Posidonia 2024 in Athens this year has lived up to expectations as attendance by shipping professionals and number of exhibitors originating from an ever-growing list of countries. With the tailwind of a strong freight market and pent-up demand given that the last two Posidonia in 2022 and 2020 had spotty attendance due to the Covid19 pandemic, Posidonia 2024 has been informative, interactive and utterly productive; in an earlier post though, we also claimed that it may have been a tad too euphoric as well, discounting that the presently elevated state of the freight markets may not been entirely due to structural demand.
Trying to draw observations via the eyes of a long-term attendee from Posidonia 2024 from 10,000 feet, there have been notable superficial trends that are predicate to the changing state of the shipping market. Let’s count the ways that the marine industry may have changed in recent history:
In the years prior to the financial crisis in 2008, shipping banks were a prominent fixture of the Posidonia scene, by hosting highly exclusive soirees (for esteemed shipowners) but also more inclusive receptions on the occasion of Posidonia. Amazing that these days, only a couple of shipping banks hosted run-of-the-mill corporate receptions, for a small circle of shipowners and business contacts. A great deal of the shipping banks from the 2000’s are no longer in business altogether or their shipping presence is limited to large corporates and they have steered away from the conventional first preferred shipping mortgage business. And, running into a shipping bankers attending for Posidonia 2024 was a rare sight altogether this year. Count one of shifting tides in shipping.
After the era of the shipping banks and their prominence during Posidonia that led to the financial crisis—speaking very broadly of the times of easy credit, there was the decade of private equity funds attending Posidonia in hordes between 2012 and 2016. Not that PE funds spent any money by throwing parties, but they were present and attending en masse parties and private events hosted by shipowners in search of new source of capital, generally for equity investors in JV partnerships to buy cheap ships in distress and jointly profit from a market recovery. Fast forward a few Posidonia later. and after a generally miserable track-record of such partnerships, there has been limited presence this year at Posidonia 2024 of any institutional investors. Any presence we noticed was from alternative capital (credit funds) seeking for transactions that banks will generally finance (high risk, high reward sort of), or for structured deals in shipping. Count two of shifting tides in shipping.
In all fairness, there have been a handful of shipowner and private equity fund alignments from the last decade that did not end in a debacle, and in most spectacular fashion proving at funding and financial acumen supplied by PEs (and institutional investors) and shipping market expertise and acumen can nicely work together if greed and egos (and some other of the seven sins) do not take over people’s hearts and minds. Making an exception in naming names, Star Bulk in a last decade was a small shipping company fresh of a SPAC transaction still trying to find its footing in a precipitously sinking shipping market. An alignment with Oaktree at the time has flourished into rolling up under the Star Bulk umbrella several Oaktree investments in the dry-bulk market, and also for allowing Star Bulk to use its shares as a currency during a decade of bad markets for any weak players that could not wait out the cycle but they could not necessarily wanted to sell for cash in a down market and the Star Bulk shares offer upside optionality and consolidate the market ("ships for shares"). A decade later, Star Bulk is the gorilla to be acknowledged in the dry-bulk market, with a solid share performance, top tier fleet and, more importantly, top tier operations that set them apart from the competition. And, while Star Bulk via a relationship with PE made it to the big leagues, a long list of shipping IPOs from two decades ago are now only the subject matter of shipping finance history books. And, during Posidonia 2024, company parties of publicly listed companies were for those that saw through the down-cycle, built sizeable fleets and operations, and have become companies where both a alpha (α) and the beta (β) count when it comes to shipping company share performance. Count three of shifting tides in shipping.
However, the most promising development at Posidonia 2024 has been the presence of start-up companies seeking to apply or leverage technology and innovation in the shipping industry. There has been the Captain’s Table hosting of early stage companies making presentations ranging from the very “banal” subject of streamlining the omnipresent and omnipotential bills of lading to companies seeking to handle CO2 in situ in the open ocean. As with early stage and start-ups, many would fail along the way (that’s the nature of the beast), but nevertheless, one or two decades ago, there would not have been a place for such companies, even as concepts, at Posidonia, or any other major shipping exhibit for that matter. We do think that shipping stands to tremendously benefit by applying technology not only for automating and expediting certain function in operations, but further for shipping to be integral part of the supply chains, it has (lots of) room for improvement in updating functions and processes and provide for the user-friendly experience at a B2B level. Thus, the presence of early stage (and rather very strong attendance) for such companies could be considered one of the ways of the future for the shipping industry. And, incubators and tech platforms and VC funds (such as TMV) focusing on the generally uncharted shipping tech scene ought to be applauded for their vision and efforts. Count four of shifting tides in shipping.
By no means an exhaustive list of observations and thoughts from attending Posidonia 2024, but these four trends were just too easy to spot, and any conclusions were more-or-less self-evident, on where the shipping markets have been and where there may be heading, just by trying to be observant having attended so many Posidonia events. It almost makes you want to go back! In space and possibly in time too!