These days I don't read much fiction as my to-read list of non-fiction/business books keeps growing faster than I can read them- but I will pick up a novel once or twice a year to unwind. This year, it was 'The Shipping Man' by Matt McCleery. Though the book says 'A Novel' on its cover, McCleery effectively uses the storytelling technique to share useful insights on the reality of shipping- insights one will not readily find in textbooks on maritime economics or on ship finance. Five stars for reaching and engaging, even entertaining the target audience.
Without spoiling the plot for you, I’ll share some of my favourite quotes from the book:
"you generally don’t get a good price and good cash flow at the same time"
"Pay less for your ships, pay less to operate them or pay less for your capital. In a commodity business like shipping, the only thing that really matters is price"
"never underestimate the strength of relationships in this business. Insiders make money in this industry"
"The simple fact is this; he who is the most bullish on the market, or has the lowest cost of capital, or has some other personal motivation for doing a deal, or ideally all three, wins the ship"
"another problem is that everyone has the same information, which means there is no hidden value; there is only the market. If the market goes up, you win. If the market goes down, you lose. And the moment you think there is no risk, that is the same moment you have failed to recognize the risk. At least the market doesn’t lie"
"there were so few truly good times to invest capital in any one shipping sector; you either had to be knowledgeable in all of the various shipping and offshore markets-or you had to spend a lot of time waiting, a luxury not afforded to very many people."
“Because charter rates and ship prices are linked and they end up at the same residual value. If the market goes up the charter keeps the upside and if the market goes down, they are likely to default or come back to you and restructure, at which point you have zero leverage because the market is weak"
"A word is only a man’s bond if the market is moving in his direction" (funny but often true)
"Do not be confused, my friend, charter rates are not the same as asset prices”
"just because charter rates drop today doesn’t mean every shipowner will be resetting his revenue based on that lower rate"
"If you order a ship you will have dead money for 18 months, not to mention the fact that it is simply impossible to make money carrying cargo on vessels, not unless they are old….the key to making money in this business is operating vintage ships…. you only do new ships at the bottom part of the cycle”
“The movement of cargo has a certain intrinsic value, but the cost of moving cargo is determined almost exclusively by the perception of the direction of the freight rates”
"And there are no economies of scale in the shipping business, not beyond a fleet of 10…You can capture the rest of the efficiencies by being the big client of a third-party ship manager”
"every veteran high yield bond investor wanted to know: “where was my money going and why.”…(and the answer) “Just the usual drill: pay down a bit of senior secured bank debt, raise more working capital”
"When you are looking at (tanker) shipping you should just forget the fleet growth numbers and the scrapping and order books and all of that supply side stuff. All you really need to look at is OPEC production and how many ships are in the Arabian Gulf" (or USEC now)
"By the time historical financial results or book values were actually released for a shipping company, there was an extremely high likelihood that they would not reflect the current market"
"Possession is nine-tenths of the law"
"success in life was basically random; it was a function only of being out in the world with a willingness to try new things" (See my review on The Black Swan)
I also respect the fact that despite the book being mostly about ship finance, due regard is given to the work of seafarers in moving world trade. Having read this book, I'm not going to wait another year to read the sequels Viking Raid and Exit Strategy, and you will find these reviews soon.
Full disclosure: I don't get paid to post reviews, so you can be assured that this is my candid opinion, and how I see the contents of the book apply to my world.
Amazon Book Link: The Shipping Man
