term

545
00:30:56,840 --> 00:30:59,760
Speaker 2: instead of putting down you know, some of the money

546
00:30:59,800 --> 00:31:02,320
Speaker 2: now and you have to wait four years until it's delivered.

547
00:31:02,400 --> 00:31:06,520
Speaker 2: You know, it's uh, you know, it's it's always a balance,

548
00:31:06,560 --> 00:31:10,240
Speaker 2: but preferably, you know, near term delivery is better.

549
00:31:11,240 --> 00:31:11,360
Speaker 3: Right.

550
00:31:11,400 --> 00:31:13,680
Speaker 1: There's been a lot of just locations in the shipping market,

551
00:31:13,720 --> 00:31:16,200
Speaker 1: whether it's russia'sho or in Ukraine or what's going on

552
00:31:16,240 --> 00:31:18,520
Speaker 1: in the Red Sea. You know, how has the conflict

553
00:31:18,520 --> 00:31:23,120
Speaker 1: in the Red Sea impacted SFL in the broader shipping market.

554
00:31:24,280 --> 00:31:27,280
Speaker 2: It hasn't affected us so much directly, because what when

555
00:31:27,320 --> 00:31:30,880
Speaker 2: we charter out vessels, we charter them out on long

556
00:31:30,960 --> 00:31:35,240
Speaker 2: term basis. So but our customers who have had you know,

557
00:31:35,640 --> 00:31:38,400
Speaker 2: had the pleasure of a rising market as a consequence

558
00:31:38,440 --> 00:31:41,800
Speaker 2: of being the Red Sea or being the you know,

559
00:31:41,880 --> 00:31:46,800
Speaker 2: the effects after effects of the Ukraine invasion in transportation flows,

560
00:31:46,920 --> 00:31:51,200
Speaker 2: or or the Panama Canal draft for instance, which also

561
00:31:51,200 --> 00:31:54,840
Speaker 2: has had an impact on cargo flow. We do have

562
00:31:54,880 --> 00:31:57,600
Speaker 2: some some charters where we have profit share, so there

563
00:31:57,640 --> 00:31:59,680
Speaker 2: we there we have some benefit. And we also have

564
00:32:00,200 --> 00:32:04,280
Speaker 2: seven smaller bulkers that we currently run in the spot market.

565
00:32:04,280 --> 00:32:06,280
Speaker 2: They used to be on long term chartters and they

566
00:32:06,360 --> 00:32:08,000
Speaker 2: come off and then we have done now in the

567
00:32:08,040 --> 00:32:11,120
Speaker 2: spot market, so so they make good money. But from

568
00:32:11,160 --> 00:32:15,360
Speaker 2: an overall perspective, we are not really you know, the beneficiary,

569
00:32:15,400 --> 00:32:18,920
Speaker 2: the short term beneficiary of of that. And and you know,

570
00:32:19,000 --> 00:32:22,480
Speaker 2: with with with with shipping, I mean you've always over

571
00:32:22,520 --> 00:32:26,960
Speaker 2: the years, you've always seen you know, you know, surprise events,

572
00:32:27,160 --> 00:32:29,840
Speaker 2: you know, you know, sometimes good and now we've had

573
00:32:29,880 --> 00:32:32,280
Speaker 2: several from a this is purely from a from a

574
00:32:32,320 --> 00:32:34,920
Speaker 2: shipping perspective, I e. How do we how do you

575
00:32:34,960 --> 00:32:37,360
Speaker 2: increase ton miles? I how long do you have to

576
00:32:37,760 --> 00:32:40,480
Speaker 2: how many how many days or or how have you

577
00:32:40,520 --> 00:32:43,840
Speaker 2: sent the goods? So you know, effective shutdown or most

578
00:32:43,880 --> 00:32:46,600
Speaker 2: of transferred through the red Sea is of course means

579
00:32:46,720 --> 00:32:50,960
Speaker 2: more days at sea. The cargo flow, particularly for oil

580
00:32:51,040 --> 00:32:55,040
Speaker 2: and and and you know, and products like diesel for instance,

581
00:32:55,520 --> 00:32:59,600
Speaker 2: was completely skewed after the Russian invasion, and uh and

582
00:32:59,680 --> 00:33:02,600
Speaker 2: sang is there for instance, and the same thing you

583
00:33:02,640 --> 00:33:05,040
Speaker 2: know in the in the Panama Canal. And then sometimes

584
00:33:05,080 --> 00:33:08,360
Speaker 2: you have the opposite effect where you have you know,

585
00:33:08,920 --> 00:33:12,320
Speaker 2: you know, elements where where, which is which is reducing

586
00:33:12,360 --> 00:33:15,760
Speaker 2: demand for transportation. You know, most of most of the

587
00:33:15,800 --> 00:33:18,400
Speaker 2: markets there are pretty basic. I mean you're moving goods

588
00:33:18,400 --> 00:33:21,560
Speaker 2: from one place to another. And you know, if you

589
00:33:21,640 --> 00:33:24,360
Speaker 2: have too many ships, you know, the markets are poor.

590
00:33:24,760 --> 00:33:28,480
Speaker 2: And and if there are not enough ships, the market

591
00:33:28,480 --> 00:33:31,240
Speaker 2: are strong. And what we have seen over a long,

592
00:33:31,480 --> 00:33:35,800
Speaker 2: long long time is a rising increase or demand for transportation.

593
00:33:36,520 --> 00:33:39,520
Speaker 2: And the good thing with shipping, you know, is that

594
00:33:39,960 --> 00:33:44,400
Speaker 2: raw material is dislocated from where it's being used and

595
00:33:44,400 --> 00:33:47,080
Speaker 2: and you need to move goods between the markets. And

596
00:33:47,080 --> 00:33:51,280
Speaker 2: and when you have that we call it base metric

597
00:33:51,360 --> 00:33:54,800
Speaker 2: in place, there is a need for shipping. Also, what's

598
00:33:54,880 --> 00:33:58,440
Speaker 2: driving the shipping markets now is an effect and this

599
00:33:58,680 --> 00:34:01,400
Speaker 2: and now we go back fifteen years or fifty plus

600
00:34:01,480 --> 00:34:05,680
Speaker 2: years to the financial crisis. You know, there was a

601
00:34:05,720 --> 00:34:09,600
Speaker 2: shipping boom in the two thousands where people were ordering

602
00:34:09,640 --> 00:34:12,600
Speaker 2: a lot of ships, making tons of money. Then the

603
00:34:12,640 --> 00:34:16,520
Speaker 2: financial crisis came, market hit. You know, ships were delivered

604
00:34:16,560 --> 00:34:20,200
Speaker 2: into a market where demand was lower, and you had

605
00:34:20,400 --> 00:34:25,560
Speaker 2: the classic boom bust dynamics, which meant that many were

606
00:34:25,600 --> 00:34:28,359
Speaker 2: not ordering vessels for a number of years because they

607
00:34:28,360 --> 00:34:31,319
Speaker 2: weren't really making so much money off these markets. So

608
00:34:31,480 --> 00:34:34,920
Speaker 2: now when a lot of that over, when the overcapacity

609
00:34:34,960 --> 00:34:37,520
Speaker 2: has been absorbed, and maybe you get these sort of

610
00:34:37,600 --> 00:34:40,560
Speaker 2: market squeezes as we mentioned, from these effects that we

611
00:34:40,640 --> 00:34:43,840
Speaker 2: discussed just you know a few moments ago. You know,

612
00:34:43,960 --> 00:34:47,600
Speaker 2: then you know you have a reduction shipbuilding capacity. Shipbuilding

613
00:34:47,640 --> 00:34:50,799
Speaker 2: capacity is down by almost fifty percent compared to the

614
00:34:50,840 --> 00:34:54,279
Speaker 2: late two thousands. That's you know, so they're just not

615
00:34:54,640 --> 00:34:57,040
Speaker 2: There are a lot of shipyards who just stopped building

616
00:34:57,400 --> 00:35:01,680
Speaker 2: or scaled down their production. The capacity, So which means

617
00:35:01,680 --> 00:35:05,680
Speaker 2: that now when you don't have enough ships, well how

618
00:35:05,680 --> 00:35:07,640
Speaker 2: long does it take to get enough ships? So you

619
00:35:07,719 --> 00:35:09,920
Speaker 2: get a market, you get a squeeze where you can

620
00:35:09,960 --> 00:35:12,399
Speaker 2: make a lot of money because even if you want

621
00:35:12,440 --> 00:35:15,480
Speaker 2: to as I mentioned with large ships, now well you

622
00:35:15,520 --> 00:35:17,760
Speaker 2: call up a shipyard, you get them in four years.

623
00:35:18,360 --> 00:35:20,960
Speaker 2: So in the between you can make a great profit

624
00:35:21,040 --> 00:35:23,000
Speaker 2: if you have a ship on the water that's sailing.

625
00:35:23,120 --> 00:35:29,120
Speaker 2: So so that is so the limitations in the shipyard capacity,

626
00:35:29,960 --> 00:35:32,799
Speaker 2: to me, is a signal that this can be a

627
00:35:32,920 --> 00:35:36,719
Speaker 2: market that can stay very interesting from an investment perspective

628
00:35:36,840 --> 00:35:38,440
Speaker 2: for the next couple of years.

629
00:35:38,719 --> 00:35:40,520
Speaker 1: And I'm assuming I'm back on the Red Sea in

630
00:35:40,560 --> 00:35:43,680
Speaker 1: the Suez Canal. I'm assuming your ships are totally avoiding

631
00:35:43,680 --> 00:35:44,080
Speaker 1: that area.

632
00:35:44,200 --> 00:35:46,840
Speaker 2: Yeah, yeah, yeah, yeah, we're staying away.

633
00:35:47,920 --> 00:35:51,560
Speaker 1: Okay, So does the company have any specific like long

634
00:35:51,640 --> 00:35:52,680
Speaker 1: term growth targets?

635
00:35:52,840 --> 00:35:53,080
Speaker 2: Is there?

636
00:35:53,360 --> 00:35:55,800
Speaker 1: You know, and I know you guys you mentioned earlier

637
00:35:55,800 --> 00:35:58,600
Speaker 1: you like to pay out your dividends. But is there

638
00:35:58,600 --> 00:36:02,040
Speaker 1: a size that you're trying to get or that's really

639
00:36:02,080 --> 00:36:03,320
Speaker 1: that's more market dependent.

640
00:36:04,239 --> 00:36:06,440
Speaker 2: I would say it's more market dependent. What we are

641
00:36:06,480 --> 00:36:10,719
Speaker 2: focused on is distribution capacity per share. So you could

642
00:36:10,719 --> 00:36:13,640
Speaker 2: say we can easily you know, double our portfolio. I

643
00:36:13,719 --> 00:36:15,960
Speaker 2: mean we can run it from this is from a

644
00:36:16,000 --> 00:36:18,439
Speaker 2: G and A perspective. We can have twice as big

645
00:36:18,480 --> 00:36:22,400
Speaker 2: portfolio without necessarily increasing G and A so much. But

646
00:36:22,640 --> 00:36:25,520
Speaker 2: again it's all down to, you know, not growth for

647
00:36:25,719 --> 00:36:28,520
Speaker 2: growth's sake, but it's growth because we think we can

648
00:36:28,560 --> 00:36:29,759
Speaker 2: deliver something to.

649
00:36:29,719 --> 00:36:31,080
Speaker 3: Our shareholders per share.

650
00:36:31,560 --> 00:36:34,680
Speaker 2: So so we are screening a lot of project all

651
00:36:34,719 --> 00:36:39,279
Speaker 2: the time, and you know, and and sometimes you know,

652
00:36:39,400 --> 00:36:44,040
Speaker 2: the stars aligned and we get a deal done. Sometimes

653
00:36:44,080 --> 00:36:48,160
Speaker 2: we pass on a deal, and you know, we just

654
00:36:48,239 --> 00:36:51,879
Speaker 2: have to stay vigorant. And and you know, we don't

655
00:36:51,880 --> 00:36:55,520
Speaker 2: have we don't we have we increase the backlog just

656
00:36:55,520 --> 00:36:58,279
Speaker 2: just this last year by more than two billion dollars.

657
00:36:58,560 --> 00:37:00,520
Speaker 2: You know, we could and we're you know, we can

658
00:37:00,600 --> 00:37:04,000
Speaker 2: easily do more if we find the right opportunities.

659
00:37:05,360 --> 00:37:07,480
Speaker 1: So, you know, we talked a lot about the revenue

660
00:37:07,520 --> 00:37:10,880
Speaker 1: aspect of your business. How do you control costs and

661
00:37:10,960 --> 00:37:15,440
Speaker 1: how do you you know, improve the overall productivity. You

662
00:37:15,520 --> 00:37:17,239
Speaker 1: mentioned a little bit about how you do it for

663
00:37:17,280 --> 00:37:20,520
Speaker 1: the vessels, but are there investments you make in people

664
00:37:20,600 --> 00:37:23,479
Speaker 1: and systems that can make you more profitable as well?

665
00:37:24,320 --> 00:37:26,880
Speaker 2: So what we try to do we try to stay

666
00:37:27,040 --> 00:37:32,080
Speaker 2: very nimble and have relatively small call it corporate overhead

667
00:37:32,680 --> 00:37:36,719
Speaker 2: resources and buy services where that where we can buy

668
00:37:36,760 --> 00:37:41,480
Speaker 2: it where it's not instrumental or necessary for the for

669
00:37:41,600 --> 00:37:45,800
Speaker 2: the business development piece of it. So for instance, ship management,

670
00:37:46,000 --> 00:37:49,319
Speaker 2: you know the crews we use third party and there

671
00:37:49,360 --> 00:37:53,239
Speaker 2: we work in parallel with. We could call them sister companies.

672
00:37:53,480 --> 00:37:57,080
Speaker 2: You know we have we have Frontline Limited the tanker owner.

673
00:37:57,440 --> 00:38:01,200
Speaker 2: We have Flex LNG the LNG owner, Gold Notion on

674
00:38:01,239 --> 00:38:04,400
Speaker 2: the dry box side, Advanced US. You know, we are

675
00:38:04,440 --> 00:38:07,759
Speaker 2: part of a you know, we have one large shareholder

676
00:38:07,800 --> 00:38:11,439
Speaker 2: in common. We run separate companies. But when we turn

677
00:38:11,480 --> 00:38:14,960
Speaker 2: around and we buy services being from the shipyards or

678
00:38:15,040 --> 00:38:18,560
Speaker 2: being a ship management services or other supplies everything from

679
00:38:18,640 --> 00:38:20,480
Speaker 2: the blue boil for engines, et cetera.

680
00:38:20,960 --> 00:38:24,320
Speaker 3: You know, we work like a big, massive buyer.

681
00:38:24,840 --> 00:38:27,480
Speaker 2: So so that's how we try to make sure that

682
00:38:27,520 --> 00:38:28,840
Speaker 2: we get the banks for the box.

683
00:38:29,280 --> 00:38:32,400
Speaker 3: We we just work. We work as a very.

684
00:38:32,560 --> 00:38:35,680
Speaker 2: As a as a big fish in a smaller pond

685
00:38:36,080 --> 00:38:39,120
Speaker 2: and make sure that we get the margin out of

686
00:38:39,200 --> 00:38:43,200
Speaker 2: everything where we can and and outsource if it's more

687
00:38:43,320 --> 00:38:46,120
Speaker 2: beneficial than having everything in.

688
00:38:46,040 --> 00:38:48,879
Speaker 1: Us right, is there anything that keeps you up at night?

689
00:38:49,520 --> 00:38:49,759
Speaker 3: You know?

690
00:38:50,040 --> 00:38:53,000
Speaker 2: Running sfl well, as I said, I mean, you have

691
00:38:53,040 --> 00:38:56,400
Speaker 2: to stay greedy and paranoid at the same time. So so,

692
00:38:56,600 --> 00:39:00,200
Speaker 2: but in general I sleep well. We have very high

693
00:39:00,239 --> 00:39:03,440
Speaker 2: operational efficiency on the vessels, you know, and and it's

694
00:39:03,480 --> 00:39:07,520
Speaker 2: a pleasure to work with customers that are really sort

695
00:39:07,520 --> 00:39:11,000
Speaker 2: of high end to a focus on top quality, which

696
00:39:11,040 --> 00:39:14,279
Speaker 2: means that which which allows us to be able to

697
00:39:14,320 --> 00:39:17,080
Speaker 2: get to get charters and charter rates where we can,

698
00:39:17,120 --> 00:39:20,400
Speaker 2: where we can you know, provide that. So you know,

699
00:39:20,680 --> 00:39:24,960
Speaker 2: I'm I'm I'm sleeping quite comfortably and really you know,

700
00:39:25,400 --> 00:39:28,440
Speaker 2: and look forward to every Monday to get back to

701
00:39:28,480 --> 00:39:29,680
Speaker 2: work after the weekends.

702
00:39:30,400 --> 00:39:33,640
Speaker 1: Right. And so you know you mentioned you started in

703
00:39:33,920 --> 00:39:37,080
Speaker 1: at at the d n b UH in the in

704
00:39:37,080 --> 00:39:40,160
Speaker 1: the corporate finance world with shipping. Were you always in

705
00:39:41,000 --> 00:39:44,160
Speaker 1: shipping at d MB or is that kind of like

706
00:39:44,200 --> 00:39:47,080
Speaker 1: you transitioned into it or you fell into it? How

707
00:39:47,120 --> 00:39:48,080
Speaker 1: did you get into shipping?

708
00:39:48,360 --> 00:39:51,880
Speaker 2: Yeah, it's kind of funny. You know, this is by coincidence.

709
00:39:51,960 --> 00:39:54,520
Speaker 2: When I after I did my national service as we

710
00:39:54,600 --> 00:40:00,200
Speaker 2: do in Norway, I stumbled into a small shipwreking company

711
00:40:00,400 --> 00:40:03,440
Speaker 2: in Bergen on the west coast of Norway, and I

712
00:40:03,520 --> 00:40:06,799
Speaker 2: really enjoyed it. So when I went to business school afterwards,

713
00:40:07,040 --> 00:40:10,759
Speaker 2: you know, I naturally migrated towards you know, shipping, you know,

714
00:40:10,880 --> 00:40:12,840
Speaker 2: as a as a as a as a as a

715
00:40:12,880 --> 00:40:16,719
Speaker 2: business segment. So so and through that I got a

716
00:40:16,719 --> 00:40:20,120
Speaker 2: lot of contacts and then I i after when I graduated,

717
00:40:20,239 --> 00:40:24,760
Speaker 2: I went into banking, both on commercial commercial lending side

718
00:40:24,760 --> 00:40:27,520
Speaker 2: at the beginning, and then moved over to corporate finance.

719
00:40:28,120 --> 00:40:30,920
Speaker 2: So so I've been I've been more true to the

720
00:40:31,000 --> 00:40:32,080
Speaker 2: segment really.

721
00:40:33,520 --> 00:40:34,520
Speaker 3: Over over the years.

722
00:40:34,520 --> 00:40:36,719
Speaker 2: So it's been it's been a few years and I've

723
00:40:36,719 --> 00:40:41,839
Speaker 2: seen some really brutal boom bust cycles along the way,

724
00:40:42,480 --> 00:40:44,920
Speaker 2: so I have have you know, built some experience. And

725
00:40:44,960 --> 00:40:48,960
Speaker 2: then we have a twenty percent shareholder in mister John Frederickson,

726
00:40:49,280 --> 00:40:52,200
Speaker 2: who has now been added for more than sixty maybe

727
00:40:52,280 --> 00:40:55,919
Speaker 2: sixty five years since he since he started business. He's

728
00:40:55,960 --> 00:40:59,279
Speaker 2: still very switched on. He's seen it all, I would say,

729
00:40:59,560 --> 00:41:04,040
Speaker 2: from what happens in markets, you know, with with volatility,

730
00:41:04,200 --> 00:41:09,359
Speaker 2: So having some very interesting discussions and conversations with with

731
00:41:09,440 --> 00:41:12,680
Speaker 2: someone like him who is the unusual, but the normal,

732
00:41:12,880 --> 00:41:15,080
Speaker 2: the normal thing in shipping, you know what they say

733
00:41:15,120 --> 00:41:18,080
Speaker 2: how to how to become a millionaire in shipping is

734
00:41:18,080 --> 00:41:20,200
Speaker 2: to start with a billion, but he's done it the

735
00:41:20,239 --> 00:41:22,960
Speaker 2: other way. He started with zero and it's become a

736
00:41:23,000 --> 00:41:26,160
Speaker 2: billionaire and it's stayed a billionaire through the cycles, which

737
00:41:26,200 --> 00:41:28,000
Speaker 2: is almost unheard.

738
00:41:27,640 --> 00:41:29,000
Speaker 3: Of in this industry.

739
00:41:29,160 --> 00:41:32,560
Speaker 2: So you know, some you know with the yes, boom bust,

740
00:41:32,640 --> 00:41:36,399
Speaker 2: but but some some understand how you play it and

741
00:41:36,440 --> 00:41:39,239
Speaker 2: make a lot of money of it. And investors who

742
00:41:39,280 --> 00:41:42,520
Speaker 2: had invested with mister Frederickson and the various companies have

743
00:41:42,640 --> 00:41:45,880
Speaker 2: also made phenomenal profits over the years.

744
00:41:47,160 --> 00:41:49,920
Speaker 1: All right, great stuff, and Oli, I really appreciate your

745
00:41:49,920 --> 00:41:53,840
Speaker 1: time and insights today and learning more about the SFL

746
00:41:54,080 --> 00:41:55,880
Speaker 1: and everything that you do over there. So thank you,

747
00:41:56,480 --> 00:41:59,080
Speaker 1: thank you very much, and I want to thank you

748
00:41:59,120 --> 00:42:01,480
Speaker 1: for tuning in. If you'd like the episode, please subscribe

749
00:42:01,520 --> 00:42:03,799
Speaker 1: and leave review. We've lined up a number of great

750
00:42:03,840 --> 00:42:07,080
Speaker 1: guests for the podcast, so check back to hear conversations

751
00:42:07,120 --> 00:42:10,719
Speaker 1: with C suite executives, shippers, regulators, and decision makers within

752
00:42:10,760 --> 00:42:13,719
Speaker 1: the freight markets. Also, if you have an idea for

753
00:42:13,719 --> 00:42:16,160
Speaker 1: a future episode, please hit me up on the Bloomberg

754
00:42:16,280 --> 00:42:19,879
Speaker 1: terminal or on Twitter at Logistics Lee. Thanks a lot,

755
00:42:19,920 --> 00:42:20,799
Speaker 1: everyone in take care