The Shipping Industry

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• The Shipping Industry

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Shipping Terminology

• Time Charter- Longer term contracts
• Spot charter- short term contracts

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Oil Tankers

• Perfect storm from about 2003-2004
• Phase out of single hull tankers 2010 (but
  affected market at time because fleets were
  restructuring and ordering double hull tankers)
• High avg. age fleets, tankers needed to be
  scrapped
• High demand for Crude oil world wide
• Ship building yards packed and backlogged until
  06
• Rough sea weather (cyclical)

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Other Oil Tanker Companies

• Other Oil shippers prospered as well
• NAT, VLCCF, TNP, GMR, OMM
• All paid high dividends during time, but since
  the outlook is not as good its probably not the
  safest time to get into them. Good dividend plays
  to watch though, just for cyclical opportunities.

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Bulk Shipping

• Ship Dry commodities such as coal, iron ore,
  steel, grains, etc.

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Bulk Market Outlook

• Has a better outlook than oil shipping in terms
  of supply and demand and room for growth.
• China, South Korea and India demanding a lot of
  commodities to develop
• China Olympics in 2008, building like crazy to
  show off to the world, increased steel demand
• Even beyond 2008, though, China Demand expected
  to continue to grow
• Fairly significant part of world fleet over age
  of 20 years, potential scrap candidates
• Supply growth expected to be lower than Demand
  growth, and not as many new build ships coming
  online until 2010.

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Baltic Exchange Dry Index (BDI)
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Bulk Shipping Strategies

• Potential in industry for safe or risky plays
• EXM heavily exposed to Spot rates

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Bulk Shipping Strategies

• EGLE has time charter strategy,
• more predictable income and as result they offer
  a high dividend yield (currently 11.5)
• Still room for growth by expanding fleet

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LNG Shipping

• Not yet very developed market,
• Needs a lot of infrastructure, because LNG needs
  offshore rigs to convert liquid to gas and vice
  versa fro transportation.
• Only company know of GLNG
• Potential, but needs more time to develop.

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Stock Picks

• My pick is Golden Ocean Group Limited (GDOCF.PK
  on US exchange, on Oslo exchange gogl.ol
• Reasoning
• John Fredriksen
• Made fortune during the Iran-Iraq wars in the
  1980s when his tankers picked up oil at great
  risk and huge profits.
• His whole life is shipping, started as a shipping
  broker
• Huge success with FRO, so he can do it with
  Golden Ocean
• Follow the expertise and good management team,
  great risk, but great reward
• Golden Ocean is growing and uses mixed strategy
  depending on the market
• International exposure, not just linked to US
  economy so its a good means of diversification

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Frontline LTD. Success
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Golden Ocean Group Ltd.
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Potential of Golden Ocean