«Bouncing along the Bottom. Opportunities and Challenges in a shipping depression ».
The 8th Annual Forum of the Institute of Chartered Shipbrokers Greek Branch took place on Monday, 19th of November, at Eugenides Foundation. The title of the Forum was: «Bouncing along the Bottom. Opportunities and Challenges in a shipping depression ».
The event has been well attended by over 400 shipping professionals – covering all spectrums of the industry.
The panel consisted of the following distinguished personalities: Mr. Nicolas A. Tsavliris, FICS Chairman of the ICS Greek Branch, Mr. Dimitris Anagnostopoulos, Member of Board of Derectors, at Aegean Baltic Bank, Mr George Xiradakis, Managing Director at XRTC Business Consultants Ltd., Mr. Ole Rikard Hammer, Chief Analyst at RS Platou Shiprokers,Oslo, Mr. Simon Ward, FICS, Director of the S&P department at Hartland Shipping Services, Mr. Michael Bodouroglou, Chairman & CEO at Paragon Shipping Inc., Mr. John Platsidakis, Managing Director at Anangel Maritime Services, Mr Nikolas P. Tsakos, CEO & President at Tsakos Energy Navigation Ltd.
Panel Moderator of the forum was Mr. Leonidas Demetriades - Eugenides, Chairman at Niver Lines Shipping Co.
Mrs. Natalia Margioli Komninou, Managing Director of the ICS Greek Branch and HMC, opened the conference. After thanking and welcoming the speakers, she conveyed that “The ICS contributes in the process of professional training and education and it has become a synonym for high level education and training in shipping business, while the ICS Membership is a mark of competence for shipping professionals worldwide.’’
Mrs. Margioli Komninou expressed her thoughts about the title, remarking that the Annual Forum of the ICS comes at a time of depression for all areas of the shipping industry. Mrs. Margioli Komninou argued that shipping, especially in Greece, is a business that focuses on the long term, as wisdom is passed from generation to generation. She concluded her reference to the topic that events as the ICS Annual Forum give the chance to share ideas and wisdom to be found, so as to survive whilst bounce along the bottom. Opportunities and Challenges are there for those that are well informed, educated and prepared to dare.
The Chairman of the ICS Greek Branch, Mr. Nicolas A.Tsavliris, queried where we can ever really know what we are heading into, or do we always trust to fortune. He expressed that there are there are two diametrically opposing views prevailing in this market. On the one hand, he mentioned what was said at the Marine Money Greek Forum in October (2012):“Cash rich owners are timing their re-investment decisions and private equity is taking a closer interest and closing deals. The year ahead looks set to be one of tremendous opportunity. There has been a structural change in ship finance, which has been caused by a combination of more stringent banking regulations and currently weak shipping industry fundamentals, but the potential to reshape the ownership profile of the industry could begin the next cyclical upturn in 2013/ 2014’’ On the other hand, Mr Tsavliris mentioned that, as Chinese shipbuilder boss Ren Yuanlin said recently, “Last year was grey. This year is black. And next year will be bloody”.
Mr. Dimitris Anagnostopoulos expressed his ideas on the world monetary turbulences and Shipping Depression. He stated that over the last decades the world economy has shifted from the so called “real economy” to the “paper economy”. As the time went by, fewer and fewer people had access to the global created wealth, thus the world GDP becomes even more unevenly distributed. Regulators have tried to make the system more stable, but with controversial results. Regulators fail to make effective reforms as they remain part of the monetary system. Real leaders should take real political and financial measures in order to alleviate the imbalances.
Referred to the shipping industry which operates based on real-tangible assets and commodities, he raised the point that shipping gives the chance to the ones that have been better prepared, followed the basic principles of business in the real economy and remained not heavily leveraged to be better positioned. For the ones who have followed and still follow some modest guidelines, market depression (inclusive of any bubble bursting of the world monetary system) is a pond of opportunities.
In his presentation Mr. George Xiradakis stressed the fact that, after 2008, although many shipping banks appear to be still active in the shipping finance sector, only a handful is practically active, and these just lending against their existing and more established clients. Furthermore, he pointed that the tide has shifted back to the American and Far Eastern institutions, most notably the re-entry of Japanese banks and the appearance of Chinese banks. According to Mr. Xiradakis, clear bank’s strategies offering long term commitment to the sector, with close monitoring of their relations with the clients, transparency and trust are the key factors that banks have to take into consideration in avoiding repeated restructurings, or the mistakes of the past. In his closing remarks, Mr. Xiradakis emphasized that in order for the rock bottom to be softened-where shipping has reached, banks and shipowners have to work together and then hopefully bounce back higher together!
Mr. Ole Rikard Hammer described in his presentation the tanker market which is currently mired in its worst downturn since the 1980s. Yet the situation is still very different, with excess capacity estimated to be between 5-10% of the fleet, a rather moderate level compared with the earlier period which saw overcapacity exceed 30%. In the opinion of RS Platou, the tanker market still remains cyclical and is unlikely to repeat the exceptionally long loss making period from the late 1970s through most of the 1980s. Mr. Hammer noticed that the most evident difference from that period is the sharp drop in the orderbook which in a rather short period has been brought down from more than 50% to the low double digits, the lowest relative level in more than 10 years. A weak world economy, excess shipbuilding capacity and reduced reliance on oil imports in mature economies remain significant, but not insurmountable, challenges to the tanker market, according to the RS Platou Chief Analyst. The shipbuilding industry has already seen a dramatic drop in ordering and has begun to adjust its capacity while a detailed analysis of tanker demand shows that changes in a single country’s import requirements has to be evaluated in the light of the overall market in order to understand the full implications. In conclusion, while the tanker continues to face significant headwinds in the near term, there are signs of cyclical responses which were not there during the past downturn. That leaves it to the fortunes of the world economy to decide when the next upswing will begin.
Mr. Simon Ward discussed the current situation, prospects, and opportunities for the container and dry bulk sectors. He suggested that unless the three main engines of economic growth all started to improve world trade, especially the container trade would continue to suffer. He was more optimistic for the immediate prospects of the smaller, I.e. handy/supramax sectors due to incremental emerging market economies, as well has the fleet profiles of both sizes (and the increasing demolition rates), but was less positive about the larger (Panamax -cape sectors). He concluded by saying that finding value in the container market was difficult because it was hard to predict the future structure of the liner trades, but cheap asset prices would favour investors buying low for a future improvement in freight rates in the dry build sector, even when the immediate future looks bleak.
Mr. Michael Bodouroglou started his speech with the most commonly asked question nowadays, when it comes to shipping: “Have we reached the bottom?” Nonetheless, he commented that it is not the most relevant one but what is relevant is the duration of the downside. Mr. Bodouroglou admitted that the shipping industry is currently under a marathon test; a test of endurance that when it ends, will define the winners and the losers. But like in every cycle, one can observe the investment environment from two different angles; the angle of suffering and struggling, and the angle of opportunity. The key objective of a shipowner, according to the speaker, is to retain the ability to make decisions. It all depends on the company’s equity and liquidity. The reality of today has shown that the market favours the ones that, even though lack in equity, manage to sustain their liquidity.The Chairman of Paragon Shipping concluded with the statement that ‘‘No matter the effort, we always arrive at the same conclusion… Cash is King.’’
Mr. Platsidakis noticed that after the very rewarding shipping market for a very long period, the dream was over due to the oversupply of ships, the reduction of cargoes- as the world economy slowed down-, and the banks’ problematic loans. He made a reference to the ‘80s shipping crisis, which was proved as an initiation of a deep assessment of the practices followed by the Greek shipping companies that continued their route, improved, prospered and gain a leading position at the shipping world. Reverting to the current situation, the Managing Director of Anangel Maritime Services, expressed his optimism that the present crisis will give the opportunities not only to renew and expand fleets, but also to improve the ship management skills. Mr. Platsidakis concluded with the statement “Shipping does not have a substitute, does not have competitors who are able to transport world trade in mass and in more efficient way. Shipping has its own self cleansing mechanisms which lead out of crisis.”
Mr. Nikolas Tsakos’ speech focused on few but very crucial aspects of primarily the tanker industry. Mr Tsakos commented that the Worldscale system that does not promote transparency in terms of what a fixture in WS translates in terms of "Time Charter Equivalent" earnings for the shipowner, and whereas most of the times a fixture may in fact translate into negative earnings. He mentioned that an effort is made through Worldscale and INTERTANKO so as to amend the way that Tanker freights are calculated, as the WS does not promote transparency in terms of what a fixture in WS translates (and thus earned). He used an example of the "Taxi Fare" where to go from point A to point B, there is a minimum charge whereas we in the tanker industry even take out of pocket expenses to pay the taxi driver to takes us there!!! The Tsakos Energy Navigation's CEO raised the point that as shipping is derived from the demand for transportation of goods around the world and if shipping in general or the tanker industry was to stop or even slowdown, the whole world population would come to a grinding halt. The last but not least point of Mr. Tsakos’ speech was that the tanker industry has raised the level of safety through self-funding in its evolution from single hull vessels, to double hull vessels. Such safety cannot be borne just by the Owners, and has to be supported by the freights.
Before the closing of the forum, it took place the award commendation of the Candidates that participated with success at the ICS Examinations in April 2012. Mrs. Margioli Komninou, mentioned that in 2012 more than 500 shipping executives attended the ICS Professional Training Courses, confirming the fact that despite the global recession, the maritime industry and individuals recognise the value of investment in professional training.
Mr. Evangelos Tsapelas from Neda Maritime Agency Co. distinguished at the ICS Examinations in Shipping Business and was awarded by Mr. Leonidas Demetriades - Eugenides. Also, the ICS Chairman, Mr. Nicolas Tsavliris gave an honorary award to Mr. Konstantinos Glezelis for his distinction in the Shipping Finance examinations 2012.
The 8th Annual Forum of the ICS Greek Branch was held with the kind contribution and support of the following sponsors:
AB Maritime Inc., Arrow Shipping Hellas S.A., Aspida Maritime Security, Capital Ship Management Corp. , Chartworld Shipping Company Corp., Eastern Mediterranean Maritime Limited, Element Shipmanagement S.A., European Navigation Inc., Gac Shipping S.A., Hartland Shipping Services Ltd., Holman Fenwick Willan LLP, , Marine Plus S.A., Marshall Islands Registry Paragon Shipping Inc., Peninsula Petroleum Ltd. , Springfield Shipping Co Panama S.A., Target Marine S.A., Tsakos Energy Navigation Ltd., Tsavliris Salvage Group, Ursachart S.A., Wartsila Greece S.A.