The New York conference and meeting circuit has been dominated by Scorpio’s Robert Bugbee- who’s bigger and smarter than just about anybody else in town. Appearing on two panels at “The Way Forward”, Bugbee stressed the divergence in prospects between big and small tankers. Prospects for larger crude carriers (VLCC and Suezmax) were described as “scary”, while the outlook for smaller MR type tankers (especially those with economic fuel consumption) is brighter.
“They have always traded at positive cash flows,” Bugbee said of the smaller vessels. Financial models shown by panel moderator Jon Chappell, from Evercore, were projecting $22,000/day hires in 2014 for VLCCs, and $13,500 daily on MRs. On a later panel, Bugbee said publicly what everybody knows- “We, shipping people, are a very undisciplined bunch.” Along with other speakers, he implored everyone to be disciplined- including the bankers lending money.
The keynote luncheon address was delivered by Oivind Lorentzen III, not as burly, but with equal smarts to Bugbee)- whose shipping roots go back several generations. Now the ceo of Seacor Holdings, his talk reflected his great successes in the industry, as well as what Seacor is doing now. Lorentzen suggests thinking very broadly about your activities, and taking an integrated view of the transportation business. We hear that his Jones Act tankers are doing very well, by the way, after recent shifts in product and chemical trades.
The talk at the coffee breaks got down to personalities- the morning news flashes on the day of the event detailed the departure of Morten Artzen the ceo at Overseas Shipholding Group (OSG). Around the meeting room at the Waldorf, it seemed that all manner of shipping lawyers, corporate lawyers and financial advisors were feeding at the OSG trough. OSG also has a Jones Act sector- but the tax man may see value before some of the creditors, according to various lawyers trolling the conference.
The various panels of shipping people, investment bankers, restructuring guys, and shipping financiers offered a mélange of thoughts providing some hints to the shape of things to come. Project specialist Basil Mavrolean, from broker CR Weber, described a sea change in the attitudes of private equity (PE) investors- who now have multi-year time horizons for realizing returns from deals. Nordea’s Ronny Bjornadal, on a banking panel, described a marketplace where more bank debt is changing hands. PE specialist Seth Eliot Wilson, from Jefferies Capital Partners, talked about investors working alongside established shipowners who “…would benefit from having somebody with cash sitting next to them at the table.” Given all the possible difficulties with conventional bank lending on the horizon, new shipowner entities, with fresh capital structures, may emerge along shipping’s path to the other side.
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