It’s probably not a big deal.
That is the assessment of leading dry bulk executive John Wobensmith as to the likely impact of US President-elect Donald Trump’s economic policies, which have been dubbed Maganomics.
The question was the first one Wobensmith faced from equity analysts upon presenting third-quarter earnings on Thursday, surfaced by Jefferies lead shipping analyst Omar Nokta.
“Our view overall is no substantial impact,” Wobensmith told Nokta. “Goods find a way to move and get to where they ultimately need to be.”
Trump’s previous tariffs skirmishes with China during his first term as president in 2018 showed some temporary disruption of trade routes but not a negative impact, he noted.
“In general, our opinion is that there won’t be any substantial impact in terms of tonne miles. There are always unintended consequences when you put tariffs in place. Goods may move less efficiently, but they continue to move,” he said.
One of the uncertainties hanging over the dry bulk trade has been the pace of economic recovery in China and that government’s willingness to proceed with stimulus programs.
As Wobensmith noted, this could quickly come to the fore under Trump’s administration.
“It could cause the Chinese to up their fiscal stimulus spending, if the Chinese think tariffs will be disruptive. We should know that in pretty short order,” he said.
Wobensmith spoke on an earnings call the day after Genco delivered adjusted net income of $18.1m or $0.41 per share for the third quarter — precisely matching the Wall Street consensus.
While rates have softened into the current quarter, Wobensmith said he’s optimistic that they will firm into the end of the year, helped by a tightening in the capesize market.
The market is in the process of clearing capesize oversupply created by a disruption in West African bauxite cargoes that pushed ships into the Atlantic Basin, he said.
“We’re optimistic going into the end of the year. We think rates are going to move back up,” Wobensmith said.
“Having said that, I think we’ll see the normal seasonal downturn going into the first quarter. But it’s nothing to be concerned about.”
Besides the Trump issue, Genco management is facing questions about its plans for fleet renewal, and how recent softening in rates might help by softening asset values.
Wobensmith largely threw cold water on that notion.
“We’re still looking pretty heavily in our fleet renewal programme,” Wobensmith said.
“Asset prices have come in a little bit, but not a lot. We’re still seeing Chinese buyers bid up the prices of older capesize vessels. The firmness is still there.”
