Management at John Fredriksen’s SFL Corp is being careful not to jeopardise the promising bulker and tanker markets as the company eyes new investments.

Chief executive Ole Hjertaker said both segments look “very interesting” due to low orderbooks.

The boss of the US-listed sale-and-leaseback specialist told a conference call that the number of tanker newbuildings is at its lowest level going back 20 or 25 years.

But he warned: “As we all know, the shipping market, in general, has always been heavily influenced by owners sort of destroying their own markets, ie when [the] market seems reasonably good, everybody runs out and orders vessels.

“And when those vessels are finished at the shipyard, there are suddenly too many vessels available and the market crashes,” he added.

Hjertaker said a good example of this was how the dry bulk market worked for several years after the ordering boom in 2014.

There was “consistently nice high growth in demand”, but way too many ships were contracted at shipyards, meaning rates took several years to catch up.

The CEO said now owners are looking at deliveries in late 2025 or into 2026 if orders are placed.

“So in either the dry bulk market and also the tanker market, if you really want to sort of order a series of vessels, you have to wait quite a long time,” Hjertaker said.

“And in the meantime, of course, it could be a very interesting market, given that there is a lack of supply,” he added.

Inflation hedge

SFL also believes new efficiency regulations due in 2023 will limit or cut tonne-mile capacity as less energy-efficient ships cut speeds to comply.

Hjertaker views ships as “real hard assets” that provide a hedge against inflation.

“And if there is inflation, that will pull up also the value and residual value of these assets,” he said.

SFL is examining opportunities to expand in tankers, bulkers and car carriers.

“But we try to be careful when we invest,” said the CEO.

“You have to have a certain degree of paranoia when you make investments in volatile markets,” he added.

“What we try to do is charter out vessels to end-users that are typically industry leaders and larger entities because we think that, over time, will give us a lower risk in the portfolio and, therefore, a higher probability of a very strong long-term return,” Hjertaker concluded.