No doubt, the strong tanker market, and the possibility, still only a conjecture at this point, of a pending shares offering helped bolster attendance. Rodgers answers during the Q & A session revealed much time spent with, and wisdom imparted to, the investor community. The New York capital markets earned considerable praise from the speaker- who described a quick fund raising effort to support Euronav’s nearly $1bn acquisition of the 15 vessel Maersk VLCC fleet at the beginning of this year.
He acknowledged that conversations with outsiders coming into the industry are not easy- pointing to a tanker market that has defied conventional analytical tenets during the past 10 years a time of boom (through 2007 for tankers) and subsequent bust for some major tanker names. In wide ranging remarks, he sang the praises of the Euronav setup, a high quality owner, not asset trader, of modern- though not necessarily “eco” tonnage, which benefits from the superior information gathered through a pooling arrangement. Euronav, a long-time member of the Tankers International pool, recently announced a further commercial cooperation with Frontline.
Rodgers was quick to distinguish between pools, where the entities remain under separate owning structures, versus consolidation through mergers and the like, which he saw as difficult given the industry’s proclivity for private structures. The pooling argument was also linked to the inherent volatility of tanker rates, which has benefitted owners with some headline numbers- marquee fixtures which equate to $100,000 per day on suezmaxes.
Borrowing some concepts from the language of probabilistic statistics, Rogers talked about an owner controlling a small fleet maybe getting lucky on a particular fixture- but also being on the wrong side of very poor information fixing without realizing “there was another cargo just three days behind the first one”. He described the cargo market is being opaque while considerable transparency surrounds the vessel market and availability of tonnage.
Speeches of this type always involve market projection even those of the implicit variety. Rodgers did not disappoint- hinting at a view of the current rate spike as being indicative of market strength- with rapidly shifting cargo flows- rather than reflecting the normal cold weather seasonality. He acknowledged that lower oil prices are good for the tanker markets because it would “…naturally draw demand…” Conversely, he offered the view that owners would not speed up their fleets in response to the recent fall in fuel prices a consequence of lower crude prices. In his view, turning up the throttles above 13 knots, where fuel consumption increases sharply, would "gain days for cargo as yet unfixed”.
Despite the very serious undertone of the speech, Rodgers trademark- wry humour, showed through. In one presentation slide, he reminded the audience to remember to laugh “because it’s absurd.”
Copyright © 2024. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited. Add Seatrade Maritime News to your Google News feed.
