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Barry Parker Commentaries

Shipping Oracles event- an overview
Jan. 19, 2016 - Capital Link Shipping -  New York Maritime Inc. (NYMAR) hosted a session billed as “The Oracles of shipping: A look at 2016”. kicking off its schedule of events for the new year. A quick brush-up on Greek lore suggests that the wisdom imparted by the ancient Greek oracles, most notably from Delphi, required some parsing; ie it was not “actionable” at the outset. So it goes with NYMAR; there was a lot of knowledge on the panel, but some review and interpretation is necessary the wisdom of NYMAR’s sages may need further evaluation, and interpretation. Like everything with shipping, there are nuances. What a great event though. The investment bank Jefferies provided both the venue, and the moderator- shipping banker Jeff Pribor. The panel of Oracles covered the entire waterfront- ranging from drybulk, tankers, containers, banking with a splash of offshore oil and marine insurance.

TEUs and KPIs
Jan. 11, 2016 - Capital Link Shipping -  Well, here we are in another New Year. The parties have ended, the Holiday lights are coming down, and the store windows on Fifth Avenue are covered up, as little retail elves create the displays for the Spring clothing. Cycles for decorations and displays are predictable, contrasted with shipping cycles, which seem to be different each time around. My inner drybulk guy was hoping that after I caught up on much needed sleep, I would wake up (a mini Rip van Winkle), refreshed to stronger hires for Capesizes, Panamaxes, and smaller sized vessels. This did not happen; in early January, drybulk hires were flirting with all-time lows, again.

Weather report for LNG ship finance- the sky is not falling
Dec. 28, 2015 - Capital Link Shipping -  Last week, we swore off “Top 10” lists, but did identify two big stories just emerging in the final weeks of the 2015; these were U.S. allowing oil exports, and Master Limited Partnerships , or MLPs (and holding companies deriving much of their cash from distributions in partnerships) reducing their payouts to holders. In all fairness, both of these developments had been in process over a period of months, but conjecture around what “might” happen is much different from real live announcements. Some readers disagreed with last week’s analysis that lifting the export ban was a non-event for the tanker market. A few readers were not shy about letting me know, including more than one who mentioned the well-publicized news story that Enterprise Product Partners (symbol “EPD”) would be loading an Eagle Ford (light API gravity) oil cargo of U.S. crude of its Houston terminal, for Vitol, to be sent abroad- possibly to northern Europe, on an Aframax.

No top 10 lists here. Will the U.S. exports total 1.3 million bbl/ day, 1.5 mbd, or 1.7 mbd?
Dec. 21, 2015 - Capital Link Shipping -  I’ve never really liked all those “Top 10” lists that come out around this time of the year; they are just filler for print advertising or clickbait online. In the world of media (mainsteam or otherwise), the lists are often penned in early December, so that the writers can enjoy the Holidays- whether this being excessive partying, family time, or an amalgam of both. So, if you submitted your list of top shipping events for 2015 to your editor, on, say December 5th, you would have missed out on some biggies (or gone back to re-write your list). There were two monster stories in the past week (which might have been a slow news week historically)- the elimination of the near prohibition of crude oil exports, and the dramatic slashing of distributions at two widely followed shipping MLPs (next week’s article).

Transient is the new networked normal
Dec. 15, 2015 - Capital Link Shipping -  This time of year, writers of columns like this will take a look back, and then a look forward. But there is some real incongruity- I should be bundled up by the fireplace about now. Instead, since New York is having something of a heat wave, I cancelled a trip to Florida (my other hang-out) and I am actually sitting at the beach as I write this. One personal note- I feel a twinge of awkwardness and sadness from an earlier trip to Florida, where several hundred attendees (me included) attending the ASBA Cargo Conference in Miami Beach were enjoying sublime weather for a boat-ride around Biscayne Bay on October 1. We had no way of knowing that the vessel El Faro was meeting its tragic end, four hundred miles to the southeast, while we were partying the night away on the boat and then around the Eden Roc and Fountainbleau hotels. There’s no deep inner meaning here; it’s just a sad juxtaposition of timings. I have begun to re-think my views on the U.S. build requirements for Jones Act tonnage and related questions about how Capital Construction Fund reserves might be creatively put to work. It’s complicatedwith numerous diagrams and arrows- but more on that next year.

Tanker market- boffins sleuthing for where oil is being stored

Dec. 07, 2015 - Capital Link Shipping -  Back in the days of Econ 101, the sages explained that any market problem could be explained by the interaction of supply and demand- where the price was a signal to buyers and sellers. At high prices, more production (usually of “widgets”- whatever they are) occurs. Conversely, at low prices, there is less incentive to produce, so supply shrinks. Well in the real world, geopolitics- where somebody has their hands on the levers of supply, comes into play. The real economics lesson for me was the “first oil” shock occurring around the same time. The supply side responded to political forces, forcing the price determination (irrespective of what the demand side was saying). At that time, increased oil prices led to a bad recession (coinciding with the end of a tanker boom). But that’s ancient history.

Crunch time- climate and competition
Nov. 30, 2015 - Capital Link Shipping -  One theme throughout these articles has been the reactionary nature of shipping; part of it is cultural (old ways of doing things, old business models, old equipment, etc), and part of it is simply that the industry straddles other industries and marketplaces, and therefore defies precise ring-fencing. Think about one of those colorful Venn Diagrams (where several parts overlap), except with very fuzzy lines so that the commonality, if it does in fact exist, is vague. So, the big shipping news involves climate, and also the competitive landscape. In both cases, bigger forces are at play. At least once a week, on Linked In (or similar), I find myself engaged in some rant or another about Corporate Social Responsibility and the image of shipping, opining on questions of whether the business should be more responsible, or even whether shipping companies should be “thought leaders” (right up there with “viral” and “curated” for the Obnoxious Business Jargon award for 2015). Snarkiness aside, it’s crunch time on many fronts.

McKinsey meets Burke, Georgiopoulos and Toepfer
Nov. 16, 2015 - Capital Link Shipping -  One of the challenges of being a shipping writer, analyst, and sometime pundit is that I know a great deal about the maritime business and something about other transport modes , but struggle to get beyond the interfaces of vessels and the broader business “hinterland”. So , imagine my delight when an e-mail arrived from McKinsey- the well -known consultant, with a link to a report called “Creating value in transportation and logistics.” Coming on the heels of Marine Money’s 2015 Ship Finance Forum, which I had planned to review here, this high level checklist on mainstream transport businesses offered a set of mainstream benchmarks, a lens, if you will, for discussing maritime finance.

Gears meshing, and private funding for port projects
Nov. 09, 2015 - Capital Link Shipping -  A good perspective on shipping, albeit a different one than I normally write about, could be gathered at last week’s convention of the American Association of Port Authorities (AAPA), held in Miami. On the shipping conference circuit- there are ship finance/ commercial shipping events, and then there are gatherings of logistics and distribution folks; the twain usually does not meet, though the AAPA gathering got me thinking about the future directions of things and new sources of money dripping into the maritime sphere as creative infrastructure financiers think expansively.

The next big spike (so far, not)
Nov. 03, 2015 - Capital Link Shipping -  Shipping offered a tale of two markets during October; tankers continued strong (OK- VLCCs backed off a bit), while drybulk sputtered further.

API, talking points and oil exports
Oct. 19, 2015 - Capital Link Shipping -  Oil exports f rom the U.S. have been in the new s again; a timely topic for me w ith the upcoming Mare Forum conference in Houston, w here I w ill be among a large cast of panelist w ho w ill w eigh in on topics related to U.S. nat ional security, and shipping. Unlimited exports of U.S. produced exports w ould be authorized under a legislat ive bill w hich has passed in the House of Representatives (HR 702). Observers suggest that this bill is pander ing to shipping interests in order to gain support in Democrat ic coastal areas. Indeed it explicit ly references a strengthened U.S. shipping f leet- through an explicit link w ith the Marit ime Secur ity Program (MSP), w here foreign built (hence non-Jones Act) but U.S. f lagged and crew ed vessels, gain subs idies so that they can compete against foreign f lag vessels (employing low er cost crew s).

Boxing Cat, Giovanni’s and other bars where freight traders hang out

Sep. 21, 2015 - Capital Link Shipping -  Capital Link’s just concluded Global Commodities, Energy & Shipping Forum offered a fascinating visage into just how much this busy intersection has changed in recent years. Back in the day, when this three way junction was my turf, a tanker broker at the bar of the “Boxing Cat” (a long-gone shipping hangout on Route 1 where Greenwich meets Stamford) asked me to move. Not wanting to be more truculent than normal, I asked him politely, what the problem was. He explained an un-written rule of etiquette; tanker brokers controlled one side of the bar, dry guys (and possibly a grain company rep) stood on the other side, and freight derivatives brokers (that was me) had no standing, hence no place to stand. Oil companies owned a bunch of tankers (this was pre Exxon Valdez) and would often supplement their fleets with inchartered tonnage. On the dry side, grain actually dominated a morass of what we now call “minor bulks”, while most coal, iron ore and bauxite/ alumina (I never knew the difference exactly) were controlled by industrial shipping companies that tended towards long-term contracts, usually at fixed prices or with escalators tied to an index of inflation.

Conference season- no robots allowed
Sep. 14, 2015 - Capital Link Shipping -  From time to time, musings about the media have infused this column; as excitement grows about the upcoming Capital Link “Commodity, Energy and Freight” conference, media matters are top of mind. As a writer on the maritime business (for public consumption, here and in various magazines, or privately- in client briefings), I regard the coverage of shipping, and the cargoes that fuel the business, in the “mainstream” outlets as being of keen importance. To wit, shipping tends towards oversupply, in the purest supply and demand sense. But real news concerning trends on the oil, iron and coal fronts will be scanned by investors and also by ship chartering decision makers (executives, not simply brokerage types). Oil, in particular, has seen coverage that documents, and sometimes anticipates the zigs and zags in the market for the “underlying” (ie the physical barrels).

Supramaxes, Panamaxes, Kamsarmaxes, Ultramaxes and now TechnoMaxes!

Sep. 08, 2015 - Capital Link Shipping -  When not writing about the buoyant tanker markets or struggling drybulk market, subjects here have included views about the interface between the        maritime industry and the rest of the world. My article that appeared during the Summer on Big Data proved to be surprisingly popular, suggesting readers’ thirst for more views on broader subjects. After all, shipping exists to serve the cargo interests- who are part of, and respond to, the currents of broader society. Big Data, the subject of my earlier thought piece, is only part of a much larger picture- where technologies might profoundly change the mode of shipping operations. Maybe they will, but maybe some fresh thinking, and some kick-starting is needed.

Black and blue, Dead Cats, Dog Days, Death Crosses, and other unpleasantness
Sep. 01, 2015 - Capital Link Shipping -  August was a month that saw July’s drybulk rally continuing for a few days, but being snuffed out quickly as the month unfolded. Though not a good month for owners’ prognostications (or “longs” in the forward market), the month was eventful- if nothing else. The price action in the most widely followed dry trades shows that broader market sentiments do indeed impact the hires paid for vessels, and prospects for future per diems.

Astronomy and tanker watchers- the sky is not falling!
Aug. 17, 2015 - Capital Link Shipping -  “Dog days” refers to the very hot days of summer; an astronomer once told me that the “Dog Star” (Sirius- which shines brightest in the winter months) actually rises around sunrise at this time of the year- hence the name. In any case, one feature of the season is that businesses of all types slow down. Whether “slow” manifests itself through oil refinery maintenance, or a lull in stockpiling of industrial commodities, both drybulk and tanker markets have slowed down in a big way. The demand side of shipping, if nothing else, is seasonal, so the easing in the markets is not worrisome for me, though of course vigilance is required. I did have one lively discussion, in an online venue, about the value of forward freight agreements in the context of “what are the markets doing?”. In terms of forecasting, my fellow discussant has promised to send me some research demonstrating their cloudy record as a crystal ball. In our dialogue, I explained that, in a perfect world, I would like to see reliable data on period fixing- the actual hires and, importantly, the duration of the fixtures. In buoyant markets, longer fixtures are possible, at per diems that will spin off lots of free cash. But such indicators, if they do exist, require expansive data visualizations- a project for a rainy day. So, until that rainy day, we get the same tired, but trusted numeraires, which, when blended with a hefty dose of intuition- things like number of loadings and whether congestion is easing, provide an informed guestimate of what might happen.

Waiting out the markets
Aug. 04, 2015 - Capital Link Shipping -  Looking around at the tanker and drybulk markets, we once again see a paradox- if that’s the right word, where week to week zigging and zagging is out of step with longer term sentiments. In a bigger context, Clarksons Research offered a great blog recently, titled “Shipping Cycles- A Chess Game You Don’t Want to Lose”, looking at efforts to wait out the inevitable in terms of “The Seventh Seal”.

Dinner chatter and getting fatter, with the tanker boys
Jul. 20, 2015 - Capital Link Shipping -  Tanker hires continue to soar- with the marquee number- the time charter equivalent on the Baltic Exchange’s “TD3” (VLCC, AG to Japan) reaching nearly $94,000/day. This huge bull run is a nice benefit of OPEC’s geopolitical gambit of pumping more oil. Oil prices have plunged, again, in the past few weeks, as barrels from what the International Energy Agency described as “…massively oversupplied…” found their way past the manifolds and into the bellies of big oil tankers.

Are we there yet? Flickers of light amidst drybulk gloom
Jul. 06, 2015 - Capital Link Shipping -  Since earlier in the year, I’ve been commenting on the amazing ability of Wall Street “buy side” equity analysts, and a few company Principals, to put a positive spin on the drybulk market- written off for dead by many observers. Not that I’ve written it off- as an investor, I hope that hires rise, presaging a long-awaited rise in share prices. Though I am not calling any type of a bottom yet, it’s worth noting that June saw an upward burst upward in the Capesize arenawhere hires rose briefly to $10,000/day.

Big Data and Big Disruptions
Jun. 29, 2015 - Capital Link Shipping -  What if they built a Big Data center for shipping, and nobody came? That was my first reaction to articles trumpeting the opening of a virtual data room that would be fed by shipping companies. The announcement, a few months ago, did not come out of the blue; rather it was the culmination of multi-year effort by one of the larger vessel classification societies. “Class” plays an integral role in creating standards for vessel construction, and inspecting vessels at periodic intervals to make sure that everything is “ship-shape”. Class inspections also provide a mechanism for enforcing international rules- acting, effectively, for Flag States, which don’t have the vast networks of “surveyors” at ports all over the world.

Marine Money Week wrap-up- Capital markets will
continue funding shipping business

Jun. 22, 2015 - Capital Link Shipping -  “Shipping and Capital Markets” was the theme of the just concluded intense and exhausting Marine Money Week, in New York, put on by the Marine Money team and conference partner Jefferies and Company. The event, held at New York’s very posh Pierre Hotel, drew more than 1,300- many of the sessions, in the hotel’s Grand Ballroom, drew standing room only crowds. The tone was far more upbeat than in recent years. Gone were the panels of restructuring and bankruptcy experts (who one year discussed the etiquette of trolling for business around the bar at the posh Four Seasons restaurant).

Stormy energy markets- with wind and gales, after calmer

Jun. 15, 2015 - Capital Link Shipping -  The Chief Economist, of BP Group ,Mr. Spencer Dale, gave a presentation on the newly released 2015 edition of its Statistical Review of World Energy to the New York Energy Forum- a group of analysts, academics/students and writers. Most of the time, there is always a shipping contingent- particularly where the subject matter concerns international oil. Mr. Ed Morse, a renowned energy expert who is a Board member of the Forum, served as the Moderator, as well as providing the venue- midtown Manhattan headquarters of Citibankwhere he is the bank’s lead energy analyst.

Oil and Water
Jun. 01, 2015 - Capital Link Shipping -  It’s been a while since I discussed the U.S. energy situation- the Jones Act, oil exports and all that. In the interim, the price of oil (which had been in free-fall) hit a bottom and has bounced upward; many commodity people view it as a bear trap or “dead cat” type of a bounce. After moving down to the low $40/barrel region (basis NYMEX oil), the price has bounced up to above $60/barrel (with the Brent oil- a marker for many international prices) typically at a $7 - $/8 barrel premium. Oil traders are closely watching the stats; certain pundits have suggested that renewed production (a response to the “rebound”) will quickly quash the recent gains. In the past month or so, the prices have leveled out; perhaps we’ve reached a new “equilibrium”- some $40/ barrel below the old level where the market seemed to balance.

LNG fuelling: Orcas, Marlins and membrane barges
May. 26, 2015 - Capital Link Shipping -  LNG fuelling of vessels has been all over the shipping trade press. It was recently the subject of the Connecticut Maritime Association’s monthly luncheon series, with a presentation by Peter Keller, a true industry veteran who is now Executive Vice President of TOTE. The speaker began by noting that many people talk about LNG fuelling, at conferences and the like, and said “What you are going to see today is not the future of LNG, but the present…the future of LNG is today…”

Many abbreviations, much confusion
May. 11, 2015 - Capital Link Shipping -  In the upcoming week, the Marine Environmental Protection Committee (MEPC), part of the International Maritime Organization (IMO), in turn part of the United Nations, will be meeting in London, UK. The finer points of IMO deliberations are the stuff of shipping geeks, rather than investors, but once the IMO finally agrees on something- the result will be an addition (or an amendment) to international diplomatic conventions that set down the legal framework for shipping.

Trains, trucks and financial engineers roaming the

May. 04, 2015 - Capital Link Shipping -  Well, those mainstream media guys have made my choice of topics very easy; this past Thursday, the Wall Street Journal carried a “above the fold” front page story about congestion at U.S. seaports, courtesy of big container vessels that stretch, stress and then ultimately fracture existing logistics infrastructures.

Wariness and weariness

Apr. 27, 2015 - Capital Link Shipping -  Capital Link’s Closed End Funds and Global ETF’s Forum (actually the 14th annual iteration of this event), held last Thursday, covered a world way beyond my maritime comfort zone. Nevertheless, shipping was touched on directly, and obliquely, in presentations on Master Limited Partnerships, and on investments impacted by energy prices.  Though we’ve heard last week’s themes before, they start to crystallize with the passage of time.  In contrast to Conference #13, a year ago, oil prices are somewhere in the $50’s, about half of last year’s value. Consequently, this year, there was less  emphasis on investments related to energy- for example funds owning a package of MLP’s (concentrated in the energy space), for example

Outside the box thinking- revenue levers and clogged fuel injectors!

Apr. 20, 2015 - Capital Link Shipping -  Mainstream media is not the only shipping interface that’s on my radar. Mainstream management consultants, ie not the usual suspects from inside the business, are also a great source for real actionable ideas, but also for snarky barbs. A recent report by the Boston Consulting Group (B-C-G), dealing with liner shipping in particular, which can be found online at Battling Overcapacity in Container Shipping definitely fits the bill. Though drybulk and tankers are more my bailiwick than liner (and I suspect that many readers are in the same boat), the report- spread out over a series of online articles, offers considerable food for thought.

Golden Age of Gas glitters again

Apr. 13, 2015 - Capital Link Shipping -  A few years ago, a report from the International Energy Agency (IEA) talked about “The Golden Age of Gas”. Admittedly, the real market penetration for gas, when it overtakes coal, as climate change concerns reign supreme is decades out, but it’s a journey. Last week, the importance of natural gas was highlighted with the announcement that Shell would be acquiring BG in a stock and cash deal valued at roughly $70 billion. 

Easter time- the hunt for yield and golden eggs

Apr. 06, 2015 - Capital Link Shipping -  Last week, I made the comment that several participants on the Analyst panel at the Capital Link Shipping and Offshore conference were suggesting that tanker equities had seen a small run up, and now, with all this attention, had less upside to offer than other sectors- say, drybulk. The larger context was that yes, the shares had made a positive move, but the magnitude of the move was less than proportional to the gains made in the actual market, where vessel hires stood in excess of $40,000/day (for widely watched VLCCs, representing a double in top line revenue, since 2014 Q3). I still disagree with the premise of buying drybulk simply because things can only get better, but maybe tankers do continue to get way too much attention, as evidenced by a flurry of shipping articles in what I call mainstream financial media. By the way, drybulk has not been immune from coverage- mainly accentuating the negative; perversely, too much negative attention may also be a contra-indicator. So maybe these analysts are on to something!

“It’s the Pipe, stupid”, and why costs matter

Mar. 30, 2015 - Capital Link Shipping -  The Capital Link International Shipping and Offshore event, last week, which has been held for 9 years, was off-the-charts good. A few weeks ago, I used the term “Recency bias” (which one analyst has now dubbed as the “R” word), talking about how investor views of future oil prices, going several years out, are swayed by very recent spot market activity. 

Wags, rags and Recency bias

Mar. 16, 2015 - Capital Link Shipping -  It’s been too painful to write anything about drybulk over the past few weeks- but maybe all the pain and “left for dead” sentiments are serving as a contra-indicator. The subject of market psychology, with tinges of behavioral economics, is full of examples where prices of particular stocks, or commodities, took a bounce off a bottom and then kept moving higher, albeit in extremely volatile setting with steadily higher lows along a chart. 

Opportunity for shipping MLPs- “…but we don’t own the cargo!!!!!”

Mar. 09, 2015 - Capital Link Shipping -  Over the past few years, we’ve seen a new type of shipping investor- one who like the sector and wants some cash flow while waiting for a big uptick in asset values. Partnership structures, and- very specifically Master Limited Partnerships (or MLP’s, with characteristics carefully defined by U.S. tax regulators), have offered investors opportunities to have their cake (in the form of periodic yield) and eat it too (in the form of a worthwhile terminal value).

Commoditization, competitive strategy, and consolidation
Mar. 02, 2015 - Capital Link Shipping -  Looking in at shipping companies from the outside has its challenges. Businesses that are industrial don’t really reveal much about their inner workings- social media blasts of blue containerships (or FPSOs with good safety records) don’t really count. Indeed, the old adage “loose lips sink ships” , originally applied when shipyards were cranking out T2s and Liberty ships (circa 1940’s) applies just as well in commercial contexts of the business, 70 years later. Sell-side equity analysts have high levels of frustration in dealing with structures that were not built with transparency in mind. Independent analysts (including tanker nerds and those who dabble in writing) can occasionally gain good insights into what companies might do, or why they are doing it. But, such endeavors-whatever the affiliation of the analyst, involve much guesswork, complementing all hard work and financial modeling that goes into pronouncements.

Commoditization, competitive strategy, and consolidation
Mar. 02, 2015 - Capital Link Shipping -  Looking in at shipping companies from the outside has its challenges. Businesses that are industrial don’t really reveal much about their inner workings- social media blasts of blue containerships (or FPSOs with good safety records) don’t really count. Indeed, the old adage “loose lips sink ships” , originally applied when shipyards were cranking out T2s and Liberty ships (circa 1940’s) applies just as well in commercial contexts of the business, 70 years later. Sell-side equity analysts have high levels of frustration in dealing with structures that were not built with transparency in mind. Independent analysts (including tanker nerds and those who dabble in writing) can occasionally gain good insights into what companies might do, or why they are doing it. But, such endeavors-whatever the affiliation of the analyst, involve much guesswork, complementing all hard work and financial modeling that goes into pronouncements.

Topical and tropical
Feb. 17, 2015 - Capital Link Shipping -  February and March are big months on the conference circuit- with organizers and attendees navigating religious holidays, school breaks and- this year, the very cold weather. The “The Life of a Ship” event, hosted jointly by the Hellenic American and the Norwegian American Chambers of Commerce, did not disappoint. A poll of attendees at the “Life of A Ship” conference, jointly sponsored by the Hellenic and Norwegian Chambers of Commerce. The conference covered topics ranging from shipbuilding (featuring a superb time lapse video from Aker Philadelphia Shipyard) through end of life matters like the changing rules on recycling and scrapping of vessels.

End of the commodities super-cycle

Feb. 09, 2015 - Capital Link Shipping -  The past few weeks present a startling example of why forecasting commodity prices is a tricky business…and putting such prognostications in writing is downright perilous. As the ink was just drying on my recent suggestions that floating storage would bolster the tanker markets for awhile, as I channeled various tanker and energy analysts, the oil markets undertook a big upward correction. Yes, I had hedged myself by reminding readers that the front end (spot and nearby) portion of the forward curve in oil is likely to be far more volatile than it was in 2009 (the last storage-induced tanker boom). But, bottom line, the economics briefly evaporated for contango trades loosely described as “buy now /sell forward, and hold on a tanker in between”.

“Kool-Aid and Golden Eggs”
Feb. 02, 2015 - Capital Link Shipping -  With another equity market swoon- this time coinciding with the earnings season that’s now upon us, the shipping stocks have moved into an uncertain phase and, dare I say it- driven by emotions. For active traders- who operate by sensing the collective psyche of the other guys in the room (which might be a virtual room, but never mind that), these are exhilarating times. For economists and analysts, including the tanker nerds described last week, who crave certainty, these can be maddening times.

Tanker nerds running amok
Jan. 26, 2015 - Capital Link Shipping -  These are heady times for oil and tanker nerds; energy company credits, U.S. oil and gas exports, the tanker market, and the crude oil markets were all covered in a series of online and live events last week. While the experts (that sounds better than nerds!) were parsing API gravities and Worldscale points- tanker owner Euronav was upping the size of its equity offering, and DryShips was readying a spinout of its tanker fleet. On the sidelines, there are whispers about other groups (from both the shipowner and PE camps) itching to liberate regulatory filings from their word processors and activate those computer links to the SEC. Oh, in the middle of all this, news reports came in reporting the demise of King Abdullah, in Saudi Arabia.

Who’s going where? And how fast?
Jan. 20, 2015 - Capital Link Shipping -  Rainstorms, ice storms, fog….all of these are excellent catalysts for staying indoors and catching up on various postings on Linked In. Fortunately, my home office is adjacent to a great big fireplace- no gas logs for me. Of great relevance, recently, are numerous postings on subjects such as the impact of low fuel prices on the speed of ships. Speed, of vessels, in turn, has an important impact on capacity utilization- if the fleet is limping along (slow steaming), utilization can be higher, at least temporarily. Once hires become more enticing, then it’s worth money for operators to speed up. Factoring lower fuel prices into the equation provides further incentives for shipowners to turn up their engines.

Balmy breezes and smooth flows of people and cargo
Jan. 12, 2015 - Capital Link Shipping -  Last week was a Florida week- truth be told, the trip was arranged before I knew about the dire forecasts for chilly New York. But, originally- the trip was only supposed to be a three day affair, when I had to extend- the decision took one millisecond, which is even faster than it takes for frostbite to form on a 9 degree day.

Tankers- decorum upstairs, hoopla below decks
Jan. 05, 2015 - Capital Link Shipping -  The shipping markets don’t always take vacations- the tanker market continues to show a great surge of optimism. Low oil prices and resultant changes seaborne tanker flows caused ton miles to spike upward, with inefficient routings leading to a stretch of existing vessel supply.

Fortune tellers discuss U.S. crude exports - it's not 1975 anymore!
Dec. 15, 2014 - Capital Link Shipping -  How low can oil prices go?  How high can tanker rates go?  Can the present tanker boom last beyond Q1 2015?  Lots of converswations and opinions - but no real answers yet.

Thanksgiving reflections
Dec. 03, 2014 - Capital Link Shipping -  For me, there was little to give thanks for on Thanksgiving Day, as OPEC’s meeting seemingly asked “Who’s the turkey?” or alternatively “Time for long crude investors to get roasted.” With oil prices plunging, the old commodity investor adage about not trying to catch a falling carving knife certainly rang true. Yet, stepping back, if the oil price drop really sticks (and I have my doubts- as I have all the way down), there are probably some highly salutary effects just around the corner.

It’s all good…just follow the money

Nov. 17, 2014 - Capital Link Shipping -  With the arrival of cold weather in New York comes the shippingevent season, with shipping people moving inside in order to warmup to views and insights of leading participants- whether they bedeal makers, principals, and analysts. Two events, Marine Money’s15th Annual Ship Finance Forum (a one day affair typically bringingin financiers and, sometimes, investors), and a session hosted by anew organization, the New York Maritime Consortium (whichincludes an amalgam of arbitrators, shipbrokers, financiers and aslew of lawyers), both offered insights, as well as great networkingafeature of all the good shipping events.

Falling fuel prices: shrinking distances, weeds and other quirks
Nov. 11, 2014 - Capital Link Shipping -  The tanker market, as noted here and elsewhere, is rocking and rolling. Depending which commentator that one reads- the present drop in oil prices (which has led to more loadings, and to shifting trade patterns- both good for shipping) is battle of titanic proportions between the major oil producers, and the new supplies in the form of shale oil. Most impressive is the bravado of Continental Resources, one of the biggest (maybe the biggest) producer of Bakken oil.

Finally, some higher hires
Nov. 04, 2014 - Capital Link Shipping -  Much of the recent shipping news is about oil trades- where there seems to be some long-term base building afoot. But, happily, it’s been nice to report that Capesize dry cargo has come to life in the past few weeks- more on that later.

Ripples, waves and turbochargers

Oct. 20, 2014 - Capital Link Shipping -  Between the boom years prior to the financial crash in 2008, and the lingering days of the Great Recession (mixed in with Isis, Ebola, and taper tantrums), a funny thing happened. Prior to 2008, port finance got very sexy- a spate of deals done circa 2006- 2007 saw numerous “privatizations” where port operators sold their crown jewels to investment funds for vast sums (equating to off the chart multiples like 20x EBITDA), and leased them back. For insurance companies (like AIG, for example), seeking to lock in returns over decades-long tenors, it was never better, with ports being seen as long-term cash generators. The port investments booked by the big funds continued to chug along- much like the vessels- which, as we’ve seen, have grown in size.

LNG shipping- new routes and old roots
Oct. 13, 2014 - Capital Link Shipping -  Poten & Partners- the well known tanker brokerage and consultancy, along with Bloomberg- a provider of valuable information on all markets (including LNG trade and shipping generally) hosted a panel of top owners- discussing LNG shipping, last week. The panelists debated a variety of issues while fielding questions from moderator Mike Tusiani. The subjects ranged from future shipping needs (with Poten looking for LNG demand of 379 million tonnes in 2020, up from 245 million in 2013) to optimal company structures. From the conversations, sales of gas out to Asia starting in 2016, from US Gulf and East Coast exporters (Poten data shows that four have been fully approved) seem to be a given; there was no pushback during the session on whether the Panama Canal widening might be delayed beyond its announced opening in early 2016.

Alchemy, older vessels and new trades for tankers
Oct. 06, 2014 - Capital Link Shipping -  Last week, info provider Genscape revealed that a cargo of Alaskan North Slope (ANS) oil was on the water bound for South Korea, aboard the U.S. flag tanker Polar Discovery (owned by Conoco Phillips-“COP”), 141,000 dwt built 2003 at Avondale. The vessel has been loading oil from the North Slope (ANS) at Valdez for discharge at refineries along the U.S West Coast. But a funny thing happened on the way to….(Puget Sound, the Bay area, or even Long Beach)….the weakening oil market caused a realignment of prices for different crudes. While the industry is contemplating the impacts of shipping through the Arctic (some 45 years after the ice-breaking voyage of the tanker Manhattan from the north of Alaska to the U.S. east coast- pre pipeline), the COP vessel is steaming directly through the nexus of several important trends. First, the bigger context is that Alaska’s oil production has been shrinking; U.S. Department of Energy data shows the state’s annual production peaking in 1988 at 2 million barrels/day. By 2013, the figure had been cut by 75%, to around 0.5 million barrels/day.

Opportunistic moves, fresh air and volatile freights
Sep. 29, 2014 - Capital Link Shipping -  Miami Beach, Florida was the site for the Association of Shipbrokers & Agents (ASBA) ‘s annual Cargo Conference event. This conference, drawing nearly 300 attendees, brings its members together for presentations bundled together with extensive networking. Not surprisingly, a large contingent of attendees from the Caribbean countries were in evidence, along with ASBA members from all over North America. Topics cover worldwide shipping market developments, as evidenced by a keynote talk by a talk by Jason Klopfer, who continues to gain wide exposure for Navig8, maybe prior to a quiet time when the company will not be able to present at such events. Mr. Klopfer provided a breath of fresh air compared to informative but unexciting oil company or legacy company speakers.

Midpoints, arbitrages and harbor rats prowling the docks
Sep. 22, 2014 - Capital Link Shipping -  Capital Link held its sixth Global Commodities, Energy and Freight Forum last week, which provided a broad overview of the shipping markets, with some insights along the way into regulatory and legal matters surrounding them. Though always well attended and excellent for networking, the wide spectrum of expert market views offered much food for thought (and grist for writers), but did not provided any precise guidance on market directions. After all, if we knew exactly what was going to happen, then…(readers can fill in the blanks).

New trades for barrels and molecules
Sep. 15, 2014 - Capital Link Shipping -  Various permutations of energy exports continue to be news-worthy, with tanker watchers closely monitoring developments that could impact the nascent crude export trades, such as they are. While we leave the definitions of “condensate” and “processing” to the experts, it’s clear that Canada is now a real destination for U.S. produced crude oil, balanced by a trade in products then coming back. Now, there could be even more U.S. crude going to Canada with the purchase, by a New York based team of one time oil traders, of a 115,000 barrel /day refinery known as North Atlantic Refining Ltd (NARL) at Come-By-Chance,Newfoundland.

Shareholder Friendliness
Sep. 03, 2014 - Capital Link Shipping -  By late August, freight markets were settling down, though many of the swap (forward freight agreements or FFA) positions continued to show expectations of strength. If broker reports are to be believed, asset prices are holding on to gains that have been made in past months. Ostensibly, this is all good. But, then again, anecdotal evidence from various private equity buddies says that they’ve have backed away from deals because of price appreciation seen in vessels earlier this year.

Drybulk delights...finally
Sep. 03, 2014 - Capital Link Shipping -  It seems like I took my eyes off drybulk sometime in late Spring, maybe four or five months ago. Other than a flurry surrounding the news of Star Bulk’s merger with Oceanbulk (which closed in early July) and the announcement of a pre-pack deal in place at Eagle Bulk, there was not much to focus on. But, all of a sudden, during August, drybulk shipping has come back on the radar. Star Bulk was in the news again, this time as it continued its “roll-up”- making a deal to acquire the fleet of Excel Bulk Carriers, which will occur through the end of the year.

Investment Themes and Shipping Memes
Aug. 20, 2014 - Capital Link Shipping -  Asset management companies are an interesting bunch; from some of my client meetings, I’ve met top portfolio managers at name-brand institutions, and tried to impart my expertise, such as it is, on spurts, spikes, sputtering and splatter where the shipping and financial markets intersect. In recent weeks, it’s been interesting to read the comments of Martin Gilbert, of Aberdeen Asset Management, a UK outfit, suggesting that “Analysts have been a bit too bullish on the sector….” I also enjoyed reading an interview with Brad Hintz (my B-School classmate from back in the day), now retiring from Sanford Bernstein to pursue a teaching career (back to B-School, albeit two hours north of our alma mater).

Blips and more blips – connecting the dots
Aug. 20, 2014 - Capital Link Shipping -  Every so often, a particular sector of the market exhibits surprising behavior, and reminds me of that famous shipping market proverb, coined by me back in my brokering days, that says “Every market run-up starts with a series of blips.”. In looking at tanker markets, there is always the macro picture- one of fundamental oversupply (however measured) for nine out of every ten years- another shipping proverb (coined by some other pundit).

One picture is worth two dozen tankers
Jul. 21, 2014 - Capital Link Shipping -  
Once in a while, as a writer, I can get away with saying “One picture is worth a thousand words” and then just go out to PJ’s or Bobby Vans and celebrate another insightful article. If it were only that easy. The graphic shown here, from the online provider of vessel positions,, conveys a great deal…and excites me enough to keep writing. The regulars will just have to save a seat for me.

Anything MLPs
Jul. 14, 2014 - Capital Link Shipping -  
Master Limited Partnerships, abbreviated as MLPs, are all over the shipping news lately. In the past few weeks, a future spin-off from Hoegh LNG, dubbed as “Hoegh LNG Partners” filed paperwork with U.S. regulators presaging a $150 million issue. The new entity will own part or full stakes in three Floating Storage and Re-Gasification Units (FSRUs)- which can be thought of as portable plants that gasify LNG, after transport, and then transfer it to the local gas transmission grid. These types of facilities have been deployed.

Conjectures about condensates
Jun. 30, 2014 - Capital Link Shipping -  
Following the exhausting Marine Money Week, it was time to get back down to Florida- where readers will remember that I have a view of the entire U.S. flag coastal tanker fleet steaming by- no reduced speeds for these vessels, they are rushing at full speed to grab the next cargo.

They all need oil revenue
Jun. 16, 2014 - Capital Link Shipping -  Each week, the news brings fresh developments that leave shipping industry observers scratching their heads and wondering, “How will this affect freight rates and vessel hires?” In the past few days, the head scratching was brought about by a fresh set of developments in the Middle East- the sudden rise of the ISIS movement and the group’s march southward through Iraq.

The next big thing…maybe
Jun. 09, 2014 - Capital Link Shipping -  
Last week, I had an interesting conversation with a possible investor which is worth relaying. Instead of the usual discussion of “Buy this if the T/C rates are below $xxxx/day, and sell that if the T/C rates are above $yyyy/day”, the discussion turned to the subject of disruptive technologies and how to invest in the next big thing.

Crystal balls, capsize bulkers, and iron ore- more Alice in Wonderland
May. 19, 2014 - Capital Link Shipping -  
It’s a busy season with client meetings, full of eager investors all wondering which direction the shipping markets are heading. I finally found a good prop, in a dusty junk shop- a crystal ball looking thing (maybe from a Christmas tree?) that I painted little cracks on. So when the question comes up, I can pull the little ornament out of my backpack and say, “My crystal ball broke a few years ago.” But fortunately, we do have useful indicators to point to; my role, many times, is to point investors toward some of these indicators.

Western Bulk Net Time Charter Margin Continues to Improve
May. 14, 2014 - Capital Link Shipping -  New York, May 14, 2014. Western Bulk reported yesterday a higher Net Time Charter (TC) margin for its WB Chartering Division for the month of April 2014. The Net TC margin per ship per day was $1,644 for April 2014, $1,127 for March 2014 and $660 for February 2014. The average margin for Q1 2014 was $ 852. 

Crushing costs: think of a big number, then double it!
May. 12, 2014 - Capital Link Shipping -  
Last week, the International Association of Independent Tanker Owners (or, Intertanko) gathered in New York for their annual convention. Part of the week was devoted to private meetings, for members (tanker owners) and associate members (vendors, usually), but the second half of the week was “opened up” (more on that later) to interested folks who could attend their seminar, and the hands-on workshops on the final day of the week. This was a stellar event, full of high level attendees, carefully planned by the Intertanko staff.

Super-cycles and Stable Cash Flows
Apr. 28, 2014 - Capital Link Shipping -  
Last week, I had the opportunity to attend Capital Link’s forum on Closed End Funds and ETF’s, a full day event held at the Metropolitan Club, which was enormously interesting. Though shipping is a valuable specialization, anyone trying to understand the place of shipping in the investing firmament must see how the maritime business fits in between the larger pieces. When I studied economics, the textbooks offered up the concept of “derived demand”, which implies that the users of the vessels will be reacting to forces exogenous to shipping itself.

Roll-ups, whiskey and SEC filings
Apr. 21, 2014 - Capital Link Shipping -  
Springtime is traditionally a time of renewal; around New York, the pollen count is off-the-charts high, and leaves are coming out. It’s also a time for budding shipowners in the “loan to own” business to realize their ambitions. Like many readers on here, I’ve been following Genco, Eagle Bulk and other companies that are in transitional modes. When reading SEC filings concerning forebearances, pre-packs and the like, I start at the back to read which investors are involved.