This is indeed what we call “the billion dollar question”. However, since I’ve been involved with shipping for my entire career, I am not deterred by the fact that the industry will always be unpredictable and volatile, and will call for a matter of good timing. The fundamental principles in shipping are the same, whether one is considering a $1bn investment or a significantly smaller amount.

The $1bn question

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?

Rule 1: “Buy the rumour and sell the fact.” In ordinary terms, irrespective of whether one is involved in the dry cargo market, the tanker market or any other sector — it is a basic prerequisite to buy at the lower end of the market and to sell in a firm market — “when the going is good”. It is almost like having to decide to leave the party when you are having a good time.

Rule 2: Ship operating and management has drastically changed. Whether we have an existing management team or propose starting a new company, in my view we have to overhaul and review the full management structure in order to bring on board the expertise required so as to be able to address the ever-changing, mind-boggling regulations. For those of us who have been around for a while, the current volatility and regulation requirements have become a nightmare. We may have to go to the point of re-educating ourselves.

In view of the need to adapt to climate change and environmentally friendly fuels, be it methane, hydrogen or ammonia — this again is an uphill struggle. I will not therefore propose getting involved in newbuildings where there is a substantial risk of taking a delivery of a vessel that, two years down the road, may not conform with the requirements at the time.

Back to the question at hand, we can only contemplate how we could invest these funds, over a long-term period of around 10 years. Effectively, shipping is a marathon and not a sprint. Being a long-term investment, it gives you the ability and flexibility of correcting and adjusting the mistakes in timing — whether it be buying or selling a ship prematurely or too late. As the old timers would say, “always keep a spare pound in your back pocket”.

Finally, I would only focus on using half a billion for a “shopping spree” and set aside the other half, for the rainy days where one may need funding to support vessels in an unexpected bad market. Indeed, in the old days, cash was king and now cash is emperor.

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