Panel Recap: Follow the Money at CMA Shipping
Last week, I moderated the "Follow the Money" panel at CMA Shipping. The prevailing sentiment was one of caution, bordering on pessimism—and this was the day before President Trump's "Liberation Day" tariff announcements on April 2, which erased trillions of dollars in equity value from global stock markets.
I’m sharing a few highlights our conversation, for those who weren’t able to make it to CMA Shipping this year.
Skepticism in Commodity Shipping Investments | There exists a general wariness of investing in mainstream commodity shipping markets. Morten Arntzen candidly shared that he had been short-selling public shipping company shares in recent months and expressed regret for not having done more.
Containership Segment Concerns | Kevin Kennedy highlighted a troubling trend in the containership sector: declining freight rates charged to shippers juxtaposed with rising charter costs for vessels—a clearly unsustainable dynamic.
Opportunities in Innovation and Decarbonization | Jean-Noel Poirier emphasized the appeal of adopting a venture portfolio approach by backing U.S.-led innovation in shipping. He reminded us that the industry is inevitably progressing toward decarbonization, mirroring advancements in sectors like aviation and automotive.
Life Extension vs. New Builds | Peter Shaerf advocated for investing in life extension projects for existing vessels, rather than commissioning new builds. Given the current market's high degree of uncertainty and historically elevated construction costs, especially in U.S. shipyards, he argued that such capital outlays are imprudent.
And a few more panel highlights, specifically focused on the growing interest in the U.S. shipping sector.
Magnitude of Government Subsidies | The high cost of building ships in the U.S. implies that government subsidies need to be substantial. Morten Arntzen highlighted that the $350 million in total annual funding support for U.S. shipyards proposed by the SHIPS Act is equivalent to less than the cost of two Medium Range (MR) tankers, at today's prices.
Foreign Investment Motivations | Recent foreign investments in U.S. shipyards, such as Hanwha's acquisition of Philly Shipyard, appear driven by a desire to build government vessels, rather than commercial vessels, for the Jones Act market.
Potential in Reflagging Foreign Vessels | An intriguing opportunity could involve purchasing foreign-built vessels and reflagging them under the U.S. flag to benefit from government-supported programs like the Tanker Security Program, especially given the current administration's focus on enhancing American maritime capabilities.
