My investment plan will be profitable for the first three to four years and then hopefully have some profitable and sustainable features coming to the front later on.
This article is part of a series written by people across shipping in response to this question about how to deploy a hypothetical TradeWinds Sustainable Shipping Fund:
How, where and why would you invest $1bn for the best return in sustainable shipping, as the industry grapples with the need to cut carbon emissions, improve efficiency and keep cargoes moving in a world facing multiple economic and political challenges? The investment will be made now and ideally held for the next seven years to the end of the decade. As an added bonus, give one policy or regulation you would like to implement from 1 January 2023 to benefit shipping?
The investment strategy would run in three phases:
- First invest in shipping shares with high liquidity and enormous dividend (more than 20% yield at the moment) and some 15+ year-old tonnage in the bulker and tanker market. They will give amazing returns in the first three to five years as I expect demand to continue to increase and the supply side will most probably be negative.
- In 2026/2027, invest in companies that have taken the risk of investing in energy-efficient ships and are just taking deliveries. I expect them to earn considerably more than the previous generation of vessels as they are delivered.
- In 2027/28, invest more of the investments into companies that earn the most by being in the ‘right’ wave of future sustainable ships.
By then, I expect the fund to be worth at least $2bn, if not $3bn.
Bonus policy change: I have no big ideas about regulation change but, if I had a say, I would rewrite the Carbon Intensity Indicator rules so they would benefit the environment immediately.
