COLUMN | Going from triumph to disaster [Grey Power]

It is probably a function of age and cynicism, but one sometimes wonders whether anyone in charge of pretty well anything, from countries to companies, really knows what is going on. They are probably paid eye-watering amounts in salaries and bonuses, tell a good tale in the annual report, but rarely seem to deliver expectations. They will have plenty of well-rehearsed excuses (Covid and the Russian invasion of Ukraine currently topping the popularity stakes), but invariably these are less than convincing.

But rather than flinging accusations around the entire industrial world, let us confine our criticisms to the maritime sphere, a sector that the economic textbooks confirm is one of derived demand and subject to intense volatility. Because of these factors, a certain degree of alertness to world affairs is required, as is a good sense of timing. Both, you might think, would be very high in the list of attributes of every chief executive in our sector, but how often is it that they get the timing of their decision making so obviously wrong, selling ships when you could barely give them away, buying them just as the prices peak.

It is rare to record a ship operator who seems able to read the market with any degree of accuracy, and many just get it so wrong that you want to weep. Is it that they are badly informed, plain ignorant, or driven by some other influences, like malignant soothsayers reading the wrong set of entrails?

“If there was any knowledge of how this old gentleman was perpetually so well-informed, it might have been his clear belief that trade was governed by politics.”

Something I have noticed over the years is that so many industry leaders give the impression of being well-informed about the shipping sector they operate within but remain signally ill-informed about others, even though there may be a degree of cross-fertilisation in ideas that could have been beneficial.

It is many years since I encountered one of my all-time shipping industry heroes, who was so good at reading the market, buying and selling at the right time. It was therefore said a sizeable number of his competitors blindly followed his actions, buying when he was seen to place orders for ships, selling when their brokers told them of this old expert’s activity in the S&P market. It seemed easier than thinking for oneself.

If there was any knowledge of how this old gentleman was perpetually so well-informed, it might have been his clear belief that trade was governed by politics and that the better informed he was about the minds of political leaders, the greater his insights into the direction world trade would be. Also, the fact that he was very rarely confounded by some eruption in the markets while so many others seemed to struggle to catch up suggests that he might have been onto something in his assiduous courting of world leaders.

“In the time lag between the cheerful signing of the contract and the delivery, the need for the ships has evaporated altogether.”

I thought about this old chap, long gone, alas, when considering the mess the container majors seem to have got into after their extraordinary experiences last year. It was utterly predictable that they would act as if their thoroughly atypical situation would become established and rushed to order ships, which have now, with the market collapsing, amounted to some 7.5 million TEUs still to be delivered, the lion’s share in huge ships.

But why should we be surprised when we saw the absolute shambles of the offshore world in the mid-decade and the eye-watering sums written off in unwanted drillships and platform supply vessel fleets, or the periodic swings and roundabouts of the bulk market in which few ever seem to time correctly? The container operators have now convinced themselves that “blanking” scheduled sailings is both legal and virtuous, while slowing down to save fuel is actually contributing to their sustainability ratings and saving the planet.

As for the ordering spree, it is advertised that the new generation of ships will be far more fuel efficient, but how often have we seen shipowners leaping on planes to shipbuilders on the far side of the world, galvanised not by the overwhelming need for new tonnage, but either copying the competitors, or lured by a belief that these were bargain prices? Then, in the time lag between the cheerful signing of the contract and the delivery, the need for the ships has evaporated altogether.

That seems to be the signature of our maritime world: going from triumph to disaster, quite often.