I will get the cliché’ over with- it’s great to be back together with people- earlier this week I was able to attend an excellent ship finance conference held in midtown New York. For many like-minded shipping professionals and hangers on (my role varies, depending on the date and time), this represented something of a reunion for people who had historically been attendees. The conference venue, a big ballroom at a grand old hotel, had been re-worked; this took some getting used to. This still decidedly low tech venue had electrical plugs (no USB plugs) in different locations than I’d grown accustomed to, but the presentations were all very good, and- with one or two exceptions, the technology was working very well for displaying slides, conveying conversations in the interactive panels, etc.
So, as always with these things, there are accidental meet-ups with old friends, business contacts whom I’ve never met in person, or someone I quoted in an article but from a distance. Yes, I had a few such encounters- folks that I had interacted with in connection with Capital Link’s Trending News Podcast Series- where I’ve been active interviewing top executives. With a personal meeting, the next video or Zoom hookup will be even better. Admittedly, during the conference, I was distracted with various business things (writing is more fun, but shipowning pays the bills), and had walked around and picked the brains of more than a few high priced lawyers who were attending the event.
During one interlude where I was standing around with my phone, in a common area outside the main meeting room, I was on hold with a “counterparty”, a rep for a charterer, in a particularly contentious series of conversations about the price of fuel on a vessel being redelivered under a time charter. Not that I knew how much fuel prices were going to rise, but- at the outset of the deal, I had given the charterer a back door that would not slam on his fingers if fuel prices went up. Charterers declined my polite offer.
While I was waiting on hold, a conference attendee (he had a legit badge, but I did not get his name), an older guy, came up to me and randomly began a conversation, starting with something along the lines of “What’s the matter with these stocks?” While I was nicely attired, good enough for an in-person ship finance conference, I hardly had the look of one of those slick investment advisors that you see on TV, so I was a little taken aback by the question.
He seemed to be a retail investor and knew the symbols of some of the companies- though it was not clear that he appreciated the finer points of the various shipping businesses around the conference, and elsewhere in the market. I paused, and thought about some of what I had absorbed in the three days of presentations. My answer to the old gentleman echoed bits of what I had seen on all the slides, and in the dialogues- the valuation Gods, if I can call them that, have time horizons that are fairly long- that’s how markets look at companies in established industrial businesses. The shipping mentality is still much more spot market, even where companies use a portfolio approach and mix in voyage/ trip TC with period charters, the result is still an earnings stream that is far from set in stone. And there are companies that have shaped a portfolio full of longer-term deals – but they have tended towards what I fondly call “the dark side”- they have gone private, or sold out to institutional buyers in the infrastructure business, for example. Those buyers seem to have equated value with long term coverage- which works well for “industrial” shipping companies (read those multi-year charters) …not so much for most of the normal players.
The conversation did not get into things like all the “OMG” uncertainties about future fuels, fuel infrastructure, carbon capture and the like (had we talked about these, they would represent further downers for investors, the low orderbooks notwithstanding). In talking to the anonymous conference attendee, I suspect from my further conversations with the gentleman (still on hold with my chartering opponents) that he had been attracted to shipping initially because of incessant news reports about “the supply chain.” That’s just a sense that I got. But yes, even here I kept quiet about specifics… my view would be that tonnage providers are clearly where it’s at, even if all the goods shortages ease up, as everything (including the vessels) have been fixed on multi-year deals.
So, where did this end up? Unfortunately- and back to business realities, the “counterparty” in my shipping deals picked up his phone, and then, the other conversation (far more unpleasant unless you like “fuel on redelivery”) resumed.