We have no position in Navios or any other "dry bulker" given ongoing risk related to excess supply of vessels, but we are keeping tabs on Navios for general insights into the global economy. The company often includes very interesting data in management slide decks. For example, we mentioned Navios and shared content from the company in July of last year in Energy Demand and China: One Picture is Worth a Thousand Words. In this case, the "picture" was a slide illustrating a massive upward shift in Chinese coal imports.
Navios reported financial results last week and included the following slides - growth in emerging economies and contribution to global growth:
And, for additional context, we include one more slide - increases in the global dry bulk trade over time:
These slides reveal a very clear trend: despite potential or actual "bubbles" in certain parts of emerging economies such as China, the multi-year/decade secular shift in emerging regions is powerful. As we've said before, the train has seemingly left the station. In our view, the trend tells a story that likely has long legs, even with turmoil in Libya/elsewhere and inflation risks. For discussion of certain risk factors, please see this 2/26 NYT's article Suddenly, Emerging Markets Look Complicated Again.
With regard to the overall trend, Navios management commented in its 4Q10 release:
- Ms. Frangou continued, "The shipping industry is going through transition at a time when there is healthy underlying demand for mineral and grain commodities and crude oil globally. While we are cautious about the near term, and continue to monitor closely the supply of vessels, we see continued demand for commodities from the urbanization of emerging markets."
Per our Global Shift and other posts, one way we expect to benefit from global growth is through our container shipping companies Seaspan (SSW) and Global Ship Lease (GSL). In both cases, we continue to see incremental upside and expect a growing dividend income stream over the medium term.
Disclosure: long SSW, GSL.
© 2011 Jeffrey Walkenhorst
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