Andrew Craig-Bennett

It’s too late to buy that VLCC. It’s far too late to sell anything, but you might want to try to cancel that open-loop scrubber installation. It might just not be too late to make an investment in hull cleaning equipment. Don’t put a passenger ship or a dive support ship into cold lay-up or you will discover the truth of the Ancient Greek proverb, “Once in lay-up, always in lay-up!” Think about what is needed to reactivate laid up ships and plan accordingly. So much for the obvious. What about the rest?

One thing that stands out is that people seem to want to avoid the recollection of plagues. We don’t mind remembering and thinking about wars, revolutions, invasions, volcanic eruptions and spectacular accidents involving lots of people dying, but we do seem to want to forget about two sorts of disasters – earthquakes and plagues.

At this moment, the newspapers, the television, radio and social media pundits are all busy telling us that Things Will Never Be the Same. I think they are wrong. History suggests that people will want to get back to ‘the same’ just as fast as they can, and we will see a resumption of whatever we were doing before, with extra eating drinking and being merry, in order to forget all about this pandemic, just as our ancestors tried to forget the others. This suggests that shipping will be back to business as usual quite soon, and all that we must think about is investment timing.

Timing in deep sea shipping is largely a question of still having cash when nobody else has any, so the thing to do is to be around and see what may influence when shipping businesses may run out of money. One thing that tramp owners know very well, and liner, passenger and oil support owners sometimes forget, is Mr Micawber’s rule – “Income twenty pounds, expenditure nineteen pounds nineteen shillings and sixpence, result happiness. Income twenty pounds, expenditure twenty pounds ought and six, result misery!” Speed of application of this rule is vital!

There are, as we know, Four Horsemen of the Apocalypse, the first horseman is Pestilence, followed by War, Famine and Death. Well, we’ve got Pestilence.

As shipping people, death isn’t much use to us, but war and famine used to be very handy for freight rates. War isn’t around on a scale big enough to help freight rates – at least, not yet, and war on a big scale has been a bad idea since the 6th of August 1945, but famine will be along any minute.

Logic tells us that crops which can be planted, tended and harvested using mechanical equipment on a big scale are going to be less affected by a shortage of people than are crops which need a lot of manual labour. It has been a truism for decades that you don’t ever make a ship investment decision based on the grain trades, because they are normally unpredictable, but I think that in today’s circumstances we may pencil in some more ton miles for grain.

Logic also tells us that, across the world, regular maintenance of all sorts of things is being deferred, and when the coronavirus outbreak is contained, as it will be, there will be a rush to do the maintenance and repairs that have been deferred, and this will happen before people make big new investments.

Lastly, this is a very odd recession. Recessions in shipping usually start with importers being unable to open letters of credit because the banks have run short of cash. This one started differently, but we may be reasonably sure that as it ends, people will have trouble opening letters of credit. There will be demand but financing that demand will be harder. In other words, money will be in short supply, and when there is a shortage of something, the price goes up. The price of money is called interest. Gearing is not going to be good.

Keep calm and carry on. ●