After a three year hiatus, the signature Marine Money event, at New York’s Pierre Hotel, began with a great line-up of presentations from companies and analysts. Long-time attendees of the conference noted that the venue had been re-done since the previous in-person meeting (where the Poseidon Principles finance platform was launched, in 2019). This year’s event saw key sponsorships from long-time supporters DNB Markets and Jefferies- both active across the ship finance spectrum.
The kick-off presentation came from Marine Money- stalwart MSI, with Dr. Adam Kent focusing on the cyclical aspects of shipping markets. Dr. Kent offered that most sectors have bounced back into good shape (with the exception, perhaps, of crude oil tankers- which have not yet benefited from likely shifts in oil trades). If it is possible to distill his series of data-intensive slides (delivered in rapid fire at the commencement of a chocker-block speaker agenda), it would be that a good deal of present strength, notably in drybulk (which MSI covers in great detail) and containers is due to “inefficiencies” throughout supply chains- things like waiting times and congestion.
The implication- as these ease, later this year and into 2023, there will be a huge impact on the drybulk and box trades. When the discussion turned to the importance of China in shipping markets, Dr. Kent said that “China is not the powerhouse that it once was.” Containers (where he said that the orderbook is approaching 30% of overall fleet size) is “ringing alarm bells for us.” He expressed concern about the combination of fleet growth (supply) and the unwinding of congestion (effectively, an increase in demand).
A panel later during the Day 1 afternoon, featuring a quartet of shipping equity analysts, saw a divergence of views on the container sector. The bifurcated views contrasted the large orderbook, with a more nuanced view of the market- analyst Tate Sullivan from Maxim Group (a boutique underwriter/ broker-dealer with a decades-long shipping franchise) who pointed out that the orders are mainly in larger vessels (contrasted with those serving regional ports) and veteran analysts Ben Nolan (from Stifel) and Jorgen Lian (from DNB Markets) who both pointed to broader “inventory cycles” (read- economic recession) that could pull down the overall demand for container moves.
Mr. Lian, who had given a separate presentation on the overall market, provided what was probably the quote of the day when he said, “In shipping, the sky is hardly a limit when supply is in doubt.” Thus, beyond the container names (where the orderbook overhang is worrisome), he brought a highly bullish view- noting that strengthened asset prices would be supporting newbuild prices. Another theme, evident throughout the “Day 1” presentations was the listed company emphasis on decarbonization– as a selling point, alongside dividend payments attracting investors.
Importantly, Scandinavian analysts look closely at the vessel values; and stress their importance in determining share prices. In his presentation, Mr. Lian also stressed that U.S. investors have “discovered” shipping shares- he presented data on two names with dual listings- Golden Ocean (in the drybulk arena) and Flex LNG (in gas carriers), where the preponderance of share trading had shifted from the Norwegian markets to the U.S. trading venues during the past two years. One presenter suggested that, with uncertainties as to future propulsion options, payments to shareholders were the optimal use of capital- a dynamic also contributing to the growing U.S. appetite for shipping shares.
This shift has been facilitated by new channels, specifically communities of individual investors with shipping expertise linked up on platforms hosted on social media. One individual investor, on a panel hosted by J Mintzmyer (well know from his Value Investor’s Edge online venue) suggested that these experts- communicating within a private community, were calling out developments of significance to the shipping markets several days ahead of wire services such as Bloomberg and Reuters, and their staffs reporting on shipping markets and supply chains.
Not only had the layout of the conference venue changed, but so have the dynamics of investors playing those markets. And these changing dynamics will be highlighted throughout the Marine Money conference.
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