00:00What is driving the unseasonably strong start to the year? So we believe there's actually been a fundamental shift in
00:07the supply and demand balance.
00:09We have had a strong bauxite trade coming out of West Africa, but iron ore in its normal, seasonable fashion
00:16has come off a little bit for January.
00:18But because of the lack of ships and new tonnage coming on, freight rates have remained nicely elevated in the
00:25first quarter.
00:26And again, we're very optimistic about this year because of that very positive supply and demand balance.
00:33Why hasn't supply picked up? I mean, if you're an enterprising shipbuilder, wouldn't you start building like gangbusters right now
00:40as rates come up?
00:41And they are, but all the slots are filled. So if Drybulk wanted to order today, it's really 2029 when
00:48you could take delivery of that ship because they're filled up with container ships, they're filled up with tankers, they're
00:54filled up with gas ships.
00:55So we're in a very interesting situation where we have a historically low order book at about 11 or 12
01:03percent of the existing fleet.
01:04But there's 11 percent of the fleet on the water that's 20 years and older.
01:10So anything new coming is really replacement tonnage for the older fleet.
01:15So I know because you say forward rates 2026 look to be the strongest since 2021.
01:19It sounds like everything's moving that way. Like for us to get there, if that's the shipping supply demand dynamic,
01:27it sounds like not much needs to change in order for you to succeed on that level.
01:30Not much. And what's again, so we talked about the supply side, but what's interesting is there's still demand growth
01:36volumes to come in the West African bauxite trade.
01:40But you have Simundu coming online, which is a very large iron ore, mostly Chinese owned, that will begin.
01:49Well, they actually begin. They did their first shipment in December of last year. But that is expected to ramp
01:56up over the next two or three years.
01:59And we can actually put numbers on it and we can look at it in terms of there is there
02:05are more than 200 capesized vessels that are needed just to support that growth in bauxite and iron ore that's
02:12coming.
02:13Speaking of China, President Trump had said that this current season China is committing to buying some eight million tons
02:18of U.S. soybeans.
02:20Have you seen any of that pick up in Chinese demand?
02:22We've seen it pick up. The Chinese demand is interesting because if you go back to 2021, they were equally
02:29buying from the U.S. as well as Brazil.
02:32Then over the last few years, they started buying quite a bit more soybean from Brazil and U.S. farmers
02:39adjusted by growing more corn, less soybean.
02:42But now that the Chinese have come back into the market. And I believe they've they've obligated themselves to buy
02:4925 million tons over the next three years each year.
02:53So it's been very positive. Well, just kind of on that broader theme year or two of the Trump presidency.
02:59How have things shaped and changed with more protectionist policies from the U.S. and from other countries?
03:04So the the tariff situation we haven't hasn't really hurt us all that much. There definitely was a drop in
03:14demand in the very short term.
03:17But then it really came roaring back in the dry bulk side. Port fees on foreign foreign built ships.
03:24That was something we were very focused on. Fortunately, that was taken off the table by both the Chinese and
03:29the U.S.
03:30But it continues to be almost an everyday geopolitical situation, whether whether it's, you know, the U.S.
03:38or whether it's the Red Sea or Russia, Ukraine or or China, for that matter.
03:42So we are going to get us what we might get probably won't get. We'll see a Supreme Court decision
03:47on tariffs on Friday.
03:49If we don't get it then it might be in the summer. Right. So the outcome of that affect business
03:53at all.
03:53I don't think so. Like I said, we're we're firing on all cylinders right now and a very large part
04:00of the shipments that we're doing are going into China.
04:03So it's more China centric than it is on the on the U.S. tariff side.
04:07How are you looking at the dividing lines between commodities? Soy, coal, iron ore. What's performing well and what's performing
04:14less well?
04:15So iron ore is performing very well. And so if you go back and you look at the strategy that
04:21we were very public about in 2023,
04:23we wanted to shift our fleet in terms of buying newer ships towards the larger vessels.
04:29And the reason for that was lower order book, less ships coming on over the next few years.
04:35But there's true demand growth on the iron ore front and the bauxite front, particularly out of West Africa, also
04:42out of Brazil a little bit from from Valley.
04:45So it's like I said, it's it's setting up very positively for the rest of this year and certainly going
04:52into 2027.
04:53I hate to look for any any clouds and otherwise sunny disposition, John.
04:57But how closely are you following the developments between the U.S. and Iran and what that means for various
05:02waterways?
05:02So it's that really comes down to the Red Sea. And I there are definitely some larger container ship companies
05:10that have started transiting again.
05:12We are more cautious. And so we are still rerouting our vessels around Africa.
05:19I think it will be a little bit of time before we are confident to go through the Red Sea.
05:24The problem is it's still volatile once you're in there.
05:28You're in there for a couple of weeks. Right. So it's not something where you can just turn around and
05:34go the other way.
05:35The Red Sea.
05:35You got.
05:35The baby.
05:35Today'sCom.
05:35Whoa.
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