00:00The stakes are incredibly high for you because we have these retaliatory port fees put on by China.
00:05The Chinese special envoy said that it will be addressed in the talks between Xi and Trump.
00:10Are you optimistic that they'll be taken off or some sort of agreement will be reached?
00:15I'm optimistic. You have to keep in mind that there are two sides to this because the U.S. did it through USTR to Chinese companies,
00:22which is really what started this the ball rolling.
00:24And then over Columbus Day weekend, the Chinese put port fees, extra port fees in place on U.S. companies.
00:32The caveat to that, which we're very happy about, is that even if you're a U.S. company and you have Chinese built ships,
00:40you can go in without any extra port fees. And 85 percent of our fleet are Chinese built.
00:46So it actually wound up working out OK for us.
00:49But we still have, obviously, the underlying business to worry about.
00:54And I wonder how the effect has been of China buying no soybeans from the U.S.
00:59They're getting them from Argentina. They're getting them elsewhere. Right.
01:01We're expecting an agreement on those terms as well. And that's a huge business for dry bulk shippers.
01:06It's a very large business for dry bulk.
01:10Last year was, I think, 13 billion dollars.
01:12You have you have the exact right number that China bought from the U.S.
01:16China has been buying a lot from Brazil and Argentina.
01:20They have been stockpiling. So I think the question, it seems that there's no doubt there is going to be a deal reached on the soybean front,
01:27which will obviously be very beneficial for U.S. farmers.
01:30And the timing of it, we're just starting to get into soybean season, so to speak.
01:36So the timing of it is very good.
01:39The question is, do they buy soybeans this year or do they push it off into next year because of the stockpiling that's been done?
01:46I think that's in my mind, that's the real question.
01:49Well, for this Trump administration, a lot of the uncertainty has been a feature, not a bug and something that they want to use to their negotiating leverage.
01:57For you, the uncertainty isn't great.
01:59How are you making decisions about shipping routes, what you do with your vessels when it feels like week by week, sometimes day by day,
02:06the decisions from the Trump administration and the Chinese are changing?
02:10I can tell you we are changing our short term strategy almost daily because of these things.
02:14But shipping, shipping always finds a way.
02:18We always find a way to work around disruptions.
02:22I can't remember a period in my career when we've had so many disruptions, the Red Sea, the Russian-Ukrainian war, the retaliatory port fees from China.
02:36You can go over to the oil tanker side and look at what's been happening there with sanctioning the two largest Russian oil companies.
02:45That's obviously causing disruption in shipping in general.
02:48So, yes, we are spending a tremendous amount of time on pivoting almost every day.
02:53And the International Maritime Organization wants to push a net zero framework.
02:58The U.S. is pushing back against that.
03:01How does that play into what are actually pretty low fuel prices right now, right?
03:06Yes.
03:06And the IMO, you know, they postpone that decision for a year and based on a lot of pressure from the U.S.,
03:15but also from China and Saudi Arabia.
03:18And, you know, our view is we have to get to an alternative fuel.
03:23I think the big question becomes how quickly do you do that because there just is not infrastructure in place.
03:31But ultimately, we think it will come.
03:33We just think it's going to be postponed at this point.
03:35A lot of these things when new expenses are coming up, whether it's thinking about kind of restructuring what fuel you're doing,
03:41new fees from the USTR, from the China side, how do you think about those price increases, what you absorb and what you pass on?
03:47We pass it on.
03:48And I can tell you this is one of, just going back to the IMO, that was one of the concerns that the U.S. delegation had
03:56because alternative fuels are more expensive, the assets to build are more expensive,
04:01and most likely that would get passed on to the consumer.
04:05In Europe, there is a carbon tax system, and we have been using biofuels as well to have carbon credits,
04:16but we've also been passing on taxes where we've incurred them.
04:21You have lived through the, and Genco has lived through the pandemic, right,
04:26the ever-given in the Suez Canal, the Red Sea.
04:31Now you've got tariffs, and you've got the carbon issue, the Panama Canal.
04:38I mean, does supply chain, does shipping ever get back to normal?
04:42Is there ever a time where you can just kick your feet up and say, like, smooth sailing from here on out?
04:47Well, I can tell you I've never kicked my feet up in shipping.
04:50But hopefully things are resolved a little bit more, I think.
04:54But this period has been intense, right?
04:56Like I said, I've never seen anything like it in my career.
05:01And, again, that's the nice thing about shipping.
05:05There are pivots, there are workarounds that you can do, which we've been, you know, extremely focused on.
05:10Well, just to that point, let's say an agreement is hashed out between President Trump and Xi
05:14that restores soybean purchases, that helps with some of the retaliatory port fees.
05:19Does this industry go all in?
05:21Or do you think that there's still some hesitancy and some stickiness
05:24to the rerouting of shipping that has already happened?
05:27Do you think that this is an industry that's willing to just say, okay, we have the all clear?
05:31Well, so what's – no, I don't think we'll ever have the all clear.
05:35I just don't see that.
05:36And I think the Red Sea issue, it all sounds wonderful to think that that is going to open up soon.
05:42But I can tell you we're going to be very hesitant before we do anything.
05:47We're really going to have to wait and see the results of that.
05:51But shipping in general is setting up very nicely from the supply side.
05:57And if you look at dry bulk shipping, 10% of the fleet is 20 years or older,
06:03so getting very close to the end of their useful life.
06:05The order book is only 10%.
06:07So it's very, very low.
06:09And building ships today, you're talking about 2,029-type deliveries
06:13because all the bursts have been filled up.
06:15So aging fleet in dry bulk, for sure, in other sectors as well.
06:21And scrapping will have to occur.
06:23And ultimately, the fleet will have to be replaced.
06:26But that's a little ways out.
06:27So I think we have a few good years here.
06:29What do you think about fuel prices?
06:30I mean, I look at, on the terminal GLCO, and I'm just looking at crude,
06:34and obviously you're using diesel and some big heavy fuel that I don't even know about.
06:39But the trend is down, right?
06:42Definitely.
06:43Yes, definitely.
06:44I mean, look, we've seen a spike in oil prices lately.
06:46So I assume that's going to transfer into bunker fuel, just like diesel.
06:51But it does seem that OPEC is producing more and more volumes,
06:57which is keeping prices lower than maybe they would have been otherwise.
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