Finally . . . some research!

So this week I put on my white lab coat and fired up the Commodore 64 to do a bit of number crunching. By now you have probably got the idea that I’m none too fond of shipping ‘cliches’. Some of this stuff is so full of dead wood that it could be an extra from a Ron Jeremy movie. ‘Buy low and sell high when rates are values go up’. Genius alert.

Be careful who you ask when wanting to experience ‘the Greek way’. Now I don’t want to be unfair to Greek owners, investors or anybody at all of Greek extraction, not every Greek thinks that you can only make money in shipping if you come from GMT+2 time zone. There are many many Greeks who have made their fortunes in shipping and many of the very smartest brains in the business hail from there, but you wouldn’t take guitar lessons from somebody just because he told you ‘Well me and Keith Richards are both British’ now would you? I am pretty certain a little more work goes into the planning than ‘it looks cheap’. Who knows.

Ready for research in Prospector Towers.
Ready for research in Prospector Towers.

However, clearly advising people to buy low, sell high would need to done by those whose faculties are being closed down faster that the University of Telex. I once got a tip from a stranger while playing a particularly abysmal round of golf. As I completed the ‘jumbo’ on my card (7-4-7) he came over and told me that ‘If you want to really improve your score you need to cut out those 3-putts’. If only I’d thought about it when I was standing over that second putt which I missed?

So, let’s have a look at what Rafa Benitez would describe as ‘facts’. The fact is that vessel values have cratered. Here’s another fact, vessel earnings have cratered. Last facts (I think these are less contentious than Rafa’s), that the values and earnings are interlinked, somehow. What is kind of interesting is that this ratio between asset values and earnings varies greatly. Going back to ‘buy low/sell high’ one might want to ask ‘what is low? what is high?’ and how do I know when low is at its lowest and high is at its highest?

We only want to deal in facts, right Rafa?
We only want to deal in facts, right Rafa?

Now history, for once, teaches you a little bit on this subject. It teaches you the average value over time of a vessel for example. But that is life in the bell jar and ultimately doesn’t help you to answer when is ‘low’ and when is ‘low’ not ‘low’? So let’s have a look at earnings against vessel values. I think we all agree that they are linked, but how exactly?

Well I fiddled up an earnings to values normal distribution curve for a 5 year old capesize. You’ve seen it, sort of, in a previous post ‘Mr Prospector thinks about buying capes’, but not in a normal distribution representation. Then I did the same for panamaxes and supramaxes. Now what do you use to forecast earnings going forward? Well, again you will know that I think forecasts of any kind, but especially earnings forecasts are just the devil’s work. So what is real and traceable? FFA forward curves fit the bill nicely, primarily because you can actually execute the trade rather than theorise it.

So here’s the basics. We’ve got 5 year old vessels. We’ve got the time charter index FFA curve going out for 5 years. You take the price of the ship and the combined earnings if you traded the mid-point of the FFA curve and you have a ratio of values to earnings. You can then back calculate through time what that ratio has been using two ways, first what real earnings were for the next 5 years; second what the FFA curve was on the day that each vessel was valued. Then you need to do a bit of Mr.Prospector jiggery-pokery and hey presto! I have an index for this and presented in the most boring table ever.

Capesize Panamax Supramax
22/04/15 507 533 889
08/04/16 626 920 1107
22/04/16 753 992 1140

When the index is at 0-750 it would imply that selling a particular ship and buying FFA 5 year strip would likely be the best policy i.e. it’s a market where earnings are more interesting than assets. 750-900 and it’s starting to get interesting to accumulate assets and sell earnings. An index of 900 or higher (it will literally never get to 2,000) and without doubt you are in territory where you would buy an asset and sell the earnings, i.e. it is now an asset player’s market.

Capes rallied prolifically over the past two weeks. One would imagine that buying a second hand cape would be where the magic lies. not necessarily!

Capes appear to still be in the territory where historically more often than not you have made money from selling the ship and buying the asset. And you think about it. Had you been a seller of a cape over the past couple of months you might well feel a bit sore because earnings are much higher and the price for that asset is a little higher too. However, if you had looked at the price/earnings index that I’m showing you then you would have sold your ship all the same, but bought the FFAs so that you capture the arbitrage in your favour. Net result? You would be a couple of million dollars better off, even when you consider that the ship you sold is now worth a bit more. It’s like entering a triathlon without ever training for the swimming bit. You might well feel like you’ve nailed the cycle, but then at some point you realise that you didn’t do something that you really should have.

This triathlon just got a lot harder.
This triathlon just got a lot harder.

Noteably, panamaxes are at a level where asset accumulation looks interesting and as for supras; if you catch hold of a supra seller either buy his ship off him fast or (if you actually like him) tell him that he is just about to hand somebody free money.

What is most appealing to me about this is not the ‘absolutes’, but the relatives. You can change the age of the ships to whatever you want. You can change the duration of the return. You can change any part of it and come up with what you feel is the most meaningful exercise. There’s no need to ‘watch for a bit’ – you have years of history to analyse. You can use it for spot trading, FFA trading, asset trading, bunker trading. Just roll your sleeves up and have a go.

One thing that I have to own up to is that this is not intended to be definitive. What I mean is that OK, you want to buy or sell a ship, but is your timing historically good against the value of the ship in terms of earnings potential? One cannot separate the two, and when viewed next to each other they do start to show a different picture to the usual clarion call of the ‘it’s cheap’ – a method that so many people have ruthlessly exposed by going bankrupt. So one must finish the trade off by creating a ratio against something that is very very far from its standard deviation. And it is surprising to find out that actually it may just be the earnings.

Trotter, stone heads and the candle factory

It was an absolute pleasure to get a call from Otto last week. Otto is one of life’s serial entrepreneurs, who is always headed for the newest best thing in the world, although seemingly never quite gets there. That’s probably why his nickname is ‘Trotter’, after the great Del Boy, who we all know and love. This time next year we’ll be . . . oh, you know the drill. Otto called me up while I was ironing my socks, which led to a trip to the accident ward with a burned ear, but once the swelling had gone down I called him back to see what was up.

‘Hey man!’ (he’s from Kettering, but talks like he’s just jumped off a surf board), ‘What’s up man?’ he asked. Other than the throbbing red lug hole I told him I was fine and dandy. What did he want? ‘Well, I’m in New York and headed for a bunch of roadshow meetings. I’m trying to get some cash together to get this new business idea of mine going,’ he informed me. He had a lot of new business ideas that didn’t always take off. Like his collection of Rolf Harris artwork for example.

He told me to be in New York on Friday and that he’d send me the business plan beforehand (something he never did). ‘Mr. P. I need a guy there with a beard. Beards are cool at the moment. I’ll tell them that you’re my advisor. You won’t have to say anything, I’ll do the talking.  Just wear a suit please, don’t wear your work boots and have a wash for God’s sake,’ he shouted. So it came to Friday and I was suited and de-booted standing outside Yellow Snow Asset Management waiting for Trotter.

'And I'm like sat there, and he's like just sat there, and like I called him the other day and . . . '
‘And I’m like sat there, and he’s like just sat there, and like I called him the other day and . . . ‘

We sat waiting for the obligatory 25 minutes while listening to the trials and tribulations of the receptionist’s love life until ushered into a meeting room looking out over Park Avenue. No drinks, no biscuits, no clue that it was even the office we were supposed to be in. Finally three 15-year olds and a balding thirty-something walk in. Golf shirts from a broker’s golf day? Check. Badly fitting enormous beige chinos? Check. Metal-rimmed specs? Check. Tan tassled loafers? Check. We’re in the right office alright.

Barely a smile, the youngest opens a leather-bound jotter and writes the date at the top of an empty page. They mutter to each other and laugh quietly like they’ve just heard the punchline to a joke that we on the other side of the table will never even get to hear. Then they turn gravely and seriously to Trotter and me. Not a word, not a gesture, but we’re on!

Trotter then begins to explain his business. He says he wants to buy a bunch of factories. He’s going to fill these factories with regular equipment to make candles. He is then going to rent the factory and equipment out to somebody who wants to run a candle-making operation. He then describes the business to them to make sure they ‘get it in one sentence’.

Welcome to Yellow Snow Asset Management.
Welcome to Yellow Snow Asset Management.

He looks up at the stone heads across the table, takes a deep breath and says ‘OK. So here it is in a nutshell. We buy the factory and rent it out. In order to create economies of scale we’ll buy lots of factories in fact. Don’t know how many are required, we’ll just buy as many as we can afford. We’ll fill every one with candle-making equipment. Then we’ll hire the staff and create the candle-making business for ‘persons unknown’ who we’ll find later to rent the factory off us. Then all they have to do is buy the wax and the wicks and produce the candles. Or is it ‘sell the candles? It’s easy to lose track.

‘Now, here’s the interesting part. We’ll collect rent from them only based on what they can sell the candles for. If they sell them for lots we’ll get more money. If they sell them for less then we’ll get less. What is important here is that we have no control over the price of candles and no guarantees on our income or utilisation of our equipment, we will just receive what they receive, less a bit – even though we’re staffing and running the factory for them.

‘The price of the real estate for candle factories also moves. It is based on whether people want to buy candle factories or not. When the revenue for candles is at its lowest, the market for candle factories is at its lowest. That can happen at any time. Over time the factory will only be worth salvage when it gets knocked down, but let’s not dwell on that.

‘What’s our competitive edge I’m sure you’re thinking? Well, there is no licensing required to build a candle factory or make candles. So there are zero barriers to entry. And in fact, lots and lots of people have come up with this exact same business plan and gone bankrupt with it. We don’t have a brand and customers are not really that bothered anyway as anything that burns wax and lights the dark is considered a candle. They’ll buy the cheapest possible. All of the candle sellers compete like crazy and drop their prices without a second glance, so the lowest price is usually the price for all. Oh, and I almost forgot. If you get a good contract to supply at a nice margin, if they find that they can buy them cheaper elsewhere then the buyer will probably walk away and give you the candles back to sell (or make, I’m confused now) at a price where you’re  losing money doing so.

No, I meant handles for forks . . .
No, I meant handles for forks . . .

‘If we decide to make long white candles then the equipment cannot be recalibrated to make say, birthday cake candles. What we make on day one we’re going to be making until the factory falls down. When candle-making businesses like ours go bust then the factories are not necessarily knocked down and the machinery isn’t changed. A new business, just like ours, comes in and starts making candles on behalf of somebody else to sell them at any price to pay for the mortgage on the factory and equipment that they just bought.

‘It is impossible to forecast the future price of candles or candle factories by the way. But I know what you’re thinking right? Are we a real estate company that buys factories specifically in the candle-making sector? Are we in fact an equipment leasing business for aspiring candle makers? Are we candle makers or sellers? Well, we’re a bit of all of it. What we’ll do is buy the factories, so we’re in the real estate business. Then we’ll fill it with equipment and workers – or maybe hire a company to fill it with workers for us, to whom we’ll pay a fee. So we’re candle makers. But we will tell investors that we are in the ‘candle business’ generally, not which specific bit and it seems that they just hear the word ‘candle’ and forget to ask about the rest.

‘Then when the investors want to know what we’ve been doing with their money we can talk about the prices people are paying for candles, how many candles are being made globally and forecast the Chinese candle demand and the likelihood of power cuts to boost candle sales. So we’ll describe the business of the guys who are using our factory and workers to justify our results, but not explain what we are doing. Oh I nearly forgot. There’s only one way to make a candle so technical innovation isn’t likely to ever be a factor.’

Finally he pauses and looks into the eyes of the astonished chuckle brothers sat opposite him. He stares at each one slowly, as I shift from buttock to buttock in a state of massive unease. ‘You fellas got any questions? You’re looking a tad confused’ says Trotter. In fact angry would be my description.

‘Mr Otto’ says baldy, who seems to be the boss on account of being the only one old enough to be able to drive, ‘That has got to be the single dumbest pitch I’ve ever heard. No facts, no figures, the most horrific business plan. What in the hell made you think that we would be interested in having our time wasted by you for this?’ He sits back, folding his arms and smirking at Trotter. The boy with the jotter slams it shut dramatically and to a man, they all push their chairs back from the table, lean back and stare mockingly at my friend.

‘Well’ says Trotter confidently, ‘You boys have a lot of money invested in shipping. I thought if I tried something that sounded a bit more plausible then it just couldn’t fail.’

PS: By the way, next week I’m actually going to do some serious stuff (sort of), so please read it as for once it will actually take some time to write.



Dirty Digger, Agent Orange and bad advice

Sometimes, just sometimes the best intended and most well meaning advice can turn out to be some of the worst. Take my mate Dirty Digger as an example. Like me, he cut his teeth diggin’ in the dirt way out west hoping to find his fortune. It’s a tough, lonely existence out there, always working on the promise that tomorrow you’re gonna get rich. As a result, men tend to be real men, and that leaves very little time for a love life.

Digger was lonely. Digger wanted a wife. Digger wanted little Diggers running around the yard. Digger got himself a date. On the evening before his big date we sat by the light of a mechanical crusher unit, drying our underpants on the engine cowl. Digger turned to me whistfully and asked if I had any advice for his date. As I turned over my toasty undercrackers to dry the gusset I looked up at the moonlit sky and sighed.

‘Well Digger, I could tell you to do this, do that, say this and that, but at the end of it you know what? The best thing to do is just to be yourself’, I said. ‘That’s mighty fine piece of advice’ he said while peeing on the dying embers of a pile of burning plastic sacks. I went to bed feeling like I had done a good thing.

When Digger returned to work on the following Monday the first thing I asked him was how his date went. ‘Well I took your advice Prospector’ he said, staring into the distance. ‘And at the end of the date she told me that I was the biggest asshole she’d ever met in her life.’ With that, he swung into the cab of his JCB, turned the key and chugged off over to the far side of the mine. I guess I just plain forgot that Digger is in fact an asshole.

A great place to dry your under-crackers

Here’s another piece of useless advice that I have heard recently. An investor told my ship owner pal Private Ryan that shipping companies should be getting closer and more involved with the commodity markets of the piles of stuff that they’re transporting. With a name like Mr Prospector you might well expect me to know a bit about digging up stuff and selling it. So not surprisingly Private Ryan told me he called Agent Orange, a trader friend or ours to see what I thought.

There’s some pretty sharp pratices in the dry bulk business. That we all know. Slick Eddy told me about a guy who was known to his enemies as Superman. His favourite trick was to book a long term contract to ship some stuff each mid-December, then put the address commission straight into his PnL. He’d trouser the bonus due for his great work then try to cancel the contract come the first day of January. There’s a lot of people right now lauding ‘the Greek way’ of doing things. I asked Les Miserable about what he thought that meant. He told me that if he chartered a ship from a Greek owner these days one ‘Greek way’ is to steam so slow that to the naked eye the ship is going backwards. Under-performance? Well, the way to deal with that is just to delete the word ‘under’ and blame it on the weather.

It seems that fiddling the bunkers has become a legitimate form of poker, whereby what you get and what you paid for might not be exactly the same. And assessing the balance is like assessing an Alsatian’s favourite poet. Luckily it has been legitimised for you to try it as the worst that can happen is that you pay back the difference for what you say happened and what really happened. Why would you not try it?

He looks like a W.B. Yeats sort of dog.
He looks like a W.B. Yeats sort of dog.

But these, along with every other ‘sharp’ trick in the freight market would give you the impression it is full of scoundrels. That might be true, but while shipping has a collection of naughty boys, the commodity trading world is where Ted Bundy trades with The Boston Strangler. Agent Orange, a commodity trader at the nether regions of the business told Private Ryan to approach the commodity trading business like running through a field of nettles in a pair of Speedos. Incidently he’s called Agent Orange because his head is exactly the same shape as an orange. He was asked to tell me a few war stories and replied ‘Would a top 100 would do?’ Hmmmmm, let’s just stick to the basics.

‘Let’s take a typical easy trade’ he said. ‘We were selling RB1 coal to India. I bought a panamax cargo off a very regular supplier. Now RB1 is RB1 right? Terms for that are 100% load port test. Standard. I take it, ship it, buyer unloads it and calls me and says ‘this ain’t RB1 buddy. It’s too late for me to do too much about it with the seller as he’s been paid. My buyer is hopping mad. I end up having to trim the price to get it accepted by the buyer. I’m out of pocket. So what happened?’

Me and Ryan were listening to him silently, thinking ‘Say nothing and I won’t look stupid’. He fires up ‘I’ll tell you what happened. They took some RB1, got it tested and its all OK. Then like a miracle some other coal got in there and got mixed up with my nice RB1 that I paid for!’ he howls. is this standard? ‘Well yes, but today it’s worse’ he said. Give me some examples?

‘Now I’ve seen a stockpile of grey iron ore on Monday turn into nice orange iron ore on Tuesday. I went to a coal trader’s office and he showed me a cupboard full of blank test reports from a very well known testing company. All ready to print when required. The stamps were there as well.’ I was starting to get a bad impression here so asked him to describe a really bad one. Surely it can’t be that bad?

080413-N-7643B-009 A U.S. Navy search and rescue swimmer jumps out of an MH-60S Knight Hawk helicopter assigned to Helicopter Sea Combat Squadron 21 during a search and rescue exercise in the Persian Gulf on April 13, 2008. The Knight Hawk crew is deployed on amphibious assault ship USS Tarawa (LHA 1), which is conducting exercises in the U.S. 5th Fleet area of operations. DoD photo by Seaman David A. Brandenburg, U.S. Navy. (Released)
He missed the inspection of the cargo at the port.

‘I know a guy who didn’t check an iron ore cargo before it was loaded and didn’t attend the inspection by the testing company. He got told by his boss that he better get a helicopter out to the ship, which had sailed with no certificate from a testing company in hand. He couldn’t do that of course. The testing company strangely failed to produce the certificate so the LC couldn’t be cashed until the ship arrived off China 30 days later. Then it showed that the cargo was 7% down on the FE content. That was rejected, no LC paid, the ship couldn’t go back. Stuck paying demurrage. To make matters worse, this guy decided to try to fake the test certificate. That’s possible of course by paying a bribe, but not helpful. The idiot then went and paid a $10,000 bribe to the wrong testing company! A nice lady there had a great Christmas courtesy of the strange man from the East.’ By now my man was boiling.

‘It got worse. The cargo got rejected, but the ship was on demurrage, so they paid off the owner to discharge it into a bonded yard for a premium. It was discharged and they all flew to China to sell it on the ground. It turns out when they got there it was not in a bonded yard. The original buyer had paid the port handlers to move it into into their own yard. Now it has been rejected, the ship was gone, it was in somebody else’s yard which they had no access to and funnily enough they got a bid from the yard owner at shall we say ‘distressed seller’ prices. That little lot cost them $3m, their entire reputation in the Chinese market and when they complained to the miner they found out that he’d already been murdered by a previously disgruntled buyer. And I’m not joking. Dead.’

But surely at least it is all done by LCs? ‘Bah! Big companies use small banks. The LC process is a massive tune up in terms of fees. So the banks are fighting for a big importer’s business. You present your documents as a seller per LC terms then nothing happens. You pretty much always get the first payment as you’ve got the bills of lading (in theory – provided you’re paying the ship owner), but everyone knows that’s fiction so it’s factored in. When it comes to balance payment, firstly the testing agency at the importing port seemingly never get around to it. When they do you can expect at least 1% off the quality that the load port report said. That depends on who bribes them the most. Incidently I don’t think it even gets tested most of the time. I went to a testing facility once and saw about 10,000 unopened bags of coal. They just clip off a standard amount based on the origin, then have the biggest summer barbecue ever. Then the bank just sits on the payment until the buyer gets round to saying ‘OK pay them’. And that is an irrevocable LC!’ he raged.

It sounded like a pretty rough sort of business. ‘Rough? I had a fist fight on a bulk carrier at anchorage two miles out to sea when the testing guys, all eleven of them, spent the whole day asleep. I woke ’em up to ask if they were going to test and ended up going at it with half a dozen of ’em until the crew intervened. I genuinely thought I’d have to stay on the ship until it got to Singapore as the trip on the lauch back to shore with the locals looked, to put it mildly, a bit dangerous.’

‘So what would you say to a ship owner thinking of getting a bit closer to the cargo?’ I asked, while bracing myself for the onslaught. ‘Well, this is literally skimming the surface of the top 100 scams and rucks. If you work in an office in a reasonable city then get your kicks by being welcomed onboard a vessel you’ve chartered like Prince Charles. Take some pictures of you in a boiler suit with a load of smiling crew members, have a beer with the captain and then head straight back to where you came from. Leave the rest of it to the poor hapless idiot who actually owns the cargo. You’ll recognise him because he’s the one who’ll look like Christopher Walken at the end of the Deer Hunter.’

Cargo owner talks to sampling agents on board the ship.
Cargo owner talks to sampling agents on board the ship.

This week I decided to stay indoors. I am not going to moan about shipping, or anything else for that matter, but I’ll leave you with a joke. An old ship owner dies. Not surprisingly he goes to hell. When he gets there the devil tells him that he needs to pick a room to stay in for eternity. He looks into the first one and sees a group of men covered in blood all fighting eachother. ‘Ship brokers’ the devil says. The next room is full of people being repeatedly slapped around the head with large planks of wood until they are black and blue and bleeding. ‘Ship owners’ says the devil. The third room is full of men standing up to their knees in human waste sipping cups of tea. ‘Commodity traders’ says the devil. The dead ship owner says ‘This doesn’t look so bad. I’ll choose this one.’ And in he goes. He is given a cup of tea, but before he can take a sip a bell rings. Out comes a huge ogre with a huge wooden club over his shoulder who bellows ‘Alright lads, tea break’s over for this year, back on your heads.’

Poncherello, private equity & the men’s room

I got invited to a posh lunch at a private equity company last week. I flew up to Manitowoc, Wisconsin, the home of Pine Coffin Capital Partners LLC after receiving an invite from Frank ‘Ponch’ Poncherello, the chief investment officer and former colleague of mine when I worked for the California Highway Patrol back in the 1980s. Ponch hadn’t changed much. He was still the same macho rambunctious guy that he was back then, with me his straight laced partner on our Harleys. Today he had retired from unpicking huge highway pile-ups and had the easier more relaxed lifestyle of running a private equity business.

On the flight up there I read the website. They are patient investors who like to partner with blah blah. Yep, the usual nonsense that all PE companies put on their ‘About Us’ page. No mention of Ponch trying to impress a good looking lady with his disco moves once a week, or us racing against time to defuse a battery about to explode on an intelligent experimental police robot.

He now runs a private equity investment business.
He now runs a private equity investment business.

After a good solid lunch of boiled moose buttock and french beans cooked by the ‘in house’ chef, coupled with a cold beer or two and some chat about shipping I had to excuse myself from the table to de-ballast. I noticed stuffed behind the cistern was what looked like a brochure. I fished it out and read the cover ‘A Guide To Shipping For Private Equity Investors’ – dated 1992. Other than a couple of pages ripped out towards the back (It was the chapter ‘High Yield Bonds’ – I’m guessing they couldn’t find the spare toilet tissues) it was pretty much intact. The final chapter was entitled ‘Terminology – Translation of Shipping Terms’. I quickly flicked to it and got comfortable. Here’s some extracts:

Pre-Investment phase

Volatility – if said before you invest it is ‘how we make money’

Volatility – if said after you have invested it is ‘why we lost money’

Opportunity – tall tale

Third Party Management Fees – how the owner gets rich

Experienced professional – check High Court records

Cyclical business – you will lose eventually

Cyclical low – we’re broke

Play the cycle – buy high/sell low

Ship owner – Bond villain

Operator – chancer

Commodity trader – robber

Commodity trading house – robber in a house

Long term customer – people we let screw us over

Private equity – mugs

Hedge fund – unicorn rancher

Capital markets – Willy Wonka’s factory

Entry point – best guess

Exit point – bankruptcy

Access to market information – plays golf with a broker

Business model – Powerpoint presentation

Research – Excel spreadsheet

Under-valued – obsolete

Niche sector – dead man’s shoes

A man died wearing these. Try them on for size . . .
A man died wearing these. Try them on for size . . .

Tax efficient – dodgy

High quality tonnage – over-priced crap we want to unload on you

Forward looking statement – guess

Good reputation – always pays brokers

Today’s asset values – the price at which you are about to buy our liabilities

Diversified group – we won’t share the profitable stuff

Family interests – all the good stuff you’ll never get your hands on

Focused strategy – no strategy

End of Year One

Current market – market of six months ago

Core business – bit that we can explain

Business unit – unmanageable employees (often in overseas location)

Peer group – other chancers

EBITDA – Brazilian pole dancer who did the christmas party last year

Discount to NAV – you now own our over-valued assets

End of Year Two

Restructure – no idea what we’re doing

Cash requirement – preparing to run for it

Equity injection – management are updating their CVs

Challenging markets – give it a month and we’re bust

Financial accounts – Disney classic

Profitable – break even

Break even – loss

Small loss – massive loss

Loss – bankrupt

Balance sheet – game of Jenga

Mark to market – see ‘Financial accounts’

Hedge – loss

Profitable hedge – hedge we didn’t understand

Cost cutting – stuff we can’t get away with anymore

Long runway – we’re past V1, but no hope of getting over the airfield fence

Optimistic outlook – we’re doomed

Positive outlook on China – run out of ideas

Chapter XI – longest chapter in any book about shipping

If only this hadn’t been hidden in the men’s room in a tiny office in northern Wisconsin since 1992. It would have been nice for all the ‘patient’ guys who are now stuck up to the wazoolahs with problems to get a better read on ‘shipping speak’. To add insult to considerable financial injury, they are actually getting the blame for today’s woes from some folk for ordering ships. How many private equity funds got into shipping totally out of the blue, receiving no advice from an ‘experienced shipping professional’?

Stepping out for a quick coffee from a private equity shipping meeting
Stepping out for a quick coffee from a private equity shipping meeting

After our most convivial catch-up lunch, Ponch drove me back to the airport. He said that he was thinking of getting back into shipping again. I smiled, looked him in those twinkling eyes and said ‘Then you better look down the back of the toilet in the men’s room. I think you’ll find all that you need to know back there.’ We said our farewells in the manly way (hug is fine, but pat the back, do not rub it) and I slipped my Walkman headphones on and pressed play on ‘Crocodile Shoes’ – the Jimmy Nail cassette single that I liked to play to calm my nerves before flying. If it’s patience people in shipping wanted, they’d be better off hiring Dr Kildare.