London-listed Taylor Maritime Investments (TMI) remains greedy for tonnage, but is holding fire for now.
The bulker owner’s chief operating officer Carl Ackerley told TradeWinds: “I always want more ships.”
The experienced bulker executive was given the role in July, following the company’s acquisition of 83% of Grindrod Shipping last December. He retained the COO job at Grindrod.
He is very optimistic about bulker markets in the next couple of years.
“We do believe that we should be towards the end of the interest rate cycle, the inflationary cycle,” the COO said. “Hopefully we start to see that coming out a little bit.”
“We we see a busy US with their infrastructure build, we see China, after a slow rebound from Covid, getting busier,” he added.
Four in 10 geared supramaxes globally were built between 2011 and 2014 and will need to be renewed, but in the meantime, the supply balance is tilted firmly in favour of owners.
“They’re all getting older and the average age of the fleet is as old as it’s been since 2009 and that’s only going to continue to climb,” Ackerley said.
“So I’m a firm believer that we should progress to a strong 2024/2025,” he added.
The COO told TradeWinds: “I guess the elephant in the room is what happens with Ukraine and if we can see an end to the war, let’s hope we do. But you know, it reminds me of Kobe in 1995 and Katrina in 2005.
“If we get that massive rebuild it could change the whole market and then China is still going well enough. So I think we’re very positive,” he said.
Buttery’s former boss
Ackerley is responsible for the integration of the companies, the implementation of commercial strategy and the oversight of combined chartering and operations across both organisations
The COO became a member of the Baltic Exchange as a shipbroker in 1989, working until 2001 as a broker in London, Johannesburg and Melbourne before moving on to the principal side.
He worked for Furness Withy Australia before joining Pacific Basin, where his path crossed with TMI chief executive Ed Buttery.
In 2010, he joined Grindrod's Island View Shipping, setting up the supramax division and becoming COO.
Buttery told TradeWinds: “In terms of where pricing is at, I don’t think it’s a terrible time to be buying ships for those with who want to be long tonnage. I think that 2024, 25, 26, arguably looks attractive.”
“That being said, you go into the market and you pay whatever it is for a ship - you may as well go and buy our shares in either Grindrod or Taylor because they’re trading a big discount to NAV [net asset value],” he said.
Long on ships
“We’ve got over 40 ships. We’re already long on ships. And so our big priority has really been deleveraging the balance sheet. The only thing that really matters, in my opinion, in shipping is getting your break-even as low as possible,” Buttery explained.
“And when you’ve made a major acquisition like Grindrod and you’ve used some leverage to do it in an 8%, 9% cost-of-debt sort of environment, that’s easily your biggest cost,” the CEO said.
“So no, we haven’t been buying. We’ve been selling. We’ve been listening to our shareholders who have been vocal about their goals in terms of finance costs, and it’s also mine,” he added.
And newbuildings are still too expensive in his view.
An owner heading to Japan now is looking at delivery early in 2027, with a price tag of $33m or $34m for a handysize bulker and in the high $30m range for an ultramax.
“And you’re sitting there for three years, not really knowing what the market’s going to do. So I think the people who are ordering ships for that far out are really the trading houses who know they’re basically going to be long cargo in terms of time,” Buttery explained.
“I don’t think it’s particularly attractive right now, but we still stay very closely in touch with all the major yards in Japan. And we’d rather not order now or next year so that we can get things right and order lots of ships whenever the market is more attractive,” he said.
“All the Greeks and all the smart families out there, they’re all buying secondhand tonnage because they earn basically the same amount if you know how to run them,” Buttery added.