Marine Money week in New York is now in its 36th year, one of the largest annual gatherings of the people who close the big deals that finance global shipping. If one wants to know how trends in global shipping and the financing tools for it are evolving, this is the place to feel the pulse of the industry.
Evangelos Marinakis, founder and chairman of Capital Maritime &Trading Corp. was present at this year’s Marine Money Week and had a very interesting discussion with Michael D. Tusiani, chairman emeritus of Poten & Partner and member of the advisory board of Columbia University’s Center on Global Energy Policy.
This discussion offered Evangelos Marinakis the opportunity to share with an audience of shipping and finance executives and experts his thoughts on energy demand, the importance of LNG, the prospects of ammonias as propulsion fuel, new environmental regulations and their costs, and on how he divides his time between shipping, his greatest love, and football, his big passion.
Optimism about energy demand
After congratulating Evangelos Marinakis for the honorary doctorate he recently received from the Massachusetts Maritime Academy, Michael Tusiani asked him about energy demand and, in particular, whether we have reached peak oil demand. Marinakis responded: “we strongly believe in oil demand and gas demand. What we have seen recently is that AI technology and chips need more energy and water. I think that energy and water are becoming very valuable for the new world that is coming. Therefore, we are optimistic and we think that the demand will be growing and, our tankers will play a significant role in the carriage of oil. We also go a step further and we invest in dual-fuel LNG tankers, because we believe it is worthwhile to pay the premium: 20 million – 25 million. It depends on the type of vessel. So, we can protect as much as we can the environment as well”.
Asked why he has kept his fleet nearly 100% in the spot market as compared to getting some term coverage, Evangelos Marinakis explained, “since I started in the industry, I think that one of the strong points was our commercial strength. We do it ourselves and on many occasions, we charter ships to cover cargo commitments. I used to do that when I first started in dry cargo. Having a company with a substantial number of vessels, I think you should be able to do it yourself. Of course, on some occasions that we feel that we can have a period fixture with an oil major, with a major industry, we consider it. But just for the sake of it, no, we do it ourselves.”
Regarding asset prices, both second-hand and newbuildings, Marinakis stressed, “we have seen increases in prices, but if you compare them back with historical highs, still we haven’t reached the top. Plus, I think that if someone studies the orderbook in tankers, especially on the bigger ones, they are underbuilt and I think that the prospects are there. From what we see from other sectors, like container vessels, and also for the bigger bulk carriers, in the future we think that the prices will be firm for the years to come and we take a view that we are not to face in the near future reductions in prices.”
Why he has chosen LNG?
When Michael Tusiani raised the issue of alternative propulsion fuels, Marinakis responded that “what we need to consider first is that if we choose LNG, methanol, or ammonia, the infrastructure should be there, but also the commodity’s price and safety. From what we have seen so far and according to experts’ reports, we go for LNG. We wonder, is there the infrastructure? Most of it is there and of course, it’s cleaner from oil. As far as the propulsion and engines are concerned, they have been tested, and we have seen that they work. So, I find it more conservative to go for LNG right now than another propulsion fuel technology”.
When asked why he has been so “bullish” about LNG, continuing to invest in LNG newbuildings as prices remain high and with an orderbook that is about 50% of the existing fleet, Evangelos Marinakis insisted on the positive prospects: “We see that there are a lot of projects that have been delayed, but eventually in 2027, 2028, 2029, we will see them coming up. Moreover, a number of turbine vessels are still trading, but they should be replaced eventually. I think that this process has delayed. I was expecting it to come earlier. But, when markets make sense, it is difficult for an owner to scrap a vessel that still makes money or has a low value in the company’s books. But we think that considering the difference in technology, in the speed consumptions and, in the overall calculation of carriage, LNG with the new technology vessels makes a lot of sense. So, I think that, still prices make sense, taking into consideration what the chartering market is, in order to invest more.”
Regarding newbuildings prices he insisted “I don’t know for how long we can see them going up, but definitely I don’t see them going down.”
When Michael Tusiani noted that Marinakis has bucked the trend of public LNG shipowners going private, by placing his LNG carriers into the public market, the founder and chair of Capital Maritime & Trading Corp. explained, “we always have been involved with capital markets, over, 17, 18 years. Even before that, we attempted to go public back in 2005. We did not accept the pricing at the time, but what we did was that we created a company with a corporate structure. The only thing that was missing was to see the price on the screen. Of course, later on, we had, a very successful IPO with CPLP. Then we had, another one with Crude Carriers, then we had a merger and then we had the second merger with Diamond S and then another one with International Seaways. So, I’m always in favour of capital markets and I think that being here in New York, Nasdaq or the New York Stock Exchange, you have access to capital, especially for vessels that need substantial amounts of money to finance. I think that we are in the right place and I fully support it.
The prospects of ammonia as propulsion fuel
In light of his recent orders for several mid-size LPG ammonia carriers, Evangelos Marinakis was asked about the rationale for ordering that size of vessel over a very large ammonia carrier: “First, we ordered the first LCO2 carriers of 22,000 cbm. What we wanted to make sure of is that until the time that the LCO2 cargoes are there, we should be able to trade the ships successfully as LPG carriers or Ammonia carriers. Therefore, we designed the vessels to be able to do both. In the meantime, we saw that the 40k and 45k sizes were underbuilt and the new technology of dual-fuel was missing. Consequently, we considered that it was the right time to expand in this sector. We also believe in ammonia, that it is coming in. However, the first ammonia carriers are smaller rather than larger. We have also invested in the larger ammonia carriers. We like the order book and we like it that we are among the first to order ships with the new technology of dual-fuel. For us, this makes a lot of sense.”
Regarding ammonia as marine fuel, Marinakis stressed the pertinence of the question, “because we have ordered, I think, the first Very Large Ammonia Carriers that will have ammonia engines, and still the yards and the manufacturers are trying to find the safest way and the safest method for these engines to work. We might have some delays, but eventually, we will be there. Ammonia is very clean. On the other hand, it is a dangerous cargo and you need to be very careful with it. You need to try to protect the crew. The yards and the engine manufacturers have a lot more to do, to make sure that this can work. If it works, I think that it will make a lot of sense. It is a matter of time.”
On the prospects of the containers sector
Regarding the future of the containers sector, Evangelos Marinakis insisted, “the carriage of containers is something that grows all the time. What we saw is that there have been some sizes that have not been built for many years because the market levels paid in chartering were extremely low. Some of them, the 4k or 5k TEU size vessels were even laid up because there was no demand. This was the case for many years, over ten years of a very depressed market when we did not have any new orders in this sector. So, we think now that this is needed and, of course, we went again for dual-fuel. That’s why we went ahead with lots of orders.”
Are PSV orders “uneconomic”?
Also present at Marine Money Week, Quintin Kneen, CEO of Tidewater, had earlier voiced his opinion that PSC orders are “uneconomic” because the day rate required is much higher that what can be secured in today’s market. When asked by Michael Tusiani to comment on this opinion, Marinakis responded in the following manner: “First, I think that our industry is very exciting and we enjoy it. For some special reasons. I think that the main one is that some people will see light in the tunnel, and some others will see darkness in the tunnel. Some of us are right. Some of us are wrong. This this is exciting. I respect all opinions. And we have our own. That means that we see some light in this sector, and we will go for it and we’ll go on a larger scale. I respect everybody’s opinion and I am glad that I have a different opinion many times. And that makes a difference.”
“They talk about protecting the environment but do not want to pay the premium for it”
The discussion then turned to questions of environmental protection and, in particular, the oncoming regulations by the EU and the IMO for maritime emissions that will increase the cost of delivering cargoes, especially to Europe. Tusiani raised the obvious question, whether charters are willing to pay for the extra cost. Marinakis’s answer was straightforward: “Charterers and oil majors are not willing. We hear a lot of interesting discussions, announcements, and speeches about how much we love our environment and how we want to protect it. On the other hand, we haven’t seen oil majors or major charterers pay for it.”
Despite this attitude by major charters, Marinakis believes that “eventually, the market, will allow, for a premium to be paid. On the other hand, what we are willing to do is, if a charterer is not willing to pay for it, we can accept it. However, in case it is needed to trade with LNG and have a saving from the tariffs that you need to pay to carry goods in Europe, then, we are quite happy to wait until we receive these premiums ourselves. Because we are convinced, that it is a matter of time for all this to happen. That is why we are investing in modem technology and dual-fuel vessels. Because we think it is coming and we will be there.”
Asked about what maritime sector has the best prospects, Marinakis insisted “tankers have provided the best returns and are the type of vessels that I prefer. We like shipping as a whole and in our blood shipping is a major component. Tankers are an exciting market with ups and downs and, especially during the crises when the markets fall, we try to take advantage and capitalize”.
“Football is a passion but the big love is shipping”
Asked by Tusiani about how he divides his time between shipping and football, Marinakis responded, “football is a passion”, but “the big love is shipping, so you need to balance in between.” For Marinakis “Football is passionate and more exciting sometimes but as I said, the big love is shipping and we enjoy it. You can never be bored with it. I recommend to everyone first to be involved in shipping and then in football. You have to make your money first and then spend it.”
Comparing managing shipping executives and managing coaches and athletes Marinakis stressed, “It is much more difficult to manage football players. Because you see young kids that all of a sudden scored some goals or they had some good performance and, out of nowhere, they make millions. It is very difficult for these kids to control it and to behave properly. On the other hand, you need to be patient enough to be able to cope with all of them and try to make successful moves. At the end of the day, victories dictate the results and irrespective of how well you perform if you do not win, it is a failure. Therefore, you need to make sure that you either be patient and you have either to pay more or find a way to manoeuvre to be able to compete at a higher level.”
He also stressed that football is becoming more competitive: “What we have seen in football is that you have to compete now with Saudi Arabia, with Abu Dhabi, with Qatar with big US funds that are investing in football. This makes it more exciting and more competitive. In shipping, we are used to it because when you enter into shipping, you have to compete with bigger companies and state companies. From the very beginning, you need to be able to run faster. To be more competitive, to be stronger. The whole struggle is an excitement.”
“Build relations and take responsibility”
Finally, Michael Tusiani asked Marinakis whether he had any regrets regarding his choices. The founder and chairman of Capital Maritime & Trading Corp. insisted “I have for sure more regrets about things that I haven’t done rather than things that I have done. For sure, if you were able to bring the time back, some actions would be different. Some behaviours would be different. Overall, I have no regrets. At the end of the day, I think that we have been fair with the people that we have done business with. We have some very good friends and we have done a lot of repeat business, which has helped us to grow and to grow substantially.”
In light of his experience, Marinakis offered the following advice: First, to be able to build relations in shipping, because it is a very small world and we know what everybody is doing. Also, to be there to take responsibility. When you make decisions and to support your people, your crew and the decisions you make until you are successful.”
The discussion ended with Michael Tusiani urging the audience “to congratulate Dr Marinakis.”
