08-06-2022 Greek shipowners see bright horizons for shipping, but are there ‘storm clouds’? TradeWinds
Is there peril ahead for shipping markets amid growing concern for the global economy? In a panel discussion with industry leaders at the TradeWinds Shipowners Forum in Athens, the answer depended on whether the response came from Greek owners or from JP Morgan’s Andrian Dacy. While the four shipowners cited positive signs for shipping markets, the head of the global transportation group at the US banking giant’s JP Morgan Asset Management pointed to “storm clouds. There’s always a bit of danger when things are good, and the same can be said when things are bad. Ignore the cycle at your peril. I do think there are storm clouds.”
Dacy, whose unit owns a fleet of ships, acknowledged that there is a healthy supply-and-demand balance in certain sectors and new regulatory burdens on shipping that could help the supply side. But he pointed to the mounting risk of a “fully-fledged recession. We are already starting to see inflation coming off as consumer [demand] destruction starts to occur, so I am a little concerned about the container ship space.” Dacy also cited issues in China that present long-term concerns for the capesize bulker market. But he was positive about the gas sector, where he said JP Morgan is putting its money.
Providing a rosier view were Danaos Corp chief executive John Coustas, Capital Maritime & Trading chairman Evangelos Marinakis, Navios Maritime chief executive Angeliki Frangou and StealthGas chief executive Harry Vafias. Coustas expressed optimism that the supply chain disruptions that led to booming box rates would continue. He said his company has long predicted that the normalization of the containerized supply chain will not happen until at least early 2023. Now, other geopolitical events have come into the picture, and they will lead to continued bottlenecks in the shoreside supply chain, pushing container ships to remain longer in ports. Looming environmental rules will also have a negative impact on vessel supply, because of speed reductions. Rising fuel costs will also lead to slowdowns.“In real estate, they say location, location, location. In shipping, its disruption, disruption, disruption,” Coustas said.
Asked about whether an economic slowdown could add to “peril” in tankers, Capital’s Marinakis said the sector has already seen the worst of the demand-side pain from Covid-19, despite continued lockdown measures in China. “I’m quite optimistic that China, eventually towards the end of the year, will open, and consumption will be coming back,” he said. “And of course, we’ll enjoy a much better market for the bigger ships, because on the smaller ships [we] have already seen better markets.”
Harry Vafias, chief executive of LPG carrier owner StealthGas, expressed optimism across the shipping space. He said that it is the first time since 2007 and 2008 that all shipping segments are doing well, except for the VLCC market, which the shipowner expects to catch up. “We are at the point where all different factors point to a better market that will stay for some time — how long, I can’t say,” he said. Vafias’ bullishness is rooted in low yard orderbooks, bottlenecks at ports and the impact of Russia’s invasion of Ukraine. “On top of that we have the fear of owners about new fuels and engines, and that also keeps ordering limited,” he said. “Most of the yards are full for three or four years forward, so even if you have all the money in the world, finding slots for conventional ships is quite difficult.”
Frangou said she is optimistic for bulkers and tankers, where Russia’s war on Ukraine has led Navios to boost estimates for tonne-miles. “We see that the tragic war in Ukraine is suddenly a very positive thing for tonne-miles,” she said, pointing to supply disruption in the oil, gas, and wheat trades. “The disruption is huge.” Navios’ forecast points to a tripling of tonne-miles in dry bulk and product tankers. But Frangou was more cautious about the container ship space, as the pandemic subsides in the West and consumer behavior shifts. “We are all here [at Posidonia]. We are all going out. We are all spending. We are travelling … This will be taking away from the dollars spent on goods,” she said.