Q3 2019 Earnings Call
For the quarter ended September Thirtyth 2019, I would like to remind everyone that this conference call is being recorded today November 7th 2019 at 830, <unk> <unk> Eastern time and will be available for replay starting at 11 30 am eastern time hosting the call today is being chairman president.
Chief Executive Officer, Peter occurred Executive Vice President and Chief commercial and Technical Officer, and buying course, Chief Financial Officer, We will open the call for questions. After the presentation for management at which point, David So called Chairman of the Board and Thorsten Patterson Executive Vice President.
Ship management will also be available for questions I will now turn the call over the Ryan courses.
Lease as well as the accompanying presentation for this conference call are available on the Investor Relations section of our website.
We could all please turn to slide three.
I would like to remind you that our discussion today contain forward looking statements actual results may differ materially from those stated or implied by forward looking statements due to risks and uncertainties associated with our business, which are discussed in the risk factor section of our annual report filed with the FCC on form 20-F for the year ended December 30, Onest 2018.
Our risk factors, maybe updated from time to time in our filings with the FCC. Please note do we assume no obligation to update any forward looking statements with that I'll now pass the call over to being Chen to discuss highlights in recent developments.
Thank you Brian Please turn to slide for the.
The operational and financial performance.
First provides a brief operation on the financial highlights for the quarter and then the wind will elaborate further.
Our industry, leading third quarter utilization of 99.6% was an improvement from last year's third quarter performance of 98.4%.
This was the highest utilization in a single quarter since 2011, and very impressive given our fleet of 112 vessels.
We continue to exceed the expectation about customers through continued excellence in operational performance best in class safety standards and reliability.
Revenue for the quarter was $282.7 million the job over the same period in 2018 is primarily due to our charger modification agreement in Q1 2019.
Which we received an upfront payment of $227 million.
Our better than expected operating income of $116.1 million, what's driven by continued focus on cost efficiency.
Our industry, leading all patch for ownership days for the third quarter was 5007, just $70 will have improved our operation cost for ownership days by over $200 from the 12 months ended September Thirtyth 2018 to the 12 months ended September Thirtyth 2000.
<unk>.
Our cash flow from operations was $145.9 billion for the quarter.
The P.S. per diluted shares was 11 cents compared to 36 cents in the third quarter of 2018. However, this was primarily due to the change in fair value of financial instruments, which contributed a loss of 10 cents per diluted shares for the third quarter.
Hi diluted share count from the exercise so Fairfax warrants in January 2019, and the loss of revenue from the Q1 choppy modification, which contributed a loss of six cents per diluted share.
Other corporate developments in this quarter, we closed the $500 million accordion to our portfolio financing program, increasing the financing to $1.5 billion.
It's comprised of $1.2 billion turned loan and Athree hundred million dollars revolving credit facility, which provides substantial liquidity.
Positions and general corporate purposes.
We also announced the acquisition of 89600 to you buy so which will be put on Athree, a time charter with our partner well when you once deliberate.
We are happy to continue to grow our fleet and pursuing accretive acquisitions, we see increasing attractive opportunities I'm on our network of partners and remain very focused on fee growth at the right price.
We see growing opportunities to broaden and deepen our customer partnership.
Our sector stabilizes into a new normal marked by consolidation and we expect our momentum to continue throughout the remainder off the year.
Please turn to a slight fives.
We have made significant progress on our five key priorities this quarter and throughout this presentation, we will discuss some of our recent accomplishments as they relate it to these key priorities.
[noise] operational excellence is that the cool of our business and we'll continually strive to be the safest and most reliable service and solution providers to our customers.
But this quarter, we have no idle days for the entire suite of 412 vessels, we continue to build upon our customer partnerships signed significant charters this quarter, including a five year arrangement for one of our Panamax vessels.
I'm pleased with our accomplishment this quarter and our team continues to build a solid track record for always executing on a problem. It's just we have made to our customers employees financing partners and our shareholders.
A piece turn to slide six.
In the Retuned to the recent acquired vessels to be put on H. me, Yeah time charter with <unk>. We have also completed a five year at U.S. flagging arrangement for one of our Panamax vessels.
They're more we compete it nine charter extensions with our largest customer Costco.
Oh lost time injury frequency continue to improve year over year with this quarter being the best on record in terms of safety.
This is in part due to the initiatives from our operations team implementing a focus and culture around safety.
As I previously mentioned, our commercial and operations team has done an excellent job of both keeping our vessels on charter and keeping them running smoothly with scheduled Oh, hi, only three days and they 99.6% utilization, which is the highest we have achieved since.
Q3 2011.
Our operating expenses per ownership days has decreased by more than $200 per day comparing to the 12 months ended September Thirtyth 2019, and the 12 months ended September Thirtyth 2018.
So in summary, we have continued this quarter to make progress on our capital claim and remain focused on growth in long term cash flows through the depth of our partnerships with our customers and the financial partners.
Our improvement seen operations and our significant liquidity provides a solid foundation for seaspans future growth.
I would now pass it over to Peter to discuss the state of the industry.
Thank you Ben.
Please turn to slide seven.
During this past quarter the charter market continued to move in a positive direction. Despite the backdrop of something right when mainlane trades.
Markets continue to be boy I know 2020 preparations.
Resulting in significant increases in rights amongst smaller vessel sizes and marginal improvements for larger vessels due to limited supply.
Limited number of deliveries and low order book to lead ratios support right stability through the rest of 2019.
Right split baby Panamax vessels reached about $14000 per day.
Which represent healthy levels within that size segment.
Right. So launch missiles continue to stay around multiyear highs.
Expects that the Tailwinds remained into 2020 .
Due to the low levels of idle tonnage.
2020 and scrubbing the dynamic.
I'm, a solid the Montana intra regional trade routes.
The vast majority of the time charter fleet will switch to burning low sulfur fuel strict Q4 2019.
Cleaning as well as scrubber retrofitting.
Providing a boost to vessel earnings as vessels are removed from service.
During this quarter, we have witnessed pockets, so depressed asset values to spot the rising rate environment.
We see those as an opportunity.
But as the largest and most financially flexible company to pursue sale and purchase transactions.
Expect a number of potential deals to materialize similarly to the mines have them to the some leading to the 9600 to you.
He's fan recently acquired.
And we remain focused on being patient and disciplined without capital allocations.
And the 9600 to use size segment.
We believe that their support for stabilized and proving rights given the lack of Newbuilds and the polarized order book.
Well segment is important for many trade routes for reasons, including upsizing volume improvements port infrastructure and the landslide logistics capability upgrades.
Please turn to slide right.
On the supply side, the idle fleet order book and demolition volumes have shown a continuation of positive fundamentals into the third quarter 2019.
This demonstrates that the industry continues to manage the supply of vessels in under an appropriate manner.
Container ship deliveries have been revised downwards in 2019.
Deliveries of some vessels are expected to slip into 2020 .
Deliveries have slowed significantly to the lowest level in more than a decade with the order books of fleet, Russia near all time lows at just over 10%.
Other positive fundamentals and the continued trend of consolidation on the line of spice, albeit amongst smaller regional operators.
Additionally, they are increasingly seems to be the potential for the positive developments from slow steaming as lydalls manage last fuel prices.
Especially as we track and 2020.
Good to get the good today scrapping.
Below expectations at the beginning of the.
In part due to improved time charter earnings as well as lower than expected scrapping price.
We continue to they expect the pace and volume of demolitions to increase during 2020 as older less efficient tonnage is removed from the market due to the high fuel prices.
Against this background and supported by a rigorous engagement with our customers, we have realized several employment opportunities, including extensions off charter agreements and longer periods for our short term vessels.
I would now like to pass the call over to run to discuss our financial results.
Thank you Peter if we get all please turn to slide nine I'll provide an overview of or overview of our financial performance for the third quarter.
Our vessel utilization for the quarter was 99.6% an increase from the 94% in the third quarter of 2018 in the highest quarterly utilization rate recorded since 2011 due to the strong charter market in efforts of our commercial team.
Operating cost for another day was $5770, a 3% increase from the comparable quarter of 2018 in a marginal increase from the second quarter of 2019. This is driven by timing of maintenance expenses. We continue to be focused on operating cost improvements and on an LTM basis, we've improved our operating ownership.
Cost per day.
My over $200 were approximately 4%.
Revenue was $282.7 million for the quarter, a 4% decrease from the third quarter 2018.
Differential is substantially due to the $12.7 million reduction from lower charter rates on the vessels subject to our charter modification agreement in Q1 of 2019 from which we received an upfront payment of $227 million.
For the nine month period revenue was up 5% driven by the acquisition of GCR.
General and administrative expenses were $7.7 million in the third quarter. This represents a decrease of 5% from the third quarter of 2018, as we continue to achieve efficiencies throughout the rollout of new commercial accounting and Treasury systems.
Brendan the nine month period Junior was also down 5% relative to that period.
Our operating earnings for the quarter were $116.1 million, a 13% decrease over the comparable quarter of 2018.
As discussed in previous quarters. This was due in part to higher operating lease expenses due to the changes in the accounting treatment of operating leases beginning in 2019 for the nine month period operating earnings increased by 70% over the comparable period in 2018, driven primarily by the 227 million dollar income from the charter modification in the.
First quarter of 2019.
GAAP diluted EPS for the quarter was 11 cents compared to 36 cents in third quarter of 2018.
This differential was primarily due to the change in fair value financial instruments, which contributed a loss of 10% 10 cents per diluted share for the third quarter.
Excluding this 10 cents per share we.
Ah delivered a result higher than our expectations.
The remaining differential was a higher share count.
And the loss of revenue from the charter modification in Q1 of 2019.
The chart the charter modification payment of 2019 contributed a loss of 6% six cents per diluted share for the quarter.
The nine month period, GAAP diluted EPS was up 35% over the comparable period in 2018.
Cash flow for operations for the quarter was $145.9 million compared to 150.
<unk> hundred $50.6 million in the same quarter over the prior year, representing a 3% decrease primarily due to lost revenue from the charter modification payment for the nine month period cash flow from operations increased by 81% for the comparable period in the prior year.
Please turn to slide 10, where we will discuss our capital structure developments.
We have continued to execute on our capital plan, reducing borrowings by $264 million. This quarter. In addition, approximately $98 million went to settle or 5.87% interest rate swaps. These are only interest rate swaps with the termination right and the settlement will have a materially positive impact on our go forward cash cost.
Further $40 million went to redeem part of the series D preferred shares which were issued to sellers of GBCI.
We continue to maintain a net debt.
Equity ratio of 1.0, which we believe is a comfortable level for our current asset base.
Additionally, we maintained a healthy cushion of liquidity through our revolving credit facilities and cash on hand, increasing size of our portfolio financing program to $1.5 billion. In September provides incremental committed source of financing for our increasing vessel acquisition activity.
This upsizing was oversubscribed by two times, which is a testament to the confidence our financing partners have and our team and our business.
Going forward, we remain focused on allocating capital towards opportunities within the container shipping space and beyond.
The execution on our capital plan has significantly improved capital availability and flexibility positioning us to execute on our next phase of growth.
Finally, we would like to remind you all that our 2019 annual Investor day will be held on November 22nd at the New York Stock Exchange. We're looking forward to seeing you. There that concludes my formal remarks and we thank you for your time say with that I'll pass the call over to the operator, who will open the call for any questions.
Thank you, ladies and gentlemen to ask a question you want me to press Star one on your telephone we ask that you. Please limit yourself to one question and one follow up question. You May then returned to the keen to withdraw your question. Please press the pound key.
Standby, while we compile the kewaunee roster.
My first question comes from Chris Wetherbee what city.
Hey, guys James wanting it on for Chris just wanted to follow up on that last comment.
You are that you need to close and get your thoughts on M&A, you've previously talked about adjacent sectors being favorable im just favoring older tonnage over now just wanted to get your current view on what you thought was the most appealing.
And how you might go about financing.
Prospective acquisition.
Yes. Thank you a this is Spain in terms of investment that we previously discussed and that our principle is that that you know we stick to the investment criteria, which means that a any acquisition that we're looking at whether it's within the container.
Ship space or using that Jason will use any other ER business opportunities the first and foremost east the return of that investment, which is why are we talking about the capital allocation. Secondly, we look at the you know the customer needs and also the business rationale. So in terms of the you know the growth off but.
Communities, we continue to look at all with these to meet different dine mentions and we want you know consistently applied the investment criteria is to those opportunities.
As we have the financial strength and also we have to platform I think today, we have very comfortable in a position where we continue to evaluate these opportunities and once we see those at the two niches that meets these criteria whether it's within the contain the space most in adjacent or any other relative.
The business opportunities that we will make those that investment decisions in terms of financing today as the wind just highlighted that not only that we have you know this $1.5 billion of the the Abe yellow financing facilities, we will continue to have other financing.
You know channels that through our traditional financing and the them a mess. It has lost that we continue to evaluate other financing opportunities. So that today, we have ample liquidity and we have to financial strength to finance any of these that.
Type of opportunities.
[noise] understood so more specifically focusing on the order book as you mentioned is quite low wanted to get a sense of how much the trade deals weighed on that and if there's any opportunities specific to see spend that have been created by the lower to Buck and how you're thinking about that as a [laughter] com opportunity moving forward.
Yeah. This is a being again in terms of the order book of the new build versus the second hand vessels, we do not prefer neither one of them rather we're looking at them equally from eight new investment perspective pass along that they meet our customer needs.
And also the returns that we want to require so you're looking at the lower order book as Peter just mentioned earlier, yes, I think in terms of the.
You know the supply side of those opportunities is relatively less compared to the second hand vessels, which today we see.
It's more attractive opportunities and so therefore in the current market environment, we see more attractive you know opportunities for those a second hand as well as that our customers have needs for those particular outside sectors soaps lab.
Type stuff the best source. So you know for us, but equally we do not really only looking at the order book rather it's looking at what our customers' requirements are and what are the returns those investments going to Britain to us.
Thank you.
Thank you. Your next question comes from Ben Nolan with Stifel.
Great.
So.
It just sort of follow up on that I know in the past you you'd said that newbuildings on long term contracts I don't notice and maybe a year ago are they the returns available on those didn't meet your threshold has that changed at all it sounds like your AG.
Gnostic to Newbuilds versus.
Versus the second hand, but they have either the returns come up or if you're thresholds changed at all.
Yes. This is being again the answer to that is that has not changed in terms of what you just described and also from our side the investment.
Criteria of home Seaspans perspective, definitely has not changed.
We will be absolutely patient and disciplined and however, I think good, particularly if we looking at as I described earlier you can be looking at the second hand market, we see increasing the bond upsell opportunities, where we can structured in such a way that will meet our investment criteria and Wednesday.
This opportunity there rises we will be able to execute it very swiftly and and meet our customer needs.
Okay.
Helpful and I'm going to try to squeeze to into one question here, so that I can play by the rules but.
<unk>.
First question sort of it in the two part question is.
Any update on the LNG business in Vietnam and part two there is I noticed that you guys have a five year contract with the U.S. flag, which is new I think for you guys.
Is there any premium associated with that or is it just longer duration, that's available and could that be expanded upon at all.
Okay.
This is a being again and.
First of all was we got into the LNG to Vietnam that project. This is a part of these wiper.
Opportunities that we disclosed earlier as we as we've stated at the very beginning a decent say opportunity where swipe, whereas the company is going through a judicial management process, which is a process that's beyond anybody's control.
Secondly, a seaspan at the time when we have the initial discussions on this opportunities that we anticipated uncertainty of such a opportunity where we structured in such a way that we only taking on this opportunity when the company's emerged from the judicial management.
As well as that we have a set of condition precedent to meet.
The current situation since that over the past 10 months, the we see the progress but the progress has been moving brought the smoke slowly and we attended the evaluating the current status and in discussion with the judicial managers KPMG and once we complete that revision and.
Assess the situation we will.
The disclose what the next day.
Subject to a you know meeting the disclosure requirement those boats or swiper ends that as well that says he spent.
So that is that that the first question. The second question once we got into the U.S. back but this is just an example of Seaspans you know customer partnership because we see we working very closely with our customers as our customers business evolves, there's a needs where they need to have this U.S. flat.
Requirements.
As you know what the U.S. back in the is quite a a complex so as you know.
Requirements, which has had very strong.
Strict set up with climate in terms of the vessel H and the vessel size. Because this is that a U.S. Bakken and also there's a certain schedule to face in this matter source and this is an example, where seaspan has the yeah. That's the scale and the flexibility. That's we always talk that bodes well.
Where that we can actually provide that we quite specific locations of those vessels at the customer needs as well as being able to facing those vessels at the right time. So there will be beneficial to see spent and also for the customer. So this is a U.S. fracking, but so we put the getting aware that it's a five year.
You know bareboat charter, where the vessel you put into the Mary time that program. The M.S.P. well, we will be able to you know so we'll feel our customer needs and you know this is expected to have more vessels over the next year to phased into such a program and this is also mutually beneficial well we.
We'll be able to continue to you know put those that written devote the vessels back into the long term charter.
Okay very helpful. Appreciate it thanks.
Thank you again, ladies and gentlemen, if you would like to ask a question. Please press Star then one my next question will come from Fadi Chamoun with BMO capital markets.
Good morning, Thank you.
Just a follow up maybe on the phone with remarks by theater or I mean, it looks like we may have a trade through here and the supply like Youve got to explained is somewhat limited than that of the regulatory impact from my almost 2020.
Can you offer up little bit thoughts on where you think the trade or to be charter rates are looking like going into the next couple of years and.
And Oh, we shipped five might be the most likely to benefit if we kind of continued to see this tightness in the supply side then how.
Kind of a trickle down to your fleet, where do you can see the benefit of in your own fleet of you refine.
Few contract I guess in the next flow while.
Thanks, Saudi for question and just as a as a reminder, we don't forecast future rates don't form of view on where those would be but turn it over appeared to talk about his views on the fleet supply component.
At the funniest Peter.
That's a good question are you know when we take a look at a the improving supply and demand situation just sometimes the order book versus the the the existing fleet that is assets at very low levels.
Historically.
So that's good news is one input.
The scrubber retrofits are currently absorbed some 1.5% of global capacity.
And is there's a significant program going into next year.
Which will finally result, and or something like 10% of the global fleet, having being referred to scrubbers. So the they certainly is a and influence on.
On availability of tonnage as I've mentioned you know the.
The 9600.
8000 to you is fully occupied reflected in the rights as a pretty much the same costs with the panamaxes.
But helps you.
Thank you.
Thank you we do have a follow up question, Ben Nolan with Stifel.
Wow that was quick so I I mean, maybe Peter being Miss This one is more directed it used to.
One of the emerging themes that we're hearing from ship owners of various types is that there's a lot of uncertainty as to if they are going to order new ships, what type of propulsion systems to put on do you use a scrubber do you want to do LNG and you know or do you want to.
Have a traditional oil power or fuel oil powered ship.
And as a consequence of that Theres really been a lack of.
Let's let's say.
Direction, and and lack of Newbuilding orders.
Obviously your customers will would on a newbuilding sort of at least.
Probably dictate what they would want but how do you guys think about that is.
Are you opened two building ships with LNG or are you you know where do you stand in terms of what should be built and and what makes sense for the next 20 years and if useful life.
Yep.
Thanks, Ben I think that's the excellent question I would just Stephen overview, and you know Peter feel free to chime I mean.
You know from Seaspans perspective, I think the first while we see the low order in the book is not primarily driven by the uncertainty with is that what the proportion proportion that a system that should be used rod. There is I think as the industrial wall or I think the liners that the C. They're much more discipline them. So.
Shelves as well because the industry that's hold that that I think you should habit that balance that demand of supply.
Specifically with regard into what proportion system that we should be using whether it's the LNG on the AWS you know scrubber, it's a matter of I think ultimately industry as a whole that will be inclined of what the you know.
Regulatory ER, you know edge requirements on our job is really is to be able to provide the advice to our customer ultimately that you know with with that with our customer that we will be able to facilitate whatever the decisions that they gonna be making whether it's going to be the Alan.
Deal, it's going to be the scrubber always gonna be that youre insist that dual dual fuel systems because.
Ultimately need the new construction is what that you know some accustomed to side is what there what they're demanding some quite none or was that what is the.
The capacity there wouldn't need from their site at the fuel. It's only one of the a may need considerations for them to make a you know that new build decision and to date in terms of the options on the on the.
On the on the fuel inside or whether its LNG and whether it's a unit dual this the swap or fit it I think seaspan has all the knowledge and expertise in providing advice to our customers in terms of what are the pros what are the comps and then then ultimately they will make the business decisions and we are.
April also be able to help them to implement such a decision should they decide to do either way.
Gotcha.
That's that's Peter Yes, just to.
The tail on what thing has said as we certainly do engage in.
A lot of dialog with our customers are though very disciplined in terms of any idea that could trigger a new build.
So if the.
Type of vessel that they need the that as a first and foremost most in regards to the size and few other special aspect in regards to feels today will fuel future, we certainly engaged with them and in these methods as well.
Different views out there.
But at the end of the days of practicality will prevail in regards to what they ultimately field.
The fifth within their own networks and those of their alliances.
I understood and to sort of put a bow on <unk>. So you guys don't have affirmed view on where the other it's a sort of what your customers need and.
See how things though.
Well I think.
Yeah, I think at the come from our perspective that you know I work out our focus and make sure that you know what did the when that but that this mission set our customer make study will be able to provide our views and that device to them.
In terms that we do we not in a position to take hate as to what you know which which fuel.
System that should be using.
Right.
Great. Thanks.
Thank you. Our next question will come from Ari Rosa with Bank of America.
Hey, good morning, guys.
So wanted to ask what the order book at historically low levels than I thought that was a really helpful chart. How long do you thinking it can stay there given what you described is a pretty tight supply environment.
But it's Peter yet so that's a good question thanks very much.
I think really what has changed over the years is the fact that.
Yeah, there's been a maturation in the markets and the container market Weve.
Come from.
Over 150 participants to.
Situation, which is a top 10 carried 90% of a global container trade.
Through the last 10 years, there's been a oh the very much increased.
Degree of of a disciplined amongst our customers.
Not only amongst customers, but they work in primarily.
Alliances wherein the ER.
Full costing and determination of all but new tonnage is the fly the against the background on the the predictive needs.
So the you know the world of Ah speculative.
Construction on ordering.
I think is something that has relatively one that has gone by.
Okay sorry.
You go ahead.
I was going to just ask how do you view the implications then for for rates over a kind of a medium to long term. It obviously not asking for a specific rate forecast, but I'm just kind of if you could talk about does that then resulting kind of more stable rates more predictable rates are or some different dynamic.
Well Ari this is Ryan I think it's important as you evaluate the order book and where the order book is now relative to the total global fleet. It's important to think about the long term dynamics of the containership market.
Ultimately view the containership market is core infrastructure for global trade and to the degree that these shifts continue to age what you'll see as a replacement of that global fleet and you also see growth and so.
We don't again as I mentioned earlier in the call, we don't forecast future rates, but we have a strong degree of confidence in the future order book of where that goes but as Peter mentioned, we believe it will be moderated in more prudent than it was in the past.
Okay, Great. That's very helpful. Thank you guys.
Thank you and we have a final question from Chris Wetherbee with Citi.
Hey, guys just wanted to touch on slide seven I think it as.
With the charter rates and the vessel values are seemingly the rates of.
Increased and obviously the vessel values at least across the first part of your decreases it more or less because the do just functioning on the lag or is the market actually sort of looking through some of those rate increases and not capitalizing them into vessels just kind of wanted to understand the dynamics in the market around the vessels and the rich.
Yes, it's Peter yet.
When we when we look at the the values.
I think it's also important have looked at the five vessels.
The current.
Idle fleet.
Which is some 3% or three point something percent of global Threed.
That includes a unfortunately the way the methodology. It includes vessels that are actually in shipyards, having retrofits, which as I mentioned little early as it currently is nearly 1.5% so the idle fleet and factors is.
Somewhere around 2%.
That is constant currency Jude just have a.
Mostly very small ships like 2500 on below which I think is why you see the other affliction on the on the logo Grafton on slide seven.
Have a 2005 hundreds or up to 3000.
Seeing some headwinds in terms of the values.
As you given to the larger vessels you.
There's a stabilization on terms of values, which has been reflected through the the improved Chaucer rights, which you can actually see on the slide above.
Which is a function of.
Supplying them on a in the here now.
Right got it and then just also looking from the demand side, you see box richer essentially more or less flattish does so does that mean essentially that.
These rate improvements are sort of mostly scrubber, driven driven by centrally capacity coming out for dry docking and tank cleaning.
Or is there essentially end market demand that you're seeing with the liners around this as well that might be a bit more permanent.
We think its but.
Certainly is a or an impact through the.
Extraction of vessels going into into dry docks.
But fundamentally with the the improving supply them on picture and the very low order book don't forget the order book because is made up most of the of the very large vessels.
And the.
Spot market is made up or not the very large.
Vessels.
Which remain on demand. So so we think a one of these factors or at play I.
I think it's important to again evaluate the container shipping spaces.
Global core infrastructure for global trade.
If you do that ultimately you have to come to the conclusion that rates will stabilize to Peter's point about a better view of supply and demand across the global fleet.
So I think that there are both elements of the here and now as Peter said, but also a better fundamental picture about supply and demand for this very important core infrastructure.
Thank you I'm showing no further questions in queue. At this time I will now like to turn the call back over Mr. Bean Chen for any closing remarks.
So thank you all very much what taking the time to join this joint I will call and we look forward to US speaking to you in the next earnings call and thank you very much of a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.