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May 4 • 5 tweets • 3 min read
Updated global fleet age and replacement requirements courtesy of the latest Danish Ship Finance report.

We are going to be hearing a lot more about negative fleet growth in #tankers and #drybulk in the coming years. Strap in for higher rates 🚀
Shipbuilding capacity still decreasing. Many second tier yards are unable to build the modern designs and sizes required. 129 second tier yards that delivered a ship in 2021 *did not receive any new orders in 2021*. These yards will most likely cease to exist in coming years.
Drybulk fleet detail. Orderbook to fleet acutely low in small sizes.
Crude tankers:
Product tankers. By far the lowest orderbook at just 4% of fleet. Compare this to today's earnings of $40k per day and DSF calling for 19% demand growth between 2022 and 2023. Just WOW.

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More from @AllVentured

AllThingsVentured Profile picture
May 2
April #tanker rates were in the top decile of the last 3 decades.

Meanwhile:
✅ No crude tanker newbuilds contracted in Q1: first time since 1995
✅ Tiny 🔬 2023 and 2024 orderbook
✅ No slots to add crude tankers until 2025

Paying attention yet? splash247.com/tanker-owners-…
And if you think there is going to be a ton of shipbuilding capacity for tankers in 2025, think again:

splash247.com/booming-lng-de…
More color on the state of tanker shipbuilding h/t Gibson Shipbroking

Also confirming no available 2023/2024 crude tanker yard capacity.

hellenicshippingnews.com/wp-content/upl… Image
Read 5 tweets
AllThingsVentured Profile picture
Apr 30
1/ Time for a check-in on $NMM

With clean product tanker rates surging I have seen a lot of enthusiasm and speculation about what this means for EPS going forward.

Updated my model with the latest charters from 20-F and ran a spot rate sensitivity on remaining open/index days:
2/ Unfortunately most of $NMM's product tanker fleet is already fixed for Q2, gradually rolling off charter throughout the rest of the year and into 2023.

It seems more likely to be a tailwind to an already huge contract backlog in containers and strong expectations in drybulk.
3/ Personally I am expecting around $16 EPS and $700M of operating cash flow for 2022 with the way markets are shaping up.

This puts year end net debt and capital leases at around $900M and EV at around $1.8B
Read 7 tweets
AllThingsVentured Profile picture
Apr 27
1/ Below is a 20y chart of oil prices and the Baltic Dry Index.

Aside from being economically sensitive, there are a number of other reasons the two follow each other quite closely.

🧵
2/ As the oil price rises, ships slow down to achieve better fuel economy and save on fuel costs.

In a high oil price environment, ships will slow until the lowest total cost of operation is found.

This slowing reduces effective capacity and causes charter rates to rise.
3/ Both ships and oil also tend to follow the same investment cycle where a boom of investment leads to a supply glut, ensuing bust, and a long period of under-investment which sets up for another period of high rates. Rinse, repeat.
Read 8 tweets
AllThingsVentured Profile picture
Apr 17
1/ I'm going to pound the table a bit more about and show that shipbuilding capacity is insufficient to replace scrapping let alone accommodate trade volume growth.

But this time we will look at the global aggregate merchant fleet including all sectors.

🧵...
2/ Across all sectors, the global orderbook is only ~10% of the active fleet compared to ~8% that is already beyond economic life in the new high fuel cost/low emissions requirement paradigm. It the time it takes the ~10% to deliver, ~14% more will approach end of economic life.
3/ In 2022, ships reaching critical decision age whether to scrap or repair for compliance increases significantly and continues to increase each year this decade.

Notice in 2022 and beyond, the capacity of ships delivered fails to match capacity hitting the new 20 year wall.
Read 10 tweets
AllThingsVentured Profile picture
Apr 16
1/ 15 months ago I penned an article entitled "Welcome to the New Container Shipping Supercycle" questioning the premises of popular conceptions of supply and demand at the time.

Some reflections on what I got right and what I got wrong.

A 🧵...

seekingalpha.com/article/439810…
2/ New ship deliveries are not hard to predict 2 years into the future as it takes upwards of 18 months to build most ships from contract date. A dearth of new ordering through late 2020 ensured insufficient supply coming to market to through 2023 to meet demand.
3/ I was also correct that there was limited capacity to add additional megamax ships in 2024.

What I completely underestimated was the enormous demand and shipbuilding slot availability for new panamax ships in lieu of available megamax capacity.
Read 13 tweets
AllThingsVentured Profile picture
Apr 9
1/ #Tankers are the biggest beneficiary of changing trade patterns due to Russian sanctions. PERIOD.

A look into why tanker rates are surging this week and why this is just the beginning.

A 🧵...
2/ The picture is becoming even clearer that Russian oil which used to go via pipeline and short sea to Europe will go all the way to China and **BACK** instead.

bloomberg.com/news/articles/…
3/ **BACK** from China? YES. The West is structurally short on refining capacity and the deficit is getting larger as Russian refining capacity becomes shut in and European refiners struggle to source the slate needed to run at full capacity. reuters.com/business/energ…
Read 16 tweets

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