Following Donald Trump’s election as US president, questions have emerged about how many of his trade tariff threats will become a reality.
A trade war with China could potentially hurt shipping, especially the container segment.
But SFL Corp chief executive Ole Hjertaker sits comfortably, backed by a $4.7bn backlog with a weighted remaining charter term of 6.7 years.
Hjertaker told TradeWinds: “We have our ships on long-term charters to very strong counterparties. The short-term swings in the markets do not occupy us that much.”
“He has talked about tariffs and trade barriers, but the US is also dependent on selling their goods globally. We have to wait and see what the outcome will be,” he added.
Two-thirds of the backlog is to customers with investment-grade ratings, which makes SFL’s performance more stable.
“If you charter vessels to financially weak clients, they will have payment problems in a down cycle.
“Investment-grade companies have a more robust balance sheet. We believe that is an important structural strength because the markets will continue to be volatile. They have always been volatile and will continue to be that,” Hjertaker explained.
The CEO believes some of Trump’s policies could be positive for oil production and lead to more transports of crude oil and oil products.
“But we are not that exposed to the short-term swings in those markets,” Hjertaker added.
SFL has a positive outlook because of the moderate orderbook in most segments, except for LNG.
“We generally believe that we have an upcycle ahead of us that can last for some time. We have to hope that there won’t be too much noise regarding global trade that affects the trade flows negatively,” he said.
SFL announced in its third-quarter report that it has agreed to sell the 1,700-teu container vessel Green Ace (built 2005) for approximately $10.8m net, with expected delivery to the buyer in December.
The Green Ace’s sister ship, the Asian Ace (built 2005), is currently on charter to AP Moller-Maersk, which expires in the first quarter of 2025.
“Then we will see whether we find a new charter or sell it,” Hjertaker said.
SFL raised over $1.1bn in new capital in the third quarter. At the end of September, the company had a total of $224m of available liquidity.
“We are generally rather optimistic about the markets and look at new investment opportunities in several segments,” he said.
