Even before Navig8 and Adnoc Logistics & Services confirmed a $1.5bn mega-deal on Monday morning, this Posidonia was destined to have an extra sparkle.
After four boom years and multiple black swan events to spur the industry, shipowners have cash in their pockets and a spring in their step.
The sight of Kylie Minogue on stage at the Capital Maritime party only added to the feel-good factor present at every cocktail reception along the Athens coastline this week.
You don’t need to dig too deep, however, for those with longer memories to inject a note of caution and a quick lesson from history. After all, what goes up must come down and shipping has a habit of going from feast to famine and back again.
It feels a bit like 2008
George Procopiou has seen enough cycles to understand this better than most. And the Dynacom boss was one of the first to inject a shot of reality into a week when Greek shipping always puts its best foot forward.
“These discussions remind me of the same thing in 2008,” he said at the Capital Link Forum on Monday. “The going concern [then] was there were not enough shipyards to go with the demand. Then suddenly, for events completely outside shipping, we had a crisis for 12 years.
“So, we are approaching a new cycle when we are talking that the capacity of shipyards is not enough and so on. Gentlemen, we are ready to start again from point zero.”
Evangelos Marinakis, who like Procopiou has been investing heavily in newbuildings, was on the same page.
“No one can predict the future and we are all romantic,” he said from the seat next to Procopiou in the Astir Palace ballroom, with views out over a marina crammed with shipowners’ yachts.
“I have ordered 88 newbuildings at $7bn cost. But I planned it. So, from now on I’m saying, ‘no more’,” he quipped.
Everyone in the room laughed and most took the message on board.
Climate focus cooling
While a reversal in fortunes for shipowners may be some time in the future, one notable shift in the present is an increasingly hardline approach to decarbonisation and environmental issues.
A growing tide of resistance has been evident in other shipping events building up to Posidonia. Here it is bubbling on the surface.
As Stephen Fewster, global head of ship finance at ING, told the TradeWinds Shipowners Forum, there is an increasing group of owners turning away from future fuel solutions with their newbuilding activity.
“I think increasingly, people are looking more at sticking with the conventional view — which is not necessarily a view I would support by the way, because we do have to decarbonise,” Fewster said.
Andrian Dacy, CEO of JP Morgan Asset Management’s Global Transportation Group, shared a personal story which framed the present situation behind public rhetoric.
“I received a letter not so long ago where the investor said: ‘If you have ESG as a central component of your decision making, we want our money back’,” he said at Capital Link. “Take that for what it’s worth but it’s out there as well.”
Banks not enjoying the boom
While shipowners, shipyards and investors are enjoying good times, spare a thought for the poor bankers. Shipping lenders are not enjoying the present boom like the rest of you.
As Fewster told the TradeWinds Shipowners Forum, ING’s shipping book had never been in such good shape for performing loans. However, it was seeing a high level of pre-payments.
“We used to say, you run to stand still. Today, you have to sprint to stand still,” he said.
The fact shipowners are paying more money than they need to their lenders, and have such low demand for fresh loans, is creating a squeeze on margins just as banks need to be preparing for the arrival of Basel IV in January 2025.
“When there is a deal, all the major banks are clambering all over it,” Fewster said.
“Asian banks, Taiwanese banks, have been very active here [in Greece]. Because of this competition, pricing is going down at the time pricing should be going up.
“We all want to maintain a portfolio, so we are all scrambling over the same deals.”
Despite shipowners having a relatively low need for their closest lenders right now, experienced shipowners such as Procopiou and Marinakis know it pays to still invite your banks to your Posidonia party.
When the tide turns and a new cycle develops, those relationships will be needed again.
