The message of Jason Klopfer, the commercial director for Navig8 Americas and coo of Navig8 Product, was that gloominess, including some sentiment creeping in from the drybulk and container sectors, has played a big role in the current bearish climate pervading the wet markets.
Importantly, the current bearishness does not comport with actual market fundamentals- in Klopfer’s view. While acknowledging high inventory levels, lowered production and increased vessel supply, he described one mantra of Navig8’s highly efficient platform, as positioning for the upturn- with its timing “driven by sentiment”.
Co-panelist Robin Heath, chartering manager on the Suezmax desk for Diamond S Tankers, a regular at the ASBA events, talked about “a general feeling of uneasiness” in the tanker markets after the Spring, with the negative feelings in the million barrel sector driven by concern about 2016- 2017 deliveries.
Heath was quick to note that total deliveries in 2016 will be “lower than many people thought” and further delays out into 2017. The demand side (movements of oil, or not) also played a big role, according to the chartering man, who described the Summer of 2016 situation as a “perfect storm” and “August of misery” brought on by less oil moving at a time of high oil inventories.
He described a situation where oil market participants were asking themselves: “Why buy $50 oil?”, meaning that buyers would wait for dips in the oil price. Nevertheless, he saw that hires were now firming in his sector, which underscored his assertion that “sentiment can change very rapidly,” as ports could get congested, and delays tend to increase in the Winter months.
The widened Panama Canal was also mentioned with Heath explaining that many suezmaxes, which could now dimensionally “fit” into the Canal, are not properly fitted for transits, as was soon to be lower Worldscale flat rates- with the effect to be determined.
A thread running through the presentations was that of “active management” of shipping assets- developing efficiencies in a shipping company that lower costs, but also enable a much quicker response to the ebbs and flows of sentiment.
Klopfer’s descriptions of the Navig8 platform matched up nicely with that of Liberty Maritime a US flag operator in the bulk markets, and logistics specialist, where panelist Josh Shapiro talked about superior market intelligence driving the company.
Lunch keynote speaker Gary Vogel, the ceo of Eagle Bulk Shipping, on the dry side, described the process of bringing change to the very traditional ways of managing shipping companies. Echoing some of Shapiro’s precepts, Vogel told his audience that: “net improvements can be tangible and sustainable”.
Eagle Bulk is now shifting its business model from that of an asset owner - with its headquarters in midtown New York one block from “Hedge Fund Alley” on Park Avenue - with vessels on period time charters, to the “operator model”, based in shipping-friendly Connecticut- an hour away, rapidly responding to market developments.
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