Q3 2024 Star Bulk Carriers Corp Earnings Call
Thank you for standing by ladies and gentlemen, and welcome to Star bulk carriers conference call on the third quarter 'twenty 'twenty four of financial results, we have with US Mr. Patrons Popeye's, Chief Executive Officer, Mr. Hamish Norton President, Mr. Cmos Spiro and Mr. Christos <unk> co.
Chief Financial officers, Mr. Nicos rescue Chief operating officer and Mrs.
S Parka dominant key Chief Executive Officer of the company at this time all participants are in a listen only mode there'll be a presentation followed by a question and answer session at which time if you wish to ask a question. Please press star one on your telephone keypad and wait for your name to be announced.
Speaker Change: I must advice you that this conference call is being recorded today, we will now pass the floor on to one of your speakers today. Mr. Parker Harris. Please go ahead Sir.
Speaker Change: Thank you operator, I'm Christos <unk> co Chief financial Officer of Starbucks, Colliers, and I would like to welcome you to our conference call regarding our financial results for the third quarter 'twenty to 'twenty four.
Speaker Change: Before we begin I kindly ask you to take a moment to read the safe Harbor statement on slide number two of our presentation.
Speaker Change: In today's presentation, we will go through our third quarter results Starbucks investment proposition actions taken to create value for our shareholders cash evolution during the quarter and an update on the Eagle bulk integration vessel operations fleet update the late.
Speaker Change: Based on the ESG front and our views on industry fundamentals before opening up for questions.
Speaker Change: Let us now turn to slide number three of the presentation for a summary of our third quarter 'twenty to 'twenty four highlights.
Speaker Change: For the third quarter 2024, the company reported the following.
Speaker Change: Net income amounted to 81 million with adjusted net income of 83 million or 71 adjusted earnings per share.
Adjusted EBITDA was $143 4 million for the quarter.
For the third quarter I spend our existing dividend policy, we declared a dividend per share of 60 cents payable on or about December 18th 2024.
Our total liquidity today stands strong at 433 million.
Speaker Change: Meanwhile, our total debt stands at $1 3 billion.
Speaker Change: Well on the top right of the page you will see our daily figures for a base Roe for the quarter.
Speaker Change: Our time charter equivalent rate was 18840 threep per vessel per day.
Speaker Change: Our combined daily Opex and net cash G&A expenses were based on everyday amounted to $6376.
Speaker Change: Therefore, our TCE less opex and cash G&A ease $12647.
Speaker Change: Seems the Eagle rock transaction was completed on April nine this year.
Speaker Change: Until the third quarter of 'twenty 'twenty four there synergies achieved from the integration, resulting to more than $9 million.
Speaker Change: Integration process is advancing smoothly across all departments significant potential for further savings in opex and dry dock costs.
Speaker Change: In 2025, and the remaining of 2024.
Speaker Change: Continued our fleet update for the quarter during the third quarter, we have sold four vessels.
Speaker Change: Three of these vessels, namely start hydrogen can be illegal and diva are expected to be delivered during the fourth quarter to their new owners, while total gross proceeds of 50 million.
Speaker Change: Please turn to slide four for a summary of Starbucks compelling value proposition.
Lifestyle bulk and.
Speaker Change: Starbucks is the largest U S listed public company and second worldwide in terms of deadweight dorms specialized in dry bulk shipping with a highest trading liquidity.
We operate a fleet of 156 patients across all segments with an average age of 11 nine years.
Speaker Change: We operate a fleet of AC equal basis, and have 98% of our fleet.
Speaker Change: Fiber deep, which provides a significant competitive advantage.
Star bulk has proven to be a consolidator in the dry bulk industry starting in 2018 through nine mergers we have grown our fleet by 75% in number of pesos.
Speaker Change: Furthermore, we operate a fully integrated management platform that makes us the most efficient and consistently amongst the lowest opex and G&A operators, while maintaining the highest right cheap ranking.
Speaker Change: Seems twenty-twenty, we have reduced our net debt per vessel by more than 50%, having reached the level, where the scrap value of our fleet comfortably covers our current net debt.
Speaker Change: Seems 2020, one through 15 consecutive dividend payments.
Speaker Change: Clarity quarterly dividends of over $1 33 billion U S dollars.
Speaker Change: We have taken advantage of historically elevated S&P values to sale some of our older and less efficient basis, using the equity proceeds to buyback our shares at prices significantly below net asset value.
Seems 2020, one we have bought back 443 million worth of star bulk shares.
Speaker Change: Throughout the years, we have built solid corporate governance, which is shareholder friendly by having primarily independent board members, including financially based stores and the other ship owners, who have a marriage deemed asleep for shares.
Speaker Change: It is important for our investors that management incentives are aligned with shareholders.
Speaker Change: Last but not least starbucks as an ESG pioneering shipping being a leader in the industry, they're forced to decarbonize.
Speaker Change: There is total transparency with investors timely and efficient compliance with environmental regulations and commitment to social responsibility.
Speaker Change: Slide five provides an overview of the company's capital allocation policy over the last three years and the various levers we have used to strengthen the company increased increasing value of our shares and return capital to our shareholders.
Starbucks has been growing the platform through consecutive fleet buyout by issuing shares at or above and maybe.
Speaker Change: In total it seems 2021 we have taken actions of $2 5 billion to create value for our shareholders.
Speaker Change: Well the bottom of the page we show our net debt evolution.
Speaker Change: Our average net debt per vessel has decreased from $12 3 million per vessel to 5.7 million per base, so a reduction of more than 50%.
Speaker Change: As a result of these deleveraging process, our current debt net debt discovered by the fleet scrap value.
Speaker Change: Finally, we currently have six debt free basis.
Speaker Change: I agree the market value of more than 800 million.
Speaker Change: Okay.
Speaker Change: Slide six graphically illustrates the changes in the company's cash balance during the third quarter.
Speaker Change: We started the quarter with $486 million gosh.
Speaker Change: We generated positive cash flow from operating activities of 138 million.
Speaker Change: After including debt proceeds and repayments capex payments and energy saving devices and ballast water treatment system installments in the second quarter dividend payment. We arrived at the cash balance today of 473 million.
Speaker Change: I will now pass the floor towards Chief operating Officer, Nicols Racecourse for an update on the Eagle back integration into our operational performance. Thank.
Speaker Change: Thank you Crystal.
Nicols Racecourse: Slide seven illustrates a summary of Eagle Bulks transaction integration.
Nicols Racecourse: The technical and commercial management with Mexico Fleet Fabless at first Starbucks coffee, I think nothing Singapore and Stanford.
Nicols Racecourse: Leveraging the combined global presence.
Nicols Racecourse: Our commercial teams for their super likes and ultra <unk> vessels and the three continents.
Nicols Racecourse: Cleveland or integration successfully managing the second largest supermaxilla ultra Lux globally operating both on voyage and time charter basis.
Nicols Racecourse: Queen management has gradually taken in house phasing out third party managers, while technical maintenance and marine sake quality standard processes and policies have been applied uniformly across the combined fleet.
Nicols Racecourse: Procurement of source spare parts bunkers, and lubricants have been centralized or the combined fleet.
Nicols Racecourse: These measures are expected to produce significant operating cost efficiencies.
Nicols Racecourse: On the bottom of the page you sell illustration of the synergies from Eagle box integration.
Nicols Racecourse: Opex G&A and interest expense as well as savings on dry dockings will have achieved more than $9 million in cost savings.
Nicols Racecourse: Please turn to slide eight we will provide an operational update.
Nicols Racecourse: Yeah.
Nicols Racecourse: Opex was up $5114 for Q3 2024.
Nicols Racecourse: Net cash G&A expenses were $1262 per vessel per day for the same period.
Nicols Racecourse: In addition, we continued to right at the top amongst our listed peers in terms of variety safety score.
Nicols Racecourse: Slide nine provides a fleet update and some guidance around the outreach of dry dock and the relevant total off hire days.
Nicols Racecourse: The mother of all debates, we provided are expected to drive a expect schedule, which for the remaining of 2024 is estimated at $18 $3 million for the dry docking of <unk>.
Nicols Racecourse: <unk> vessels.
Nicols Racecourse: In total we expect to have approximately 420 off hire days for the same period.
Nicols Racecourse: In 2025, we expect to drive the 47 vessels for 1200 off hire days and unexpected cost $53 8 million.
Nicols Racecourse: On the top part of the base, we'll have our capex schedule.
Nicols Racecourse: Illustrating our new building Capex and vessel energy efficiency upgrade expenses with 100% of our fleet not being pass worker treatment Victor.
Nicols Racecourse: Based on our latest construction schedules are new building vessels are expected to be delivered in Q4, 25 and 26.
Nicols Racecourse: In line with E X sight and C. I regulations, we will continue investing in upgrading our fleet with our latest operational technologies.
Nicols Racecourse: And in improving our fuel consumption and reducing our environmental footprint further enhancing the commercial attractiveness of the Starbucks fleet.
Nicols Racecourse: Regarding our energy saving devices retrofit program, we have completed 41 installations or three more remaining for retrofit by the end of 'twenty 'twenty four.
Nicols Racecourse: We plan to retrofit the other 26 vessels were csp's within next year.
Nicols Racecourse: We have all the numbers are based on current estimates around dry docking retrofit planning vessel employment and yard capacity.
Nicols Racecourse: Please turn to slide 10 for an update on our fleet sales.
Nicols Racecourse: Sales from.
Nicols Racecourse: We continue disposing of vessels Opportunistically.
Okay got attractive levels.
In 2024, we have sold 13 vessels for total gross proceeds of 233 million, reducing our average age and improving overall fleet efficiency.
Nicols Racecourse: Following the rollover of Eagle Bulks existing chartering contracts, we now have a total of 10 chartering vessels.
Nicols Racecourse: As mentioned earlier, we have five pharmacy building contracts with Cingal shipyard for the construction of five <unk>, new building vessels and delivery in Q4 and first half 2026.
Nicols Racecourse: Considering the aforementioned changes in our fleet mix, we operate one of the largest dry bulk fleet among U S and European listed peers with 156 vessels on a fully delivered basis.
Nicols Racecourse: Average age of 11 four nine years.
Speaker Change: I will now pass the floor towards you started to offer sense highest like the Lucky finally HCI.
Speaker Change: Okay.
Speaker Change: Thank you Nicole.
Speaker Change: Please turn to slide 10, where we highlight our continued leadership on the ESG front.
Speaker Change: The six animal Starbucks yesterday report has been published in accordance with the latest global reporting initiative requirements.
Speaker Change: With Pwc guidance. The report has received limited assurance for me why and Hasnt been reviewed by the company's ESG Committee.
Speaker Change: Among its key milestones the reports highlight Saint Pat's materiality assessment conducted with inputs from internal and external stakeholders and includes a comprehensive list of E. S. T related key performance indicators benchmarking the company's performance against the previous years.
Speaker Change: Through the implementation of technical and operational measures.
Speaker Change: The energy efficiency the company achieved a 4% reduction in scope, one greenhouse gas emissions compared to the previous year.
Speaker Change: A five point improvement in fleet wide see eye to eye and a nine five reduction in scope three emissions.
Speaker Change: For the fourth consecutive year Starbucks successfully submitted the 'twenty to 'twenty three carbon disclosure project question there.
Speaker Change: These yourself mission expanded to include data on water management alongside climate change reporting.
Preparations are underway for the purely your maritime regulations coming into effect in January 2025.
Speaker Change: Focusing on compliance strategies, such as bio fuel adoption and leveraging the pooling and banking mechanisms outlined in the regulation.
Speaker Change: On the global regulations front, we actively engaged with regulators and industry organizations, providing input and expertise to support the development of midterm greenhouse gas reduction measures expect it to be adopted by the I am all in 2025.
We continue to enhance wellbeing programs for our people.
And strengthened our contributions to society, including the sponsoring of baskets, who qualified for the Paris 2024 Olympic games.
Speaker Change: I will now pass the floor to our CEO Petros Pappas for a market update and his closing remarks.
Petros Pappas: Thank you harriss.
Petros Pappas: Please turn to slide 11 for a brief update of supply.
Petros Pappas: During the first 10 months of 'twenty 'twenty four a total of 29.4 million deadweight was delivered.
And 2.9 million deadweight was centered demolition for a net fleet growth of 26, and a half million deadweight.
Petros Pappas: Or two 6% year to date and 3% year over a year.
Petros Pappas: Uncertainty on future Green propulsion.
Petros Pappas: Hi, She building costs and limited shipyard capacity until late 'twenty or 'twenty six.
Petros Pappas: Due to increased competition from other vessel types have helped keep your this under control.
Petros Pappas: The order book experienced a small increase in presently stands at 10, 3%.
While the vessels above 20, and 15 years of age stand at nine 5% and 23, 5% over the fleet respectively.
Petros Pappas: The average steaming speed of the dry bulk fleet has stabilized at low levels of approximately 11 nuts. During the last six months due to inflated bunker costs, and then environmental regulations, including E X I N C III.
Petros Pappas: That increasingly even 75 slow steaming.
Ever.
Petros Pappas: As of 'twenty, 'twenty, four and increasing number of vessels delivered during the 2009 2013 shipbuilding boom would be going through their third special survey moderating supply growth as a consequence.
Petros Pappas: Global Port congestion has fully normalized following a strong reduction that lots of two years and gradually inflated available supply.
Petros Pappas: Approximately 6%.
Petros Pappas: <unk> is now expected to follow seasonal trends and the negative effect on the supply and demand imbalance will fade gradually reverse 2025.
Petros Pappas: Moreover.
Petros Pappas: Rising tensions in the Red Sea since late 2023, and the rerouting away from this way is continuing to close strong inefficiencies portrayed.
Petros Pappas: While crossings through the Panama Canal.
Petros Pappas: Expected to fully recover by the end of this year.
Petros Pappas: As a result of the above trends flip growth is unlikely to exceed 3% per annum over the next couple of years, even under the assumption that demolition activity remains at the current low levels.
Petros Pappas: Let us now turn to slide 12 for a brief update of demand.
Petros Pappas: According to Clarksons total dry bulk trade during 'twenty 'twenty four is projected to expand by five 2% in ton miles.
Petros Pappas: During the first three quarters of 'twenty 'twenty four total dry bulk trade volumes increased by five 4% year over year due to record iron ore coal and minor bulk exports while ton mile have received extra support from canola and efficiencies and strong long haul.
Plastic exports.
Petros Pappas: Despite the weak economic performance and that's struggling property sector.
Petros Pappas: These dry bulk imports have increased by 6.4% year to date.
Petros Pappas: Supported by strength in infrastructure manufacturing and end product exports.
Petros Pappas: Imports through the rest of the world are experiencing a strong recovery over the last year as lower commodity prices and easing monetary policy is boosting raw materials demand.
Petros Pappas: During 2025 dry bulk demand is projected to increase by one 3% at ton miles, while the IMF forecast for global GDP growth standing at three 2% the same as in 2024.
Petros Pappas: While the Chinese GDP is projected to slow down to four and a half per cent from 4.8% this year.
Speaker Change: The incoming Trump administration is expected to follow a pro tariff policy that may create headwinds for global trade.
Speaker Change: Washington installation next but will in our view had been moderate direct impact on dry bulk trades.
Speaker Change: During the last few months, the Chinese authorities have announced string.
Speaker Change: Pro growth measures that should help improve the economic outlook.
Speaker Change: The main goals of the various stimulus packages are to provide support on appropriate if prices.
Do you use the huge inventory of lots sold houses.
Speaker Change: The address local government debt through the issuance of 10 trillion, one special bonds and to boost private consumption.
Speaker Change: Moreover, should the Trump administration impose heavy traffic from Chinese tariffs on Chinese products, we expect additional measures to support domestic consumption and alleviate the potential weakness in exports.
Speaker Change: Iron ore trade is expected to expand by five 8% in ton miles in 'twenty, 'twenty, four and 1% of the 'twenty to 'twenty five.
Speaker Change: During the first three quarters Chinese steel production declined by four 1% year over year as the property market continued to face challenges while strength from manufacturing is still exports.
Speaker Change: Have helped provide the barstool sports.
Speaker Change: On the other hand steel production from the rest of the world is experiencing a recovery throughout the year and year to date have increased by three 3% driven by strong demand from India and a gradual recovery in Vietnam the Caribbean.
Speaker Change: Preference for higher quality iron ore to meet environmental targets is expected to gradually inflate ton miles as new mine capacity is the highest quality of iron ore will come on line in the Atlantic over the next few years and gradually substitute Chinese domestic.
Speaker Change: Production and imports of inferior quality.
Speaker Change: Coal trade is expected to expand by 5% during 2024 and contracted by 2% in 'twenty to 'twenty five.
Global focus on energy Securities. During the last years has inflated coal trade volumes, but growth has come primarily from shortfall Indonesian exports.
Speaker Change: Chinese coal imports presently stands at record levels and year to date have increased by 13, 5%.
Yes.
Speaker Change: It should be a generation grew at a faster pace than domestic coal production. During the first three quarters and stocks and of course Bulks increased ahead of peak winter.
Speaker Change: Winter demand.
Speaker Change: Wherever the Indian economy has expanded at the fastest pace. Among G. 20 members that has led to a strong increase in energy demand and along with inland infrastructural things on domestic production is inflating coal imports requirements.
Speaker Change: Yeah.
Speaker Change: Grain trade is expected to expand by six 6% during 'twenty 'twenty four and by two 4% and 2025 during the first three quarters grain trades increased by 10%, but during the third quarter it'd be client by 0.5% driven by a correction over Brazilian corn exports.
Speaker Change: Weak black sea volumes and better than expected Chinese production.
Speaker Change: U S grain sales have experienced a strong increase is expected to inflate going into volumes during Q4, while we increase the grain production worldwide.
Speaker Change: We've continued to put pressure on grain prices and support grain trade in the medium term.
Speaker Change: Minor bulk trade has the highest correlation to global GDP growth is expected to expand by four 4% during 2024 and two 6% with 2025.
Speaker Change: The positive regional steel price arbitrage, and then potentially a rush to build up inventories before the implementation of tariffs continues to intensify as Chinese exports and backhaul trades, while bauxite exports out of West Africa continued to expand at a strong pace that generates ton miles.
Speaker Change: For the Capesize sector.
Speaker Change: As a final comment we expect the relative Q1 market slowed down but remain optimistic about the medium term prospects of the dry bulk market.
Speaker Change: The favorable supply fixture stricter environmental regulations and recent steps by the Chinese government to stimulate the economy.
Speaker Change: In the periods of increased geopolitical uncertainties, we remain focused on actively managing our diverse cupboard fleet to take advantage of this advanced that's sort of emerging market opportunities and continue creating value for our shareholders.
Speaker Change: Over to you operator.
Speaker Change: [noise].
Speaker Change: Thank you.
Speaker Change: He would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: For me should tell will indicate your line is in the question queue.
Speaker Change: You May press star two if he would like to remove your question from the queue for.
Speaker Change: For participants using speaker equipment, it may be necessary.
Sorry to pick up your handset before pressing the star Keys. Our first question is from Ahmar Yep Yep.
Speaker Change: Jefferies. Please proceed.
Speaker Change: Thank you. Thanks, operator, hey, guys good afternoon.
Speaker Change: Oh, Hey, a couple of questions, maybe just first off on the dis synergies you're realizing following following the merger with Eagle you've got 9 million. So far through the third quarter can you talk a little bit about where you think this starts to evolve from here I know the initial target had been or maybe than the existing target.
Speaker Change: We used to be $50 million achievable within 12 months to 18 months do you feel that you're on pace for that does it happen sooner and is there any more that can be extracted do you think.
Speaker Change: Thank you Omar this is Nicholas.
Speaker Change: Focusing on Q3, where you see the $6 5 million of synergy sales for the quarter.
Speaker Change: It gives a pretty good idea of what should be falling on the consecutive quarters and throughout 2025.
Speaker Change: Spectation means that this threshold.
Speaker Change: Cort, you should improve especially as we're kicking off with efficiencies on a crew changes, which has been unexpected exercise and we need to correct.
Speaker Change: And Drydocks.
More efficient expenses, so I think we're on target and hopefully we'll be reporting.
Better numbers as well on a Q4.
Speaker Change: Yeah, and just to add you know the.
Speaker Change: Yes, the synergies are at 26 million annual run rate already and you know where.
Speaker Change: We've got sort of four quarters before you know we expect it to hit the final run rate. So I think we'll be there.
Speaker Change: Probably.
Speaker Change: Yeah.
Speaker Change: Alright, thanks, very much and just to.
Speaker Change: Make sure I hear it correctly, probably like the synergies that are to be realized from here and that is sort of a bigger ratio or a bigger amount or are on the operating cost like the vessel opex on the dry dockings.
Speaker Change: Well when I say millions drydocking days yeah.
Speaker Change: The 26 million run rate is only opex and G&A on top of this you should not the dry docks that may cause I made reference during the presentation. We did not have any dry docks on the eagle bulk fleet during the third quarter. So the figure that you can see there of $6 5 million includes only opex.
Speaker Change: G&A and interest expense savings for this specific quarter.
Speaker Change: Oh, okay.
Speaker Change: Thank you and then I guess.
Speaker Change: I guess, it's still early days, just one quarter, especially post merger what do you think and this is a modeling question, but what do you what should we be modeling for G&A on say an ongoing basis.
So Oh my God this is seamless.
Speaker Change: The figure that we.
Speaker Change: We have.
Speaker Change: Actually they split about rehab in the AR for the third quarter for the.
Speaker Change: Eagle bulk.
Speaker Change: <unk> excuse me back office G&A is a 17.7 hundred per day per vessel.
Speaker Change: So we have managed to being significantly lower than the figure.
Speaker Change: Uh Huh Eagle hard during the last quarter of operation.
We expect that as we move ahead, we will be in a position to further reduce our the office expenses and head count expansion so far.
Speaker Change: Oh Stamford.
Singapore and bring it closer to the figure that often so the Austin chalk has had the op two <unk> last quarter.
Okay, great. Thanks, and just a final one on my end up more market.
Speaker Change: More market color and Petrus you discussed this a little bit, but just wanted to get maybe a bit more flavor or feel for how you had been seeing this market develop recently you know clearly case have been the outperformer really all year.
Speaker Change: And even recently, even though there's been some volatility case, that's definitely been farmer, but the sub cape seem to be a bit stuck and just wanted to see if you could maybe give a sense of what's driving that divergence.
Speaker Change: Hi, Omar.
Omar: Yeah, well actually vacates have been doing okay for the quarter. They havent been doing that great. Because the average for Q4 has been 20800 and it was last week and a couple of days ago that actually last week that you'd be extremely well.
But the average has been 20800.
Omar: That.
Omar: Sure.
Omar: And also then it's not just the smaller sizes are the Super IMAX average has been about 14 and a half thousand. So EP is actually the problem is actually we've the panamaxes.
Omar: And.
Omar: It's a bit surprising because if you look at the problem of Panamax epic quantities.
Omar: That had been carried during 2024, they have been nine 3% in tons higher than our than the equivalent last year. So actually I was wondering and I had the discussion with our analysis Department.
Omar: And they're reasons of Oh, the falling on the Panamaxes are as follows first of all the supply is three 4%.
Omar: Which is.
Omar: They're relatively high side, 3.4% already.
Omar: Than a big problem has been the reduction of Oh congestion.
Omar: On the Panamax side more.
Omar: Most of the reduction in congestion that's been on the on those vessels.
Omar: Then it says problem has been the fact that 42%.
Omar: The additional tons this year.
Omar: <unk> been Indonesian coal to China.
Omar: And this is as you know this is a very short distance.
Thereafter, Brazil decreased their corn exports by 7 million tons compared to last year and that's a long that's long distance, although Argentina actually increase theirs. They do a lot of that on our own small on our super vessels, where Brazil exports.
Omar: Mostly on the Panamax is therefore, the decrees affected the panamaxes.
Omar: And then of course, the opening up of the Panama Canal didn't help a lot.
Omar: Russia exporting less grains from the Black Sea.
Omar: There was a number of Panamax doughnuts are released.
Omar: From the reduction in the Chinese coastal trade, so all of that actually conspired in reducing our actual demand in ton miles for for the Panamax sector.
Got it perfect. Thank you very very clear and very helpful. Thanks, guys. That's it.
Speaker Change: Thank you Omar.
Speaker Change: Our next question is from.
Speaker Change: Ben Nolan with Stifel. Please proceed.
Ben Nolan: I appreciate it and thank you and by the way that was it.
It was a very comprehensive answer there Patricia M. So I appreciate that it's helpful to me.
Speaker Change: The I did have a couple of questions, though our first sort of following up with you know the market trends and so forth I was curious if you have.
And appreciating that you talked a little bit about sort of the impact of the election and change in administration in the United States, but have you seen any change and and customer activity. Yet is there is there any sort of.
Speaker Change: Front running of a potential tariffs or or anything of that sort.
And maybe is that something you would expect are a problem or not.
Speaker Change: Well actually a hybrid.
Speaker Change: Actually we have not seen much yet.
Speaker Change: But we do expect to see some short term boost in trade.
Speaker Change: Because of what people are afraid is coming.
Speaker Change: And we have a view about what's.
Speaker Change: What's going well what the Trump effect is going to be if you want I can I can talk about that.
Speaker Change: Sure.
Speaker Change: Okay. So.
So.
U S trade U S bulk trade actually.
Speaker Change: It's not huge.
Speaker Change: It's a U S trades about on bulk is about 5% on exports and 2% on imports. So there is going to be a relatively at a relatively small direct effect.
Speaker Change: But oh.
Speaker Change: What is going well the actual effects, let's say, let's take tariffs to begin with.
Speaker Change: So if if there are big tariffs on China, what will happen is that China will import less from the U S and will are important more from a south America. So that is going to create longer distances, and we will probably more important.
We'll create more congestion because the south American imports are perhaps less efficient than the U S sports and also there's going to be more demand from the same sports so I think that.
Speaker Change: I would consider that would be a positive effect.
Speaker Change: Also such tariffs.
Speaker Change: Believe will stimulate China.
Speaker Change: To boost their economy.
Speaker Change: And I think as a counter measure so I think that May also become a positive are a result of us had status.
Speaker Change:
Speaker Change: And third the point of tariffs would be that a negative point would be that it is.
Speaker Change: Oh boy that it will create a will have a negative effect on the world economy are.
We cannot evaluate that right now, but we believe there's going to be less trade overall at the end of the day.
Speaker Change: Specifically, we believe that our paths will <unk>.
Speaker Change: Influence.
Speaker Change: And staying there ships more than anything else.
Speaker Change: Because there's more <unk>.
Speaker Change: That's trade to the U S from China.
Speaker Change: And if that happens if there's a reduction in trades.
Speaker Change: On the container ships that will then affect our supermac specials, because when a container ships are doing very well there is a cannibal cannibalization of our commodities from container ships to a super amongst vessels.
Speaker Change: Now another effect of the Trump.
Speaker Change: The Trump policies could could be that out of the Ukraine War stops.
Speaker Change: And that had created inefficiencies up to now, but we think here that Europe will not give up their sanctions right away. So that was the that will probably continue and hopefully theres going to be reconstruction in the Ukraine, which would be a very positive thing because that would create also.
Major congestion and we think there's going to be more exports from a both from Russia and Ukraine from the Black Sea. So we consider that as a positive as well.
Speaker Change: Now what could be a big negative.
Speaker Change: It would be the fact that I mean, you saw I think are worth at least I saw that Iran is kind of retracting on their on their a nuclear.
Speaker Change: Plans as far as creating nuclear weapons is concerned and I think that this probably has to do with a certain fear over what.
Speaker Change: Mr Trump might might do.
Speaker Change: But a side effect of that could be that the Iranians might stop supporting the hoodies and.
Speaker Change: And if that happens it's a potential that the red Sea will open and if the Red seal opens that is not going to be a positive for for shipping. We all know that a big percentage of vessels actually go through them.
Speaker Change: The Cape of good hope and are therefore ton miles increase.
Speaker Change: And then final and the final point I think that the Trump administration would probably Oh.
Speaker Change: Affects the dollar it would probably strengthen the dollar which is not good for commodity trade and might reduce oil prices, which is not good for vessel speeds. So.
Speaker Change: Overall, there are positives and negatives.
Speaker Change:
Speaker Change: We actually see more positives.
Except if it leads to an opening up of over there you'd see that would actually balance.
Speaker Change: The words and negative.
Speaker Change: Yeah that was that was a lot more than I was counting on very helpful. I appreciate it.
Speaker Change: Okay.
Speaker Change: I hear you would that you would ask the question. So it was prepared.
Speaker Change: Yeah.
Speaker Change: These are so changing gears just for my second question you guys have been implementing in and spending money on the the energy saving devices I am curious now that you've had them all here or there there's quite a number of them.
Speaker Change: That are in the fleet had been using them have you have you done any postmortem at all in terms of figuring out what are your actual return on the investment has been and you know where.
Speaker Change: What your excess.
Speaker Change: Excess cash flow is relative to vessels that they don't have that equipment.
Speaker Change: Hi, Ben this is Nicholas.
Speaker Change: We are trying to figure out what is the answer for the question before we install them. So it's pretty much doing a module testing before we install anything and importantly, we do see trials on every ship that is fix it. So we have actual numbers that we count on and we make a forecast on that basis the show.
Speaker Change: I'm sorry, the repayment period is anything between two to three years, depending on the measure.
Speaker Change: Which ranges from dots, all the way to change and propel us.
Speaker Change: And the efficiency we get.
Speaker Change: As Preston is there anything between 6% to 10% depending on the combination of technologies you use.
Speaker Change: Okay, and then in there haven't been any any variance relative to sort of what you had modeled and tested it's come in as expected.
Speaker Change: It is coming as expected because we did not install anything unless we've run the calculations that mathematical calculation was behind it.
Speaker Change: Fact beyond of course, getting better consumptions and burning less fuel. So we know that the repayment is quite specific is that the CIA ratings over the vessel improves once you fix the.
Speaker Change: The devices. So we follow a very careful approach when and what to install some ships would just leave out but the vessels that.
Speaker Change: Require an upgrade to remain competitive until you have a much more clear picture on the <unk> reduction rate post 2026, or fuels or retrofits, we prefer to keep everything upgrades to remain competitive and it seems to be.
Speaker Change: Working that's why you see us continue with the plan.
Speaker Change: Got it okay very helpful. I appreciate it thank you.
Speaker Change: Thank you and.
Speaker Change: Our next question is from Chris Robertson with Deutsche Bank. Please proceed.
Hey, good afternoon, everyone.
Shout out to all mine Denver taken most of the I think good questions there.
Speaker Change: Wanted to follow up on Ben's questions related to the energy saving devices, but noticed you had mentioned.
Speaker Change: <unk> you're around the use of Biofuels.
Speaker Change: I'm wondering if you could speak specifically on that if that's biodiesel if that's for us.
In the secondary of tanks in certain areas I guess just in Europe.
Speaker Change: Kind of the economics around fuel and the availability in terms of where you could.
Speaker Change: Pick that up in the bunker.
Speaker Change: Hi, Chris This is harriss.
Speaker Change: So while we are looking at to Biofuels within the scope of a purely your maritime regulation, which basically requires that we reduce the carbon intensity of the shows that we burn.
Speaker Change: It is a it is a there is a pooling mechanism in this regulation, which basically enables us to use biofuels on a few vessels in this way generate credits for the remaining of the vessels, which trade in and out of Europe. This regulation is relevant for our trade in and out of European imports now where we are.
Speaker Change: Get them same discussions with bankers suppliers at the moment. The biofuel. We're looking into is be seriously with these are the most available and are the most tested to ban in Arlington rooms that is availability for the quantities that we expect we will need in order to comply with Everglades.
Speaker Change: And for 2025.
Speaker Change: Now a what a what maintains the landscape here is the global regulations that are expected to be decided within 20 to 25 to come into effect until seven with at that point in time will it affect the entire globe. So whilst we see relevant measures at a global level. So.
Speaker Change: This means that we will have to reduce carbon intensive they shouldn't be burden in a global date. These will required additional quantities of biofuels. So this is the list of Dallas will be sometimes that's have been noteworthy for 10 25, we do not expect to have difficulty in sourcing the bias that we need to comply with regulation.
Speaker Change: Okay. That's helpful and just as a follow up to that I guess as it relates to your fleet, but essentially the broader fleet are there any tweaks or upgrades to your engines are just engines in general across the fleet that would need to be done in order to burn the biofuel.
Speaker Change: No no.
Speaker Change: <unk> sat already tested and we can bring them in or entering rooms without any further modification.
Speaker Change: Yes.
Speaker Change: Yes, it's basically Saturday, 70% fuel oil right and 30%.
Biodiesel and that makes work.
Speaker Change: Hey, Michelle is there any.
Speaker Change: Additional maintenance required and burning that type of fuel does that create any issues down the road wherever the increased costs anywhere.
Speaker Change: What you have to use the right lubricating oil.
Speaker Change: And Nicole may be more familiar with that than I am.
Speaker Change: But I think that is.
Speaker Change: I think basically as long as you burn it relatively quickly after you buy it.
Speaker Change: Well I think it can go bad.
Speaker Change: You leave it a long time.
Speaker Change: Yeah, Hi, Chris This is Nicos <unk>.
Speaker Change: Tammy scores because the lifetime of the pure whilst we keep it on board. However is this is intended for the European trade as high as mentioned we've done our work in terms of the frequency of calls in Europe.
It has a pretty good idea of what Tom who will require to comply with purely you, especially after the legal merger, where we have a lot more suppressed and these are the shifts of the calling seven leading to Europe, but we don't expect any difference on operating expense maintenance or any sort of.
Speaker Change: Damages to be done with fuels, it's pretty safe to use and we've tested it so where we're good.
Speaker Change: And then Chris that this is just a follow up for your modeling purposes. These are costs that are through our charter parties. We are able to pass on time charters. So this wouldn't be extra costs for Starbucks.
Speaker Change: That's good to hear okay. Yeah I appreciate the answers. Thank you very much.
Speaker Change: Oh.
Speaker Change: Our next question is from Bendick Fulton Etfs with Clarksons Securities. Please proceed.
Speaker Change: Thank you so.
Speaker Change: At least on our numbers the type of market seems to be pricing in quite a discount a two two secondhand values. Your stocking included.
Speaker Change: So I would love to hear your thoughts on the kind of situation in the S&P market.
Speaker Change: You mean, the what we think where we think prices will move.
Speaker Change: Yes.
Yeah.
Speaker Change: Well, you know prices react to chartering rates, but so therefore on the smaller vessels will probably see a downside for as long as they're not doing as well, especially on panamax.
Speaker Change: Hum.
Speaker Change: I'm on the supra.
Speaker Change: As well probably because they follow panamax is to a degree on the capes for her.
Speaker Change: Capes the picture is a much better in the sense that.
Speaker Change: Their book is it like seven 4%, which is very low and then there is expectation that there's going to be longer.
Speaker Change: The longer routes the trade going forward for more more iron ore from Brazil.
And more bauxite from West Africa, and later on more iron ore from West Africa, and therefore more ton miles so I think that the capes they.
Speaker Change: <unk> will be more resilient and let's not forget that Ah theres not too much availability nine four new buildings, so people will necessary to turn to secondhand and that will probably underpin prices to a degree so overall bigger vessels not the huge issue.
Speaker Change: Probably more of a problem with a panamax for as long as they're weak.
Speaker Change: Yeah.
Speaker Change: And I guess, it's slide to follow up on blocks. One you did mentioned the softness in panamax relative to.
Speaker Change: The adult segments do you see that are more.
Speaker Change: More of a structural thing or do you expect it to be temporary.
Speaker Change: Yeah.
Speaker Change: Yeah, well, what do Panamax as Carrie Panamaxes carry our grains and cone.
Speaker Change: So it will depend on what happens with the base to these two cargoes, we think that that's.
Speaker Change: On the grain side, there's going to be more trades going forward on the cold side.
Speaker Change:
Speaker Change: The long term the long term.
Speaker Change: In the long term, it's going to be less coal trades, but I think that in the short term misses and especially with the Trump transition that might not happen. So.
Speaker Change: And of course, as we said because of because of the need to to use a higher quality.
Speaker Change: Ingredients in our steelmaking, which sees our iron ore and coal.
Speaker Change: And those are mostly sits.
Speaker Change: Situated.
Speaker Change: In the Atlantic, we think that the long haul will remain so long haul is is more important than our than no.
Speaker Change: Then tons themselves so.
Speaker Change: I think that it will revert.
Speaker Change: To a better market going forward of course, let's not forget that panamax. The Panamax order book is the highest at around I think 14 14.
Speaker Change: 14, 1% and that is not going to help a lot.
Speaker Change: So overall.
Speaker Change: On the trade side, we are positive for the medium to longer term.
Speaker Change: Oh, the panamaxes, but as I've said before we're more positive on the capes and the suppress.
Speaker Change: Depending on what happens with the Red Sea and with container ships.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question is from claim at Marlin <unk> with value Investor's edge. Please proceed.
Speaker Change: Hi, good afternoon. Thank you for taking my questions.
Most of that's already been covered but I wanted to ask a bit about your fleet strategy going forward. You know have 10 vessels chartered under long term agreements could.
Could you talk a bit about how you're seeing on the trade off between paying tariffs.
Barristers bagging.
Speaker Change: When you think about renewing the fleet, especially considering there's somewhat elevated us about issuers don't care about before on the meat side segment.
Can you please repeat that.
Speaker Change: That charter versus what.
Speaker Change: So I'm, sorry, but I think versus what you're seeing there.
Speaker Change: <unk> purchases that castles.
Speaker Change: I I I think Jay.
Speaker Change: Thanks Ross.
Speaker Change: Karen.
Speaker Change: The size.
Speaker Change: Differences and so on but I think one thing to be clear about is that with our share trading below you know net liquidation value of hard assets.
We're not intending to buy big fleets and vessels for cash or to place large new building orders for cash.
Speaker Change: Yeah, we we understand that with with the share trading you know basically below the.
Speaker Change: Net liquidation value.
Speaker Change: Shareholders are looking for us.
Speaker Change: If we're going to make.
Speaker Change: <unk> investment in ships it should be basically buying our shares.
Yeah.
Speaker Change: So yeah, that's the near term.
Speaker Change: I think for the longer term, obviously, we'll have to watch.
Petros Pappas: Renew the fleet and Petros, maybe you want to talk to that subject yeah yeah.
Speaker Change: On the on the on purchasing of vessels as Amy said exactly.
Speaker Change: On chartering in vessels it will depend on pricing I mean are we the vessels that we have chartered thing.
Speaker Change: Surely we did them in are extremely.
Speaker Change: Good levels for us.
Speaker Change: After that when one when the market improves they went up much.
Speaker Change: They were up like two or $3000 per hour per day, and therefore, we stopped doing chartering in if the market slows down and ideas fall to previous levels. Then we'll do more of that we have very very good relationship with our Japanese owners and.
Speaker Change: I'm sure that they appreciate the strength of our company and.
Speaker Change: And the good cooperation that we always had on the chartering deals and I think that we will do more of them, but at prices that make sense.
Speaker Change: At charter levels are very high.
Speaker Change: Thank you that's very helpful. Thank you.
Speaker Change: Thanks for taking my questions and congratulations for the quarter.
Speaker Change: Thanks, a lot thank you Kevin.
Speaker Change: We have reached the end of our question and answer session I would like to turn the conference back over to management for closing remarks.
Speaker Change: No further remarks, operator, thank you very much.
Speaker Change: Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Speaker Change: Thank you bye bye.
Speaker Change: Cool.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yes.
Yeah.
Speaker Change: [music].
Yeah.
Speaker Change: Okay.
Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].