However, the significant challenges that can be transformed into opportunities for the shipping sector were highlighted in a speaker panel on the sidelines of the 27th Marine Money Greek Ship Finance Forum, which is currently being held in Glyfada.
The impact of geopolitical developments
Mr. Jerry Kalogiratos, Chief Executive Officer, Capital Clean Energy Carriers Corp., gave an extensive reference to geopolitical developments and how they affect trade flows and freight rates. As he characteristically stated, geopolitics has always been an integral part of shipping markets, however their frequency has intensified in recent years. Regarding oil tankers, Mr. Kalogiratos mentioned that the markets of India and China are now more important than that of Europe and added that the fleet of 700 ships subject to sanctions is creating realignments, especially concerning available tonnage. He also estimated that a ceasefire in Gaza would affect the movement of containerships and car carriers and perhaps, to a lesser extent, bulk carriers. Mr. Kalogiratos also noted that while all these upheavals positively impact the freight market, they act as a deterrent to the inflow of new capital into the industry, resulting in shipowners not having the ability to raise new capital and “in the short term, someone will have to pay the additional costs.”
Mr. Kostas Delaportas, President and CEO of DryDel Shipping Inc., described the disruptions in the Red Sea as a “game changer” for the dry bulk sector, while referring to recent Chinese port fees on ships connected to the USA, he commented that many shipowners are already avoiding Chinese ports and unloading cargo in other countries, a fact that reduces supply and contributes to rising freight rates.
Changes in the commodity map
Mr. George Souravlas, CEO, Load Line Marine SA, when asked about the course of freight markets, noted that, in bulk carriers, the weakening of the dollar resulted in freight rates recovering in the second half compared to the first half of the year. Tariffs, according to him, have contributed significantly to the increase in ton-miles. “Ton-miles for soybean cargoes from the East Coast of South America to China have doubled,” he noted.
Mr. Alex Hatziperas, Chief Operating Officer, Dorian LPG Ltd., spoke of significant changes in LPG flows this year, away from the traditional US-China dipole: “for example, over 30 cargoes from the US to India have been recorded, a 40% increase.” The freight market has recovered, according to him, after a sluggish first quarter and now freight rates are around $/day compared to $/day a year ago and $/day two years ago.
Strategic consolidations and also a window of opportunity for new structures
According to Mr. Kalogiratos, in recent years there has been an intense trend of consolidation among companies, amidst a wave of environmental regulations and with the aim of better access to capital, human resources, and information. “Let’s focus on companies in Greece. From 850 15 years ago, they have fallen to below 590. Also important is that the top ten Greek shipowners controlled 20% of the Greek-owned fleet 15 years ago, while they now control 40%.” The CEO of Capital Clean Energy Carriers Corp. estimated that the consolidation trend will continue among companies, but this does not mean that there are no windows of opportunity for new companies.
“This is the beauty of this sector.”
The energy transition in uncharted waters
Mr. Souravlas reiterated the uncertainty surrounding the sector regarding its energy transition. He stressed that there is no clear direction for alternative fuels and expressed the view that lifecycle analyses of all new fuels should be strengthened and their availability monitored. He also highlighted the role ports must play for a cleaner future.
When asked about the biggest challenge for the shipping industry today, Mr. Delaportas mentioned the IMO NZF and the transition to alternative fuels, while emphasizing the need to scrap older ships. “The orderbook is at historically low levels, below 10%, and it is an opportunity for new investments in the bulk carrier market,” he pointed out.
