Page 49: of Maritime Reporter Magazine (September 2021)

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U.S. government must implement a comprehensive strategy ted contracts that are always fair to both parties.” to push back on unfair foreign competition that erodes the re- All of the dialogue has occurred at a time of bigger ves- silience of U.S. critical supply chains and industries.” sels. In discussing broad solutions to the supply chain crises,

OSRA 2021 was driven by dif? culties in securing “empties” John McCown stressed that the vessels themselves, which for export cargo back to Asia, seemingly one aspect of a far now top out around 24,000 TEU with recent newbuilds (such broader set of issues, albeit a great source of inef? ciencies. In- as HMM’s HMM Algeciras, Evergreen’s Ever Ace, MSC’s deed, Los Angeles’s Gene Seroka, in his recent remarks, noted Gülsün class vessels and the 23,000 TEU LNG-fueled vessels that: “Our largest export commodity continues to be air as we being deployed by CMA-CGM) “… deliver extraordinary ef- reposition empty containers back to Asia.” While there have ? ciencies and can access many ports directly…” (unlike the been loud complaints from the cargo side, the carriers also face dinosaur-like ULCCs which failed in the tanker trades). Mc- uncertainties in planning for future loads as cargo customers Cown, author of the book Giants of the Sea, told Maritime adjust their programs. Gordon Downes, from NYSHEX, tells Reporter, “Recent events demonstrate that bottlenecks have

Maritime Reporter: “What carriers and shippers really need is occurred … but these ef? cient vessels are not the problem the ability to make enforceable contracts, where both parties and our gaze should be focused elsewhere.” Commenting on are committed to the terms of the contract. Of course, carriers regulatory issues, including OSRA 2021, he said: “Shipping and shippers should always have a choice, either to lock in a is a cyclical business and things should be looked at in terms price and service level to “hedge” against the volatility, or to of impact over the entire cycle. While any abuses need to be ‘ride’ the market. NYSHEX provides a digital mechanism that checked, circumspection is in order for changes directed at enables carriers and shippers to lock in through 2-way commit- temporary issues that the market will correct.”

Carrier and tonnage provider stocks

Through share purchases in listed carriers, or tonnage providers (shipowners who charter their vessels to the carriers), investors who climbed aboard in late 2020, and into early 2021, have been able to reap large gains as these shares out-paced the broader market. Stocks that U.S. investors can trade include: ZIM (“ZIM”, carrier), Danaos (“DAC”, tonnage provider), Atlas Corporation (“ATCO”, parent of tonnage provider Seaspan Corp.) and Costa- mare (“CMRE”, tonnage provider). In a mid August research report covering ZIM, Jefferies and Co. shipping equities analyst Randy

Giveans wrote: “Container freight rates and containership charter rates have climbed higher throughout the year as demand for con- tainerized goods, especially in the US and Europe, remains robust, availability of spot vessels remains constrained, and persistent con- gestion is removing effective supply from the market. The Shanghai

Containerized Freight Index is up over 50% year to date to an all- time high of $4,282/TEU last week... We expect rates to remain very robust through 2021 and well into 2022.” In an early August report on DAC, Mr. Giveans highlighted the dynamic of carriers chartering in vessels from tonnage providers, saying: “…charterers are cur- rently booking vessels further in advance and for longer durations of 3-4 years.” John McCown, in his report estimates that in Q1 2021, the carriers earned a record setting aggregate $19.1 billion, a mark likely to be exceeded once all the Q2 results are available. 49

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