What are we worried about that we shouldn’t be worried about, and what are we not worried about that we should be worried about?
This was a question posed from the floor at the Monaco Yacht Club at the latest Maritime CEO Forum by Richard Diamond from Dallas-based Castlewood Capital Partners and it was one that got panellists at the event’s Money & Ships session thinking hard.
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Grabbing the mike first to answer Diamond’s existential question was Dagfinn Lunde, the chairman of eShipfinance.com, telling delegates not to worry about what future ships will look like. More of a concern for him was the available capacity to retrofit today’s existing merchant fleet.
Quite so, concurred Alan Hatton, the CEO of Singapore-based shipowner Foreguard Shipping. “I’m less concerned with the things that the markets can fix such as green ships. Markets and regulators will come together and find solutions,” he told the 125 senior executives attending the exclusive, by-invite-only event. For Hatton, the risks of geopolitical uncertainty becoming contagious were more of a worry.
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“What I am worried about is that we should be prepared for disruptions in the future, not just geopolitical, but environmental,” Cetinok said, citing the many weather disruptions making shipping headlines over the last couple of years. Also, he warned shipping needs to keep abreast of the rapidly changing global trading patterns, many of which are appearing in an “unpredictable manner”.
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In terms of what concerns him more, Fiori said: “Cycles have shrunk and volatility has increased exponentially. We have to be prepared for huge volatility.”
From the floor, Andrian Dacy, the managing director of the global transportation group at JP Morgan, described the exchange on the stage as “hugely impactful”.
“What I worry about is the impact of the Poseidon Principles as well as the impact of Basel IV and the implications for traditional banks to lend against older ships. This will be significantly curtailed,” Dacy said, advising fellow owners flush with cash to not order ships but pay down debts.
In terms of where to invest Arrow’s research head, Cetinok, was favourable towards dry bulk, and smaller ships in general, picking out ultramaxes and MRs when pressed while Lunde picked out the hugely underinvested offshore segment as an attractive proposition.
The panel was lukewarm at best when it came to the attraction of IPOs with Lunde quipping: “Shipping is full of money so there’s no need for IPOs.”
On financing in general, Fiori advised owners to seek several ways to raise cash whether it be via bank lending, debt financing, or long-term charters.
“You always need alternatives. The really successful ones are the ones who are always tapping the markets,” Fiori said.
All panellists agreed that while traditional shipping banks might not be so ready to do business as in the past there was no shortage of available lenders.
“There is no lack of money,” Lunde said, adding: “There are plenty of institutions lining up to lend to shipping.”
Quite so, agreed Fiori. “Finding money is never a problem. It is a lack of good ideas that is the problem. There will always be new sources of financing for shipping,” he concluded.
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