YouSaid · the spoken record

Sal Mercogliano

lines on the record: 105
first: 2022-08-25
most recent: 2022-08-25
sittings or episodes: 1
sources: podcast

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“It's ever increasing. You have dips, usually with economic recessions, 2008, 2020. All of a sudden you saw those dips happen. But it's ever increasing. And it's just because it is so cheap to move things. We've made the cost of manufacturing overseas. I did an entire video on a friend of mine who had a container of peaches. And those peaches, she was eating them in Washington, D.C. The peaches were grown in Argentina. They were packaged in Thailand. And I sat there and I said, think about that for a moment, that it was cheaper to sell peaches from Argentina on a boat halfway around the world to Thailand, packaged them, sail them on another boat halfway around the world, and then rode or rail them to a store in Washington DC than it is to grow the peaches in the United States. And that gives you an idea of why ocean shipping is so important for us.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Some of the greatest overcoming logistics problems in the world, and so much of our goods move by ship. I'll give a recommendation for two books. One is by an author by the name of Rose George, wrote a book called 90% of Everything, which is her view of how things move. She wrote it in the early 2010s, wrote on a container ship, and really saw that. And then Bruce Jones's book, To Rule the Waves, which really talks about how dependent we are on the ocean to move goods around. And the post-World War II environment that allows ocean freight to move, you know, 1950, we moved half a billion tons of cargo on the world's oceans. Last year, 2021, we probably moved 12 billion tons. And what you see is an exponential growth in the volume of amount of goods we move on the world's oceans.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“That ocean shipping is that same exact way with cargo and freight. Again, I go back to that issue, hit that Amazon button. I'm going to get next day shipping. It comes in a day. That cargo has been moving for four to six months prior to that. And that's a long logistics issue. And companies like Amazon, for example, were really innovative in overcoming obstacles. They leased ships. They brought ships into ports other than LA and Long Beach. They had ships that could offload themselves. They didn't even have to go to a container terminal. They just had to come to a dock. And they would bring a ship in with a thousand containers and offload them on a dock. They would have their own mini container yard there and truck them in and they were carrying high value, low density cargo to get out of the backlog.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“I just think it's a misconception that it's not important ocean shipping, well, you know, my stuff comes from here and everything. And in truth, the oceans are essential. I had an argument the other day about somebody about what was going on off China and Taiwan. And we were talking about the fact that, well, China can be blockaded, but it's data can come out yet. 99% of all the world's data is in these undersea cables. And I joke with students all the time if you call someone from North Carolina and Australia, how much of that is actually in the air. And it's like almost none. It's from your phone to your cell phone tower. The rest is in cables by string under the ocean there. And I think most people don't understand.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Companies that people see, they see these containers go down the road, they recognize them, but they don't know what they do. And I think that's really the key. When the colonial pipeline goes down, do we have enough tankers to move oil? Up and down the coast. That's where OSG comes in. That's where Crowley comes in. That's where a lot of these companies come in that a lot of people don't know about. So again, to put some context to this, because again, I always tell my students, you have the world at your fingertips, you have the greatest source of information available to you ever before in the internet and your phone. The question is, where do you tell good information from bad information from? Because there's so much out there. And that's one of the things I try to do with my YouTube channel.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it was huge. 2017 when Hangin Marine, for example, went away. It was consumed by the other companies. So you didn't really notice it. This is a major, I mean, it was one of the biggest companies in South Korea. Massive bankruptcy really didn't resonate too much around the world in many ways. But today, if Maresk or MSc or one of these big companies would have an issue, and all of a sudden they disappeared. Today would be massive. I mean, huge ramifications because we're pushing the supply chain to its limits. And, you know, we've seen it with cyber attacks on these companies sometimes. They're susceptible to it because they have huge networks that have to be open. And so when Mares got hit by the Napietia virus in 2017, it cost him $300 million. They were out of service for three weeks. But again, there were other companies that can move in here. But, you know, again, these are...”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, shipping is so important and it touched us all of our lives. Most things that are in front of me, including the computer, the microphone, I got via Amazon and probably did come over on a ship. Does it ever strike you as odd that there are companies whose market value is over $100 billion? It's very high. And if they disappeared, it's not like life would be entirely different. But probably the market cap of the entire global shipping industry is probably less than one of those single companies. If there were no ships, I mean, it would be game over. Things would be totally different. Yeah.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“I had somebody who would tell me that because I tend to talk when my videos go up when there's a maritime disaster. And I had one of the guys I sailed with tell me, you're the face of maritime disasters. And I said, well, I don't know if I really want that title. But it's important to put in the context so that when events do happen ever given in the Suez, ever forward, off of Baltimore, or a ship accident happens, I do like to provide the content. And more importantly, why it's important to you? Why is it important to the consumer in Iowa and New Jersey and Lithuania, in Nepal? And why is it important? And so I think it's a great opportunity to unmask that.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Where I talked about the container sector, I talked about the tanker sector. I talked about different elements in there and really make it understandable. And then I do features that go more in depth on them. But it's been really impressive. I started the channel a little over a year ago whenever given when a shore in the Suez, I had 300 subscribers and I think the day before Ever Given went ashore, I had three people watch my channel. And today I've got 46,000 subscribers and almost 5 million views. So it's crazy. It's just, I'm not used to it. People tell me you're an influencer. It's like, no. Just a history professor here at Campbell University.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“It's funny because I'm so used to teaching students, and so sometimes I get professorial on how to be careful. I kept repeating things and people said your video is way too long, dude. You're saying the same thing over and over again. It's like, well, yeah, I'm used to hammering it in the students' heads. So, you know, it's a change. It's really fascinating to me because, again, I could teach 20, 30 students in a classroom who may be interested, may not be, but I could post a video and get 20,000 hits. And it's been really fun because, again, one of the things I try to do is make shipping understanding to people and take this kind of macro view of different sectors and different areas. Every week I do a weekly news show with the ship. So I just posted one today.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“And so I think that's a lot of also hesitation by people to invest in them because I don't understand them. I don't understand how they operate. I don't understand the system. Do I find out about it? It's one of the reasons I started a YouTube channel to talk about this is talk about how these systems operate so that people would not be so detached from them.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“I'm terrible about it. I do it all the time. I can't help it. But I'm talking about investors. Be detached, be open from it. I'm a historian. I have to love these things. So I love ships to death. To me, they're one of my favorite things to talk about and look at. And again, you know, my background was I looked at, you know, I sailed them. I've looked at the history of them, but now I'm looking at how they're operating today. And I think it's a fascinating industry. I think, again, it's so outside the mainstream of so many people that they don't realize the potential and opportunity in there for career-wise, for investment-wise, to look at. But again, we keep it so detached from us. You can't go into a port. You can't really see these things.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“No, no, you have to be really. I joke with shipping guys all the time you shouldn't name your ships. You should just leave them numbers. Because they get too attached to them. They get too attached to them. They turn them into, you know. Female kind of personalities and trucking companies don't do it. They don't name their trucks. They don't name their planes. They just, you know. Just get detached from”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“And we just can't seem to get out of it. So I think the oil market has the potential, specifically gas, clean product tankers, gas and diesel, and LNG are probably the ones I'm watching the most right now and see the most potential coming in. I just could not tell you when I think it's going to kick because it just doesn't follow a lot of sane patterns at times. And again, a lot of people made money early in 2020 when they were in tankers and all of a sudden it got in and they didn't get out fast enough because things bottomed out very quickly. And that's the thing. I'd be willing to get out of it because again, it tends to spike and then come back down.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Get out of it. But I think they're in a pretty good position right now to see this. These global disruptions. And that's the other thing to remember is we're still in COVID and COVID created an ocean tsunami of disruptions. We haven't really seen this since the World Wars where ocean shipping has been disrupted as much. We've seen isolated ones, hurricanes, political events, things happen. But the problem is the pool is pendulating with waves right now. And all these other events get thrown in the pool and they keep the waves going. They're subsiding. They're coming down. They're not as high as they were, but they keep coming in. And I use a phrase, you know, the Black Swan event used to be the one time event. Now it's a swarm of black swans dive bombing us.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, you know, if you watch tankers, and I mean, literally watch them going on like an app like Marine Traffic and you look at, you know, you will see the farm of tankers sitting off Singapore, fully loaded, ready to go, and they're just waiting for the prices to spike, and then they're off and running, and they go. You've got enough to keep the system up and running, but a lot of smart companies are prepositioning low-cost oil at places and waiting for that spike to come up. So, yeah, the seasonality is, again, if you're playing the stock just to make it in a quarter, then, yeah, you're watching the seasonality. But in the long term, again, if you look at tankers historically, they've never been lower than before. I mean, they're at this massive low that they're coming out of. And I think we're starting to see them tick up. I mean, the stories are out there that this is the best tanker market in 25 years, and everybody's talking about it. I think you got to be careful about the hype about that too, because again, you got to know when.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“There's going to be a fall. The question is does it come in the spring of 2023 or do we see it later in that year? And that's going to be geared on the recession. That's going to be geared on the world. If you follow world ocean trade, it correlates exactly to the containers. So I think that one of the strongest ones are outfits like Custom Air, Atlas, C-SPAN, which are leasing the vessels. They're in good, solid positions. Returning dividends, they're just really, really good right off the bat right now because it doesn't matter if the container market falls. They've got leases. They've got chips going out and they've got income coming in whether the ships sale or not.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think, again, crude oil carriers are really one of the big challenges right now just because of that. Russia has thrown such a monkey wrench in things. There was a great story by Greg Miller over at Freightways the other day where he talks about, well, they were shipping out to Europe like 700 billion barrels a day to Europe, but now they're shipping 800 million barrels to India, for example. That's great until the pipeline comes in and then that goes away. And so crude has been just one of those tough areas to really gauge. I think containers are going to come down. I mean, I expect to see that. I think they're the most volatile in the future here.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“The amount of ore you need to move is increasing. And what we're seeing is a lot of that future is playing out there. It's like, well, let me get it from Brazil now. Well, I'm going to get it from South Africa now. I'm going to get it from West Australia now, or I'm going to get it out of Canada now. And so you're seeing a lot of that movement take place. And there's a big return back to bulk shipping. And again, it's the biggest growing sector in shipping right now. It has been historically over years. We don't see them being built right now, but you're going to see them really change here in the future once we get through this container wave. So, you know, those are kind of the companies I look at right now as really interesting to watch. And again, look at them long term. If you want to make some quick money, man, you just got to be following it really closely.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, man, it was just like, you know, and then, you know, people got off, they got back on. It's just, you know, I think there was a lot on that. But I think on the dry bulk side, too. I mean, we're seeing a lot Eagle, which is one I like to watch a lot. I think they're a great solid company. I think they have a great leadership, you know, corporate management, I think is fantastic. I think they're well placed for where they're going to be. These medium-sized bulk companies are really interesting to watch right now because, again, something as simple as, hey, we're shifting over to electric hybrid power. Well, you're going to need a buttload of copper, you know, and copper can only be hauled by these guys. So don't think for a minute, you know, I have a lot of people tell me, well, coal's going out, so bulks are going out. It's like, no, it's like.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“In a lot of you just a Hawaii, for example, get its last shipment of coal, so there's got to be a replacement for that. LNG seems to be the appeal for a lot of people because it's a cleaner burning fuel. Good intermediary fuel for right now. You know, I think the container market's an interesting one to watch. I know it's coming down, but it's going to stabilize back out again. And it'll be interesting to see what some of these container companies do. Container companies are weird because a lot of them are privately held. So you can't even invest in some of them. But when new companies come in, I think Zim has changed that model is what happens when you have an IPO like Zim come out there. Because I talk to a lot of people when Zim was doing their IPO and they were sitting there going, oh, this never going to work. It's going to never work. It's like, no, this is a good idea for them to do this. And I think I got overhyped for a long time. There was a lot of people on the Zimbaden wagon.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“I watch a company like OSG, for example, in the tanker market right now. I think they're undervalued immensely. I think there's a lot of opportunity here. There's also a government issue going on right now where the U.S. really wants to get more U.S. flag tankers in. So they're in a really good position right now, including a program that provides a subsidy to them. I think they're in a good position to really go up. And plus, they're just ridiculously low. I got to say their stock value has been undervalued. All tankers' stock value has been, in my opinion, undervalued for quite a long time. I think a lot of the product tankers are in a good position. You know, DHT, international sea waves. I think they're in good positions too to do it. I'm very unsure about the crude oil market. I think that's an issue. I think Flex LNG is going to do nothing but increase. Especially with the phase out of coal.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“You need to understand that. But, you know, if you watch it and understand it, and again, I'm really encouraged by what I've seen. You know, the question is, how do they take this money? But the X variable I keep saying out there is this technology issue. Is what happens with this? That's going to drive up the cost for shipbuilding and ship operation in the future.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“But I haven't seen it really take off yet. The other positive about ocean shipping, I will tell you, is a lot more data out there, a lot more information out there so that you can follow this a lot better. I think everything from new sources to good reporting out there. There's bad reporting out there, too. Be careful because there's a lot of people who don't understand this at all. And they make cases, and I can't tell you the number of people I heard talking about freight rates of falling off a cliff and this is the end. And it's like, you know, okay, it's not the sky's not falling here.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“To what was happening. And as I mentioned to you before, you know, the tanker market is probably one of the best for that where you're sitting there with a load of diesel on a ship and all of a sudden you see an opportunity to move it in the futures that way. The container one is an interesting one. And like I said, they've been talking about it. I know like Craig Fuller over at Freight Waves has talked about that, seen about that if something you can do. It's one of the reasons he started his outfit there was to try to read freight, kind of become like the Bloomberg of Ocean Freight.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“They've been trying to do that with containers. So the future market for containers has been trying to get started. I have not seen it really develop. It's not something I've seen really mature yet. It'd be interesting to watch, but man, I got to tell you, it's pure. There's a lot of luck in that. It's just because how do you call it? Where do you see it? Because again, the thing about ocean shipping is you can shift it so much, you know, so you can always move it around. And being in the right place at the right time sometimes is pure happenstance. And nobody really saw what COVID was going to be unless you were really attuned.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“So, you know, again, if you can afford that, that's great, but it does have to make some stops. And so there's that danger. And I think as we get better with COVID, we'll see that come back. I think what is happening right now with the cruise lines is they had put off this for so long and have tried to restart so many times. It's cost them so much money that now their debt is just, they can't hide it anymore. Too big to fail has been But they just have tried to restart so many times and they just can't seem to get it to kick right now. And again, I think it's because of the management. I'm just really fundamentally amazed that their management, which pats each other on the back all the time, failed them.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“White Star, which became canard, and that's actually a subset under Carnival right now. So the White Star and Kennard combined together, they run like the Queen Elizabeth, the Queen Mary, Queen Victoria. And they've been hitting very hard too because they tend to do these really long voyages around the world, these multiple ones. And those are the ones that they have the biggest problems with because the longer the passengers are on, the more ports they hit, the more likely you are to have an outbreak on board.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Again, I just don't understand the operating procedure they were doing. They just did not see what was coming. And I don't think you had to really read the tea leaves too much to understand that a global pandemic is not going to make a lot of people want to get on a buffet line with 5,000 other people in the near future.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Got to go into ports that are much more safer for them to go into. Once they start doing that, and again, it's going to go to top management, how it goes. Carnival is the biggest one. They've got the most cushioned because they are the biggest operator out there. They're more likely to get it. I think Royal Caribbean is in a good position. Norwegian is the one to worry about because they've just got a smaller market than everybody else and they don't have as much cush”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Concordia went ashore off Sicily, and 32 people died. This was going to have an impact on cruising because this was pure human negligence. And the fact that more people didn't die was just due to happenstance. You saw a dip in the cruise industry for about six months, and then nobody remembers it anymore. And I think COVID's going to be that way. Once you get past the COVID elements and cruise lines start doing some smart things which are starting to do shorter cruises, two, three-day cruises so that you don't ping COVID cases. You know, get them on and off the boat before anything happens. I'm serious. I think it's a smart move they're doing. What they're finding is these long voyages is what's killing them.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“And so they were just again, if you read the CLIA, which is their group that does represent all of them, you read their reports, and man, it was like, this is never going to stop being sunshine. And you read the delivery reports and ships were just bigger and bigger and more expensive and the more frills. And just nobody saw it. And so does Carnival, Royal Caribbean, and Norwegian go away? No. I mean, they're not going to go away. But what you're going to see is a fundamental restructuring of them. Again, they're incorporated offshore, so they're not even a U.S. company. So, you know, they're in Panama, Bahamas, and Liberia. They're going to bleed off ships. They're going to take substantial losses. But I do think there's an opportunity there investment. You know, when those stocks hit the lower, again, look out the five, ten years. And if you look at their past growth, you know, I would have told you in 2013 that when Costa”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Will always go on a cruise ship. Let me be clear. I love cruise ships and I will go on them in a minute. But I think they need some management. Now, what's really interesting about the cruise lines is carnival isn't just carnival. It has subsidiary lines, Royal Caribbean, Norwegian has that. And what you're going to see them do is bleed off some of these lines. If it's bankruptcy, whatever it is, what we saw them do last year was start scrapping vessels. I mean, they just took old ships out of service and sold them. But the problem with scrapping them was they weren't even getting money on the steel that they should have been getting. Just the pure tonnage of the vessel was not paying them enough money. They just had to get them off their books. And so they were running ships aground. It was a great image in Turkey of about eight of them lined up. Carnival and Royal Caribbean side by side. And the other problem they had is their order book was full. And so they couldn't back out of order.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“There's no revenue, but there was literally nothing done to prevent the loss. I mean, they didn't lay the ships off. They had full crews sitting there. I mean, at one point, there was like a parking lot off Bermuda and Bahamas that was fully staffed cruise ships with nobody on board. And again, they law themselves all the time, but I think their management has to take a hit for this because they have not done the phased, you know, coming back into service. They keep thinking they're going to put 5,000 people back on Oasis of the Sea and it's not going to happen. And they've done very little to manage that.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, they made a critical error. Let me be clear. I mean, I think they thought in early 2020 this is going to blow over. And none of them did what they should have done, which was start laying ships up because they could not foresee this happening. And they were bleeding cash. When you look at Carnival and Royal Caribbean and Norwegian and you look at their reports for 2020 and 2021, I mean, they were just hemorrhaging money. What gets me...”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Ship because you can drop it into more trade routes. If you had this huge massive vessel, you can only go on certain routes. And the container companies are starting to see that. They need versatile ships, not just these big, huge monster ships that can only be used on the Europe to Asia route.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“And they can't sell the ships A 5,000 person passenger ship. Nobody needs one of those. But the ocean freight companies are in a much better position than they've been before. And even on the dry bulk in the tanker side, I think they'd much rather be smaller because they know that when it hits, their ships make more money per ship than ever before. I don't think they're so worried about providing the supply as much as when the demand hits, they're going to make some profitability here. If you look at the tanker market, for example, one of the things it did is it bled off those really big massive ships because while they were great, huge economies of scale, they found the medium-sized vessels, what are known as MRs and LRs, medium range and long-range vessels, were the better”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Rounded economy for themselves. They're not solely based on ocean freight. So obviously if the freight falls, that's bad for them, but they're in a much stronger position. And again, this is where I think these container companies are going to be a lot different coming out of a potential recession in 2020, whatever it happens to be, because one will happen than it was in 2008. In 2008, they had so over-leveraged themselves. They're almost like the passenger liners today. If you watch the information on carnival and royal Caribbean and Norwegian, they had so invested themselves in the concept that this is always going to go up. It's never going to go down. We're going to invest in bigger and badder ships. There's no problem here. They were the real estate of shipping, basically. And now they're suffering because they can't sell enough stock to get them out from their...”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Sure. So I think the red line there is the pre COVID rates that 1,500 to 2000, they don't want to return to that. That's not what they want by any means. And so what we've seen so far is a lot of the ocean carriers beyond investing in new technologies are also diversifying themselves. Pre-2008, if you looked at ocean carriers, they owned the containers. They owned the chassis. They did a lot of the movement on and off the ship. They owned the terminals. But in 2008, when the global recession hit and they invested in these huge large ships, couldn't get rid of the ships because they would lose money if they got rid of the ships. So what they did is they divested themselves of terminals, of containers, of chassis, everything they could have. Now they're being much more rounded. You got container companies buying air freight companies. They're buying terminals back. CMA, CGM bought back the Phoenix terminal at LA, for example. So they are once again creating a much more”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“They're getting their rental fee every day. And matter of fact, if you don't drive it, that's better for them because then it's less wear and tear on the ships.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“That are not being used is infinitesimal right now. It's crazy how low it is. But as I mentioned to you before, too, a lot of ships are running that shouldn't be running. And so what you're going to see is this mass scrapping that's going to take place. So because of technology and because of the flexibility of vessels, you're going to see a lot of these vessels go out of service. And so it's going to be a big kind of circuit change what's going on. For me, the NOOs are really, for me, what I watch because, again, they're doing a smart move. They're out there leasing those vessels. They're filling in. And they were able to get some pretty good long leases with some companies back when everything was hitting they got locked into one, two, three year long leases in some cases, not just a few months. So they were in a pretty good position to be in. And whether those ships sail or not, they make money. It doesn't matter if you get that car from, you know, Alamo. They don't care if you drive it or not.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think the people who own the lease are the best ones. I mean, they're renting the ships. They are just kicking back and loving this because they've got great deals so that even if the ships come back in 2024 and 2025 and there's no one to lease them, they paid them off. I mean, they'll lay them up cold and sit there, but they'll be a demand and need for them going on. Zim, for example, started building ships because they realized, okay, we're leasing like crazy here. We need to have some ships built. And most container companies go to like Alpha Liner and you look at the list of the top container liners and they break it out by the number of ships they own versus the number they charter. And usually what they'll do is they'll have a good core fleet of vessels of their own and then in turn they'll plus up what happened in 2020 is again I could have gone in business with a rowboat and moved one container and I could have probably leased that for money. It was just if you had anything that floated it's out there now the amount of vessels that are like un”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Right, and so if you're renting a ship, obviously what you don't want to happen is you release a ship for, let's say, a month. I know that to do that, and then shipping rates explode higher, you make all this money, but then you have to constantly re-re up your contract. And I'm guessing the leasing, the person who's leasing their ship will charge higher rates. But Zim and a lot of these companies, they've leased them out for years, right? So those are profitable. So who's in a better position?”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Oh, Zim was probably the classic case of that. When you look at Zim a year ago, they only owned one ship. They operated 100, you know, but they were basically just leasing the rest of them. Because, again, they were not sure what the market was going to do. So they went to leasing firms and these NOOOOOs, as it's called, would build these ships. They would get these great deals because they would build 20, 30 ships at a time. And they're basically the U-Haul of the Sea. Basically, they just rent them out to do it. But you look at, again, Atlas, or C-SPAN, which is a subset of Atlas, is a great example of that. They've been able to lease out every one of their vessels. They've got contracts through 2024 and the 2025. And basically, they have paid off nearly all their vessels so that whatever they're taking in right now is going to upkeep maintenance and basically profitability.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“From these noner operators, companies like C-SPAN Atlas, Costamare, which are really good investments right now. If you look at what happened with Atlas and C-SPAN, this takeover bid, it's a really interesting one.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“As much, you know, ironically, one of the things that we saw was in January 1st of 2020, ships, there was a change in fuel. You had to go to this low sulfur fuel oil because of sulfur emissions. This was part of that phased element of emissions. And so ships either had to buy the very low sulfur or install what's called scrubbers, which basically scrubbed the exhaust. And what we're seeing right now is those ships that installed scrubbers are making money because they can buy cheap fuel. They don't have to buy the very expensive fuel. But those are going to be phased out. You can't operate scrubbers after, I think it's 2024. So they've got to phase them out next year. So that's going to kick back up again for them. Again, we're seeing companies laying ships up, you know, just not sailing a vessel what they call blank sailing. And what we see is a lot of these ocean carriers right now are deferring the building of their vessels and instead they're leasing a lot of vessels.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Sure. So, I mean, labor costs are pretty low for them because, again, one of the things that you're seeing is they're shopping around the world for the cheapest labor. So, you know, the most common mariners are from Philippines, India, Russia, which has been a bit of a problem recently, Indonesia, and India. And so they can keep their freight rates, I mean, their labor costs down pretty much. Again, they've built larger vessels, economy of scale. One of the things that we talked about 15 years ago, ships tremendously bigger, went from 5,000 to 20,000 TEU, but the crews have gone down because of automation and elements, you know, where you needed a 35-person crew, now you need 25. So that has gotten a lot cheaper for them. Fuel has been the one thing that's really ticked up quite a bit. And again, one of the things that we're seeing is a return to kind of slow steaming to slow the ships down, to reduce down that fuel level, so that they're not burning.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“So I've just got the Freitos, just the global container freight index. And as you mentioned earlier, the price skyrocketed from $1,500 to $10,000, $11,000, I think at the peak. And now it's down to $6,100. So obviously the shipping companies, container companies were printing money at $11,000. But how profitable is $6,000 for them? And what are their costs? What are the biggest costs? Is it labor? Is it buying the ship? Do they have debt on the ship that they have to pay interest on? Walk me through sort of what their income statement would look like based on where the freight rate is. Sure.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“Now, at the height of COVID, it was in the 30s. Now it's bouncing between 30 and 40 percent. And so people who are shipping sit there and go, listen, I'm willing to pay an extra three grand for a container. Again, because you spread it across the entire contents of a container, unless you're shipping couches, which is large volume cargo. You can spread that across, and it's more efficient for them.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT
“If you look at the freight rates now and you look at these indexes which kind of take the average of it, if you look at the Fredo's Baltic container index, from Shanghai to LA Long Beach is 6,000 in change, but to the east coast, it's 9,000 in change. And you'd sit there and go, wow, am I paying extra $3,000 for a container? But if your reliability is a lot better, you know, I know I can get this ship in. I know I can offload it. And plus, I don't have to worry about rail. I've got a shorter transportation land bridge. I got to deal with. I'm not warehousing it. I'm not dealing with detention and demerge charges because the port of LA and Long Beach is backed up. Then you're willing to pay. Some people are willing to pay that little extra money for the better reliability because that's something else we've seen is just a fall off the cliff of reliability. You know, pre-COVID, the reliability, you know, the time you would get your container delivered to you on time was about 70 to 80 percent.”
2022-08-25 · Forward Guidance · The Global Shipping Crisis Is Not Over | Sal Mercogliano · IDENTIFIED FROM THE TRANSCRIPT