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AllThingsVentured

12 Sep, 5 tweets, 3 min read

Global shipping fleet in perspective thanks to UNCTAD. New ship order books for #tankers and #drybulk are at decade lows, yet shipyards are full through 2023-end with orders from other sectors. Sure looks like a massive shortage of aggregate shipbuilding capacity coming 2024+

Shipyard capacity has been declining for a decade and 2022 will be the most painful year for shipbuilders yet. Orders have since recovered, but many yards have locked in contracts at unprofitable levels due to high steel prices and could post losses through 2023.

Although it is obvious that more shipbuilding capacity will be needed to replace the surge of ships ordered during the last boom, shipbuilders will only begin repairing balance sheets in 2024 and will need years of profitability before planning new capacity.

It takes a couple years to build a new shipyard. Even if shipbuilders break ground on new capacity in 2025, that capacity can start building ships in 2027 for delivery in 2029. THIS is why shipping is the MEGA cyclical. YEARS of lagging supply followed by YEARS of oversupply.

It is no coincidence that the shipping goes in roughly 20 year cycles as the economic life of a ship is 20-25 years. 10 years of mega profits as shipbuilders struggle to keep up followed by 10 years of losses from overcapacity. Guess where we are in this cycle...

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@AllVentured

31 Aug

1/ Is the new Navios Partners $NMM turning over a new leaf?

They took the time to speak with me after the conference call this morning.

My takeaway: There seems to be a genuine interest to improve investor relations and lay a foundation to close the NAV gap in the future.

2/ I don't love tankers right now as I don't expect to see profitable tanker rates anytime soon, but the $NNA deal terms were fair on a NAV for NAV basis and we could very well be at the bottom of the tanker asset value cycle and expect a very strong tanker market 2023 forward.

3/ The first major thing to love about this deal is the scale it creates with the largest US listed ship owner by vessel count. This will be pretty hard to ignore going forward. I expect more analyst coverage, transparency, and a narrowing of the massive gap to NAV.

Read 6 tweets

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@AllVentured

10 Jul

1/ ESG will be a huge tailwind for commodity trade in the coming years. Higher quality ores take significantly less energy to smelt. High quality supplies from further afield will replace lower quality supplies closer to production centers requiring far more #drybulk ton miles

2/ Using steel making as a case study we can see this effect with the 2 major steel making ingredients: iron ore and met coal. With capital markets closing off to coal investments, only the highest quality met coal projects will attract capital and prices will remain elevated:

3/ High coal prices combined with existing and impending carbon taxes will incentivize the highest quality iron ore supplies which use less coal. The market is already pricing this in with futures for high grade price premiums widening significantly in future years:

Read 12 tweets

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@AllVentured

29 Jun

New $ATCO press release out today reveals that they are achieving more than 90% financing on their newbuilds and that since their conference call early May they have signed forward contracts for nearly 30 ships that had contracts expiring in 2021 and 2022. prnewswire.com/news-releases/…

Although the corresponding 6k filed today is cryptic and doesn't provide the terms of the new charters for the 30 ships mentioned, the CEO mentioned on the call in early May that they were looking at $27k for 5 years on panamax which has only increased meaningfully since then.

The 6k reveals that exactly 15 of these 2021 and 2022 charter rolls were negotiated in June and we can deduce from the commentary on the conference call that another 10-15 were negotiated after the conference call in May.

Read 8 tweets

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@AllVentured

27 Jun

1/ Pro tips for import companies struggling with $20k container rates:

Don't bank on rates going back down before the end of the year. Rates are just as likely to go higher with back to school and holiday shopping seasons coming up.

2/ Inventory to sales ratios are still near record lows which means we can expect to continue breaking import volume records through peak season

3/ Although container rates may ease in early 2022 after peak season, expect container rates to stay very high until mid-2023 as 2022 will see the least new ship capacity delivered in over a decade.

Read 6 tweets

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