Navios Maritime Partners Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 13, 2024

There are 8 speakers on the call.

Operator

Thank you for joining us for Navios Maritime Partners Fourth Quarter 2023 Earnings Conference Call. With us today from the company are Chairwoman and CEO, Ms. Angeliki Frangou Chief Operating Officer, Mr. Stavros Desippes Chief Financial Officer, Ms. Eric Seroni and Vice Chairman, Mr.

Operator

Ted Petrone. As a reminder, this conference call is being webcast. To access the webcast, please go to the Investors section of Navios Partners website today's earnings conference call will also be found there. Now I will review the Safe Harbor statement. This conference call will contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners.

Operator

Forward looking statements are statements that are not historical facts. Such forward looking statements are based upon the current beliefs and expectations of Navios Partners Management and are subject to risks and uncertainties, which could Core's actual results to differ materially from the forward looking statements. Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call.

Operator

The agenda for today's call is as follows. First, Mr. Rambo will offer opening remarks. Next, Mr. Desipis will give an overview of Navios Partners segment data.

Operator

Next, Mr. Tironi will give an overview of Navios Partners' financial results. Then Mr. Petrone will provide an industry overview. And lastly, we'll open the call to take questions.

Operator

Now I turn the call over to Navios Partners' Chairwoman and CEO, Ms. Angeliki Frangou. Angeliki? Good morning, all, and thank

Speaker 1

you for joining us on today's call. I am pleased with the results for the 4th and full year of 2023. For the quarter, we reported revenue of $327,300,000 and net income $132,400,000 For the full year, we reported revenue of $1,300,000,000 and net income $433,600,000 Net earnings per common unit was $4.30 for the quarter and $14.08 for the full year. The general background in which we operate is important. In 2023, the world continued to experience disruption in normal trade routes.

Speaker 1

Regional conflict, Initially in Ukraine and Russia and later in the Middle East introduced uncertainty and inefficiency into transportation. Most recently, we have seen traffic in Venezuela reduced by over 50%. This disruption is compounded by a drought limiting traffic in the Panama Canal. Consequently, a typically seasonally slow Q1 has been surprisingly strong in 2024. In addition, the U.

Speaker 1

S. And European Economists seem to have managed inflationary pressures and are generally healthy. While there are pockets of weakness, the economies of most of the top 10 economies are growing. Further, China seems to be leveraging its export strength to counter the economic issues it is facing domestically. Should the current environment remain, we would expect rate to remain strong for 2024.

Speaker 1

However, I do note that this robust environment can change quickly should conflict driven efficiencies clear and all economies have suffered from a further wave of inflation. As usual, we continue to execute on our strategic initiatives by focusing on things that we can control, such as reducing leverage, modernizing our energy efficient fleet and taking long term cover where available. Please turn to Slide 7. Navios Partners is a leading publicly listed shipping company diversified In 15 asset classes in 3 sectors, we have $296,200,000 of cash On our balance sheet, in the Q4, we earned about 5.4% interest on an annualized base in our cash balance. Our fleet modernization continues.

Speaker 1

In the period 2023 to 2024 year to date, We sold 17 vessels, generating gross sale proceeds of $327,600,000 We took delivery of 2 container ships charter out for over 5 years at an average net rate of 30 $7,015 per day. We also added about $137,000,000 of contracted revenue to our coverage with various long term charters, mainly in the Tiger segment. For 2024, 63% of our 56,000 and 58 available days are fixed. This creates a current breakeven of $4.91 per open day. Let's now turn to Slide 8.

Speaker 1

On this slide, we provide an overview of our execution in terms of certain important metrics comparing 2023 to a base year of 2022. As you can see, our fleet remains about the same size today as it was in 2022, with all of the purchases and sales effectively being netted out as we modernize our fleet. Not accidental. Our fleet age remains the same. We believe that while we must be patiently aware of the development of carbon neutral technology, we can maximize energy efficiency by maintaining a fleet of useful vessels containing current technology.

Speaker 1

In addition, as you can see from vessels value, the diversity of our fleet has allowed the steel value of our fleet to improve by about 3% from 2022. I would also note that these key values do not give any consideration to our contracted backlog, which today is about $3,300,000,000 With a stable and performing fleet, our financial metrics have improved. Year over year, revenue is up 8% and adjusted EBITDA is up by 12%. These developments allow us to reduce our debt by 6% to $2,000,000,000 and increase our cash balance by about 70% to almost $300,000,000 Consequently, we are on the path to our target net leverage of 20%, 25% with current net leverage of 38.2%. This is an improvement of 15% over year end 2022.

Speaker 1

I would like now to turn the presentation over to Mr. Navios Partners, Chief Operating Officer, Stratos.

Speaker 2

Thank you, Yelica, and good morning all. Please turn to Slide 9, which details our operating free cash flow potential for 2024. We fixed 63% of available days at an average rate of 24 $1,910 net per day. This created an estimated operating breakeven of $491 per day for the remaining 20,000 97 days that are open or indexed late. On the right side of the slide, we provide our 56,058 available days by vessel type, so that you can perform your own sensitivity analysis.

Speaker 2

However, whatever number used, we should develop substantial cash flow in 2024. Please turn to Slide 10. We are always renewing the fleet so that we maintain a young profile. It is part of our strategy to reduce our carbon footprint by modernizing our fleet, benefiting from new technologies and eco vessels with greener characteristics. During Q4 of 2023 and Q1 2020 We got delivery of 25,300 TEU container ships, both charter route for an average of 5.2 years at an average net daily rate of $37,050 per day, generating revenue of approximately $140,000,000 Following these deliveries, We have $1,600,000,000 remaining investment and 26 new,000,000 vessels delivering to our fleet through 2027.

Speaker 2

In containerships, we have 10 vessels to be delivered with a total acquisition price of approximately $736,000,000 We have mitigated this risk with long term credit worth charters, generating about $900,000,000 in revenue over a 6.6 year average charter duration. In the tanker space, we acquired 16 vessels for a total price of approximately 885,000,000 We charted out 10 of these vessels for an average period of 5 years, generating revenues of about $500,000 The drybulk mobility program of 8 vessels was completed in June 2023 with the delivery of the last Capesize vessel. We have also been opportunistically selling all their vessels. 2023 year to date in 2024, we have sold 17 vessels with an average age of 15.4 years for $327,600,000 We sold 8 tanker vessels for about $215,000,000 and 9 drybulk vessels for about $114,500,000 Moving to Slide 11, we continue to secure long term employment for our fleet. In Q4 2023 and year to date 2024, We have created about $140,000,000 additional contracted revenue.

Speaker 2

Approximately $125,000,000 comes from our tanker fleet about $15,000,000 comes from one drybulk question. Our total contract revenue amounts to $3,300,000,000 $1,100,000,000 relates to our tanker fleet, $400,000,000 relates to our dry bulk fleet and $1,800,000,000 relates to our containerships. Chart rates are extending through 2,037 with a diverse of quality counterparties. About 50% of our contracted revenue is expected to be held in the next 2 years. I now pass the call to Eri Cironi, our CFO, who will take you through the financial highlights.

Speaker 2

Eri?

Speaker 3

Thank you, Stratos, and good morning all. I will briefly review our unaudited financial results for the Q4 and the year ended December 31, 2020 3, the financial information is included in the press release and is summarized in the slide presentation available on the company's website. Moving to the earnings highlights on Slide 12. Total revenue for the Q4 of 2023 decreased to $327,000,000 compared to $371,000,000 for the same period in 2022 on the back of 6% less available days and 5 percent lower combined time charter equivalent rate. Revenue in Q4 2023 compared to Q3 2023 increased by $4,100,000 on the back of higher combined time charter equivalent rate despite lower available days.

Speaker 3

Time charter revenue for the 3 month period is understated by $10,500,000 because U. S. GAAP rules require the recognition of revenue For our charters, we deescalating rates on a straight line basis. In terms of sector performance, TCE rates for Q4 of 2023 for our drybulk fleet increased by 6.5% to $16,902 per day compared to the same period in 2022. In contracts, our container and tanker PCE rates were approximately 11% lower compared to the same period last year at 30,356,000 and 27,500 and 62 per day respectively.

Speaker 3

EBITDA, net income and EPU were adjusted as explained in the slide footnote. Excluding these amounts, adjusted EBITDA for Q4 2023 increased to $227,000,000 13% higher compared to the same period last year and almost 31% higher compared to Q3 2023. Adjusted net income for Q4 2023 increased to $133,000,000 18% higher compared to Q4 2022 and 61% higher compared to Q3 2023. Total revenue for 2023 increased by 8% to $1,300,000,000 compared to $1,200,000,000 for the same period in 2022. Time charter revenue for the period is understated by $40,700,000 because U.

Speaker 3

S. GAAP rules require the recognition of revenue for our charters with de escalating rates On a straight line basis, the increase in revenue was mainly a result of a 10% increase in our available days to 54,000 766 compared to 49,804 in 2022. Our combined TCE rate for 2023 was lower at $22,337 per day compared to the same period last year. In terms of sector performance, both tankers and containers enjoyed improved rates compared to the same period last year. 2023 time charter equivalent rates for our tankers increased by 36 percent to 28,662 per day and for our containers by approximately 8% to $33,770 per day compared to the same period last year.

Speaker 3

In contrast, Our dry fleet TCE rate was 26% lower compared to the same period last year at $14,422 per day. Adjusted EBITDA for 2023 increased by 12% to $748,000,000 compared to $668,000,000 in 2022. Adjusted net income for 2023 increased by 11% to 383 $1,000,000 compared to $430,000,000 last year. Our net income was negatively affected by 55 $1,000,000 reduction in the positive impact of the amortization of unfavorable leases and a $41,000,000 increase In our interest expense, net of interest income due to the increase in our debt levels and the interest rate costs. Adjusted earnings per common unit for 2023 were $12.45 Turning to Slide 13, I will briefly discuss some key balance sheet data.

Speaker 3

As of December 31, 2023, Cash and cash equivalents, including restricted cash and time deposits in excess of 3 months were 296,000,000 During 2023, we paid $465,000,000 of pre delivery installments under our new building program, Vessel acquisitions and other capitalized expenses. We sold 15 vessels for $259,000,000 net, adding about $163,000,000 cash after the repayment of their respective debt. Long term borrowers, including the current portion net of deferred fees, reduced to €1,860,000,000 Net debt to capitalization decreased to 33.8%. Slide 14 highlights our debt profile. We continue to diversify our funding resources between bank debt and leasing structures, while 36% of our debt has fixed interest at an average rate of 5.6%.

Speaker 3

We also try to mitigate part of the increased interest rate cost having reduced the average margin of our floating rate debt by approximately 40 basis points to 2.3% from 2.7% at 2022 year end. Our maturity profile is staggered with no significant volumes due in any single year. In terms of our new billing program, 80% of our new billing financing is already concluded or in documentation phase at an average margin of 1.8% for floating rate debt. In January 2024, We have signed a $40,000,000 facility with a new lender to refinance 3 vessels where we managed to decrease our margin and extend maturity. Turning to Slide 15, you can see our ESG initiatives.

Speaker 3

We continue to invest in new energy efficient vessels and reduce emissions through energy saving devices and efficient vessel operations. In February 2024, Navios, in collaboration with Lloyds Register, founded the Global Maritime Emissions Reduction Center that will focus on optimizing the existing global fleet efficiency. Navios is a socially conscious group whose core values include diversity, inclusion and safety. We have Strong corporate governance is clear code of ethics, while our Board is composed by majority independent directors. I'll now pass the call to Ted Petrone to take you through the industry section.

Speaker 3

Ted?

Speaker 4

Thank you, Eri. Please turn to Slide 17 for a review of current trade disruptions. Panama and Suez Canal's 2 strategic maritime transit points continue to operate at restricted transit levels. With regard to the Suez Canal, the Red Sea disruptions have caused a rerouting of ships via the Cape of Good Hope, increasing costs and ton miles. Since the end of November, transits have reduced by 75% for containers, 51% for product tankers, 16% for crew tankers and 34% for dry bulk vessels.

Speaker 4

Panama Canal daily transit restrictions stand at 24 vessels, 33% below normal. Please turn to Slide 19 for a review of the tanker industry. World GDP grew at 3.1% in 2023 and is expected to grow by 3.1% again in 2024 based on the IMF's January forecast. There's 85% correlation of world oil demand to global GDP growth. In spite of economic uncertainties and the crisis in the Ukraine and Red Sea, the IEA projects a 1,200,000 barrels per day increase And world oil demand for 20 24 to 103,000,000 barrels per day.

Speaker 4

Chinese crude imports continue to rise averaging 11,300,000 barrels day in 2023, an 11% increase over 2022. After a seasonally low Q3, all sector rates increased in Q4 on the back of global demand and increasing refinery throughput led by China and India. Additionally, seaborne crude and clean trading patterns, which were initially diverted to longer haul routes due to Russian sanctions have once again been rerouted by the above mentioned Red Sea disruptions. These even longer haul routes continue to increase ton miles putting pressure on both costs and rates. Recent rates remain firm Having risen on the back of rising demand, the Saudi and Russian export cuts have been somewhat mitigated by increased Atlantic exports.

Speaker 4

Turning to Slide 20. As previously mentioned, both crude and product rates remain strong across the board due to healthy supply and demand fundamentals, minimal fleet growth and shifting trading patterns. Product tankers are also aided by healthy refinery margins of discounted Russian crude exported to the Indian Ocean and the Far East, Returning to the Atlantic as clean product. Crude ton mile growth increased by 6.2% in 2023 and is expected to grow by a further 4.1% in 20 24. Similarly, product ton miles increased 9.6% in 2023 and are expected to grow 7.3% in 2024.

Speaker 4

These percentage increases anticipate some continued canal restrictions, but could rise based on the duration of these sanctions. Turning to Slide 21. VLCC net fleet growth is projected at 2.2% for 2023 and a negative fleet growth of 0.5 for 2024. This decline can be partially attributed to owners' hesitance to order expensive long lived assets in light of macroeconomic uncertainty and engine technology concerns due to CO2 restrictions in force since the beginning of the year. The current record low order book is only 2.6% of the fleet or only 23 vessels, one of the lowest in 30 years.

Speaker 4

Vessels over 20 years of age are about 17% of the fleet The total fleet were 157 vessels, which is almost 7 times the order book. Turning to Slide 22. Product tanker net fleet growth is 2.1% for 2023 and projected to be only 1.4% for 2024. The current product tanker order book is 12.7 percent of the fleet, one of the lowest on record and is approximately equal to 14.6% of the fleet, which 20 years of age or older. In concluding the tanker sector review, tanker rates across the board continue at historically healthy levels, Combination of below average global inventories, growth in oil demand, longer new longer trading routes for both crude and products as well as one of the lowest order books in 3 decades and the IMO 2023 regulations should provide for healthy tanker earnings going forward.

Speaker 4

Please turn to Slide 24 for a review of the drybulk industry. For the 1st 8 months of 2024, rates in all sectors remain muted record Chinese imports were mitigated by unwinding congestion. Chinese raw material demand continued throughout 'twenty three on the back of persistent economic stimulus and continued stockpiling. Strong Atlantic exports of iron ore bauxite and grain in Q4 led both the BDI and Cape rates to peak on December 4 at 3,346 points $54,584 respectively. The BDI 2024 at 2093 and year to date average stands at approximately 1600 levels rarely seen in the early part of the year.

Speaker 4

Despite the negative headlines, Chinese imports of iron ore, coal, soybeans and bauxite in 2023 were up 16% over 2022. With regard to iron ore, China's GDP grew 5.2% in Q4 of 2023. Chinese continued stimulus measures and stocking to assist iron ore demand, which recorded record endpoints in 2023 of 1,160,000,000 tons. Coal trade continues to be impacted by the war in Ukraine as a ban on Russian coal shifted trading patterns towards longer haul routes. Global imports are expected to increase 3% or about 19,000,000 tons second half of twenty twenty four over the first half of twenty twenty four.

Speaker 4

As with coal, the global grain trade is also impacted by the war in Ukraine shifting trading patterns to the longer haul routes. Seaborne grain trade volume is expected to grow by 1.9% in 2024. Going forward, supply and demand fundamentals remain intact A normally seasonally stronger Q2, the historical low order book, continuing canal restrictions and tightening GHG emissions regulations remain positive factors, which are reflected in the period and FFA market. Please turn to Slide 25. Current order book stands at 8.5% of the fleet, one of the lowest Since the mid-1990s, net fleet growth for 2023 was 3.1% and is expected to be only 2.3% in 2024 As owners remove tonnage that will be uneconomic due to IMO 2023 CO2 rules enforced since the beginning of this year.

Speaker 4

Vessels over 20 years of age are about 10.1 percent of the total fleet, which compares favorably with the historically low order book. In concluding, our dry bulk sector review, continuing demand for natural resources, restrictions in transiting both the Panama and Suez canals, War and sanction related longer haul trades combined with slowing pace of newbuilding deliveries all support freight rates going forward. Please turn to Slide 27 for a review of the container industry. The SCFI currently stands at 2,166, up Some 150% over its 2023 low of 8.87% on September 29 and 14% higher than the open 2024. Downward pressure from reduced trade and increasing deliveries for most of 'twenty three brought SCFI levels back down to pre pandemic levels.

Speaker 4

However, a slight improvement in trade flow followed by rerouting of vessels away from the Red Sea and around the Cape of Good Hope for increased ton miles, which propelled SCSI levels back above the previously mentioned pre pandemic levels. Output pressure for time charter rates should remain for the duration of the Red Sea disruption. However, continuing record fleet growth should eventually modify these gains and reverse costs when the Middle East conflict settles. Though the trade is expected to grow by 3.8% in 'twenty four and 3.1% in 'twenty five, newbuilding deliveries in 'twenty four and 'twenty five will be equivalent to approximately 17% of the fleet after record net fleet growth of 8% this year followed by similar level in 2025. This should continue to put pressure on rates for some time.

Speaker 4

The graph in the lower left shows a continuing growth in U. S. Consumer purchases of goods, which is above pre pandemic levels in line with recently reported U. S. GDP growth for 2023.

Speaker 4

Imports in the U. S. Have slowed Turning to Slide 28, net fleet growth was 8.2% for 2023 and is expected to be 8% for 2024. The current order book stands at 23.6 percent against 12.3% of the fleet 20 years of age or older. About 72% of the order book is 10,000 TEU vessels or larger.

Speaker 4

In concluding the container sector review, supply and demand fundamentals remain challenged due to and geopolitical uncertainties and an elevated order book. However, the prospect of Chinese stimulus increasing ton miles and world GDP growth of 3.1 percent for 2024 provide a counterpoint to a challenging 24%. This concludes our presentation. I would now like to turn the call over to Angeliki for Final comments. Angeliki?

Speaker 1

Thank you, Ted. This completes my presentation, and we open the call to questions.

Speaker 5

Our first question will come from Omar Khanna with Jefferies. Please go ahead.

Speaker 6

Hey guys, good morning, good afternoon. Thanks for the update. Very good detail, I think, just on the company and the market overall. Just had a couple of follow ups and maybe just kind of big picture. I wanted to ask about strategy.

Speaker 6

You show on Slide 8 the priorities in 23, which were deleveraging in fleet renewal, building the backlog And then maintaining a profitability, you generally, I would say, executed on that. How do you see strategy in 'twenty four? Does that change in any way relative to 'twenty three, especially in the context of what's going on disruption wise

Speaker 4

in the Black Sea and the Red Sea? Thank you.

Speaker 1

Good morning, Omar. I mean, basically, we have actually put a page here, I mean, On the strategy, Page 8. And this is Our target is 1, is we have very well articulated is to have a 20%, 25% net ATV. And we gave a scorecard. We gave them we have about 176 vessels, and we have done that in 23 even though we sold 17 vessels, keeping the average age the same, increasing our revenue to about $1,300,000,000 creating an adjusted EBITDA of almost $750,000,000 and a cash of $300,000,000 Almost $300,000,000 Contracted revenue is a very important Elements in our strategy that gives us ability to navigate.

Speaker 1

So we have about 3,300,000,000 And we've managed to bring net LTV to 38%. As we've seen the disruptions, which have contributed to a better market and also we've seen economies that are the top 10 economies are doing pretty well even with some weaknesses. We believe that as we are continuing and we think the 2024 developing, we will have a much better how the market will perform, and that will give us a lot of options.

Speaker 6

Thanks, Angeliki. And I guess, as you mentioned in the opening remarks is that you'll focus on what you can control given all the uncertainty. Obviously, the 38% LTV is obviously much stronger than where it was. Part of that is obviously income and cash. You've also had asset value appreciation.

Speaker 6

You just said you've sold 17 ships recently. You have been taking delivery of several of the contracted new buildings. You have more new buildings to come. Just we've seen very firm prices in the purchase market, at least what it looks like, particularly in drybulk and tankers, how do you see Navios kind of reacting in this context of Rising value, the disruptions have led to higher incoming cash flow. It's also now led perhaps to rising values.

Speaker 6

Are you expecting to sell more ships into strength and take advantage of these opportunities and perhaps help you delever Sooner?

Speaker 4

And if that's the case, any specific segments that you see an opportunity to sell into strength?

Speaker 1

We are very disciplined in that and you have seen us over the last couple of years. We always compare residual value, sales value and charter rate. When we see I mean, we just sold a 15 year old VLCC with a special survey due. I mean, that was at a historically high level considering the CapEx. And at the same time, we may take opportunities of fixing others.

Speaker 1

So this is something that we will do constantly with the target the 20%, 25% net LTV. It works both ways. You can create either cash flow up firm or through the cash flows over the period. We just did A 5 year build on the tanker segment on product that was at historically high level, very So this is something that we are very is something that we are concentrating and we are taking and we are maximizing the opportunity. One of the things we have to realize is that this kind of a market we are Having we have a strong market in shipping that is driven from disruption and inefficiencies, Red Sea, Panama Canal, conflicts and good economies.

Speaker 1

You don't know how much of what is actually affecting the market. That's why you see us being taking the opportunity on fixing and also keeping in other sectors spot exposure. It's a balance.

Speaker 6

Yes. No, that makes sense. And maybe a final one for me, Justin. Ted discussed The container market and how that strengthened here recently, obviously, a lot of uncertainties ahead given the order book. You do have handful, not a big amount, but you have a handful of smaller vessels that come available for new charter.

Speaker 6

Has there been any shift in how liners have approached you or shipowners in general about looking for vessels, any sort of sense you can give on potential duration relative to what had been available, say, 3 months ago?

Speaker 1

If there is one sector that Red Sea has been very affected it in a positive way has been the container sector. So I mean, definitely, we have seen we have about 4 vessels that are coming often. And this is a kind of an environment where we'll judge whether you can do a 2 year charter and create a contracted revenue or This is the kind of opportunity that you will be looking. Definitely, the additional around the Cape and additional strength of containers that you need has positively affected that sector. But it's a disruption When, how this will change?

Speaker 6

Yes, definitely. Okay. Well, thanks Angeliki. That's it for me. I'll turn it over.

Speaker 1

Thank you.

Speaker 5

Thank you. Our next question comes from Chris Wetherbee with Citi. Please go ahead.

Speaker 7

Hey, thanks. I guess I wanted to come back The debt target to the leverage target, I know you mentioned, I think, 25%. So can you talk about sort of timing, how you think, obviously, the market is stronger now. So Does that accelerate the timeline at all in terms of reaching that? I want to get a sense of how you think about that.

Speaker 1

I think one of the issues, I'd say, you have these These are options that if I take you back in October 1, 2020, Nobody knew what will happen. And we saw a totally different market that created cash flows and a value coming up. If we look on 2024, I think this is something that we will see how we how it develops because you can have These are these are these are actions, change, geopolitical events, and then you will see the real the economies how they are performing, which they are not generally doing badly, but you don't know how much of the wind is from the one side or the other. And that will actually give you the opportunity because you may have values coming up. We have seen values coming on the drybulk, on tankers Coming up, you don't know how that will affect in a significant way.

Speaker 1

We have a nice a very From Q1 that has been we haven't seen for a long time. This developing over the year can bring you very quickly in your target. Okay. We will have on the second half, we will have the opportunity to move back there. Sorry.

Speaker 7

Okay. No, that's helpful. I appreciate it. And then I guess, yes, I mean, when you think about the disruptions on the container side, whether it be Red I guess, two questions for you and maybe more operational. So with me, I guess.

Speaker 7

Are you seeing anything from a demand standpoint transferring more to U. S. West Coast over U. S. East Coast?

Speaker 7

And then I think And I guess generally speaking, are you seeing liner companies change the way they deploy vessels to account for this? Or are streams getting longer, more vessels I don't know how transparent that is to you as a vessel owner, but any comments you have there would be helpful in terms of how the operations are changing as a result of what's going on with the Red Sea. We had some very interesting what's going on with the Red Sea?

Speaker 1

We had some very interesting conversations with some of the aligners, but Ted will give you in-depth. I this is a sector that is very, very much affected by both events.

Speaker 4

Hey, Chris. Would say it's a sector that's affected the most. 34% of all contingencies seem to go through that area, 20% of the vessels. You had a lot of switching over to the West Coast. They've been the associates have been moving their It ships around.

Speaker 4

So obviously, if you look at the SCFI going from the Far East the West Coast, it's tripled since November. So, there's a lot of movement around the cargo. So, a lot of inefficiencies, maybe it settles down, maybe we've seen a high, but There's going to be a continuing upward pressure while this major sector gets eliminated, right? I mean, you're just Moving roofs around and now they've got to figure out, which ships are going to go where. It's changing the landscape, and it looks to be with us for a while.

Speaker 4

Do you have a sense

Speaker 7

of what you think the actual capacity reduction is from sort of the variety of disruptions going on in the market?

Speaker 4

Well, if you have think about it, if you have 34% of the containers going through and 20 of the vessels. So you're having the bigger vessels. So that was a bigger disruption for Europe, just probably more inflationary. So it's sort of a mainline ship that I'm going to have to be diverted. Now the mainline ships can't come to the States, you have to fill in with the smaller ships.

Speaker 4

And so that's affecting the U. S. With the 14,000 to 16,000.

Speaker 1

I mean, in a ton mile overall, I think that you can see that you can You know, the result is afterwards that you can have over 10% online effect on this.

Speaker 4

Overall the world, I'm just going to Europe, it's a good 33 more on the ground.

Speaker 7

So that's Yes. Fantastic. Well, thanks so much for the time. I appreciate it.

Speaker 1

Thank you.

Speaker 5

Thank you. At this time, I would like to turn the call back to Angeliki for any closing remarks.

Speaker 1

Thank you. This completes our quarterly results.

Speaker 6

Thank you.

Speaker 5

And this does conclude today's call. We thank you for your participation. You may disconnect at any time.

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Navios Maritime Partners Q4 2023
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