Thank you for an exciting challenge, TradeWinds. We do not provide public investment advice, so our reflections should not be construed as such.

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?

Our industry is undeniably in flux. We see new ideas and thoughts about technology, alternative fuel regulation, and industry initiatives every day.

Odfjell is concerned about climate change and its consequences for individuals, societies and businesses. As a result, we have set a specific goal and are supporting initiatives and regulations to decarbonise our operations as soon as possible.

However, we believe that full decarbonisation will take time and that betting on a single technology or fuel at this time is risky. So, we believe that traditional technology and fossil fuels will continue to dominate shipping in the short term of the TradeWinds investment profile of seven years.

So, in the short term, we believe that investing in shipping companies with a modern fleet capable of improving energy efficiency through technical, operational and digital measures will provide good value to the fund.

Investment in traditional but modern shipping with improvement potential will ensure regulatory compliance, lower fuel costs, a lower risk of stranded assets and a lower risk of being first to market in terms of technology.

We support early adopters and believe it is important that the industry moves from aspiration to action. However, we think focusing on what you can control is essential.

We have little control over transportation, infrastructure or fuel supply.

In today’s situation, we would therefore take a conservative approach, and also believe that companies with a good mix of contracts and spot exposure will provide a good hedge.

The growing population, as well as increased demand for goods, both industrial and consumer, will drive demand for seaborne transportation. We believe that sectors serving multiple industries, such as chemical tankers, will benefit from GDP growth and a limited increase in supply in the coming years.

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