Weight of Freight: Talking tankers with Asyad’s CEO

John: And welcome to Argus' "Weight of Freight," where we explore the powerful connections between the freight and commodities markets. Today, we'll be talking to Dr. Ibrahim Al Nadhairi, chief executive of Asyad Shipping. He's been chief executive of Asyad Shipping since 2020, and led the company's fleet growth to 95 ships, operating across the tanker, dry bulk, and gas carrier segments. Welcome.

Dr. Al Nadhairi: Thank you very much, John. And looking forward.

John: Excellent. So, Asyad recently purchased three new-build VLCCs from Hanwha Ocean, in South Korea. What pushed you towards this particular purchase?

Dr. Al Nadhairi: Well, that's [inaudible 00:00:49] These are not the only three ships that we bought recently from Hanwha. We also managed to purchase four new vessels as well, in 2024. And this is basically, it's part of a scheme that we are following, and our business strategy, in terms of renewing the fleet, as well as expanding it. So, we are building for the next phase of the market, as I would say. It's not just only for the coming quarter or the coming short term. These, of course, these vessels, as I said, they are part of our renewal program, as well as expanding the fleet itself. And also, for us, we want to strengthen our VLCC position in the market, and improve our overall age profile. [inaudible 00:01:44] you may appreciate that, especially in shipping, you need to maintain a young fleet, and this is basically our strategy, also, to make sure that our fleet is young, it's competitive, and it's also fuel-efficient. In terms of competitiveness, [inaudible 00:02:01] operationally competitive, we do our own operation here, from the Muscat office, and we do the commercial operation from Muscat as well as from Singapore office.

So, basically, these thing, they all, put together, they matter to us. For us as well, we need to be seen, and, as well, that we believe we are a green company, or becoming greener, I would say. So, in terms of our emission performance, that is important for us. We strive to reduce our emission footprint. And to do that also, we need to reduce our operating cost. So, newer ships, or younger ships, means less fuel emission and more competitive operating cost. Of course, the market itself, I would say, is thrilling, and it's good to go for such a new acquisition. And we will continue doing that over the near future.

John: You mentioned strengthening your position in VLCCs in particular. Do you see that as a market that's going to be firm in the short term and the long term?

Dr. Al Nadhairi: Well, shipping market in general is quite cyclic, I would say. And the near term can move quickly. Things can change overnight, and I mean it overnight. We experienced this recently. However, also, due to the geopolitical situation around the world, the routing change, the insurance, all of these are put together. Of course, this will impact the shipping market. Saying that, for us, we don't try to predict the daily rates, when it comes to shipping. However, we focus on keeping our fleet as flexible as possible, and protecting our performance, as I said, through balanced commercial decisions, as well as professional technical management of the ships. So, it's operationally and commercially balanced, and we think this is going to help us, basically, in maintaining a more competitive, commercially competitive fleet in the [inaudible 00:04:30]

John: That must be a very difficult situation at the moment. A lot of environmental regulations are changing. There's a lot of evolution, especially on the ship fuel and emissions side. And you mentioned that with these purchases, you're focusing more on your emissions. So, is there any particular fuel that Asyad is going to be focusing on going forward? Ammonia, or methanol, or...? Is there any particular focus?

Dr. Al Nadhairi: Well, for us, at this stage, we... I mean, these new ships, let's just put it as a practical example, these new ships, they are dual fuel-ready. So, we are not focusing as such on a particular fuel at this stage. We still maintain the conventional fuel, with, of course, other addition to the ships that will reduce the fuel emission in terms of, like, enhancing the performance of the ships, fitting scrubbers, introducing new technologies to the ships, whether they're to the propeller or to the hull itself, or maybe by applying the more friendly, and I would say more efficient, paint on the hull itself. Then also, we try to digitalize the operation onboard. And we maintain, also, I would say, in total, it's like a modern, efficient VLCC, which we think is better-positioned for the regulatory and commercial environment as we go ahead.

Then we just go and focus on a certain fuel. Though we are keeping the door open, to be honest, for different fuels, whether it's ammonia or the methanol. And we do have ships that already operate on LNG, which is, like, considered to be transitional fuel. So, yes, we are trying to create that balance, but we don't want to be ahead of the industry in this particular topic, simply because the technology is yet to be approved, or proved, basically. There are still trials and failures on these things. There's a trial and error in [inaudible 00:06:48] technology itself. However, for us, what can we think of is basically what is happening now. So, when we say our ships are dual fuel-ready, we know that they include technologies, as I said before, like scrubbers, like shaft generators. There's also, these ships are...well, and, like, they're complying with the latest environmental requirements. They comply with the IMO requirements. They comply with the local as well as the international requirements, when it comes to the flag state.

John: Excellent. You mentioned some of the technologies that don't get talked about a lot there, like the propeller technology and the paint on the ship, as being significant in helping you save on fuel efficiency and save on emissions. Do you see substantial savings when those technologies are included?

Dr. Al Nadhairi: I would say yes. So, when it comes to enhancing efficiency and fuel efficiency on board, I mean, it's not how many or how much technology you put on board. It's what type of technology you put on board. I would give you an example. So, we do have a lot of sails on one of our big ships. It's one of its kind. It's a very big ship, 400,000 tons. And the ship is fitted with a lot of sails, as well as the technology, an advanced technology within the propeller. Putting these two technologies together has given us a very good saving, fuel saving, and fuel efficiency. However, if we try to add more technologies into that one, we would maybe barely make a little bit of a difference. The cost would be high, in terms of CapEx, as well as we might end up having a very small gain, if there is any in the first place. So, you need to really do it nicely. You need to select the right technology for the right ship as well.

Not all the technologies will fit with the ships. For example, when I say rotor sails, we wouldn't fit rotor sails on small ships, because simply, there's no gain there. Or it will be very limited gain. But when it comes to the propeller technology, efficiency, to enhance the efficiency in the technology, in the propeller, then yes, this can be applied to all types of ships. Hull paint can be also applied to majority of the ships, especially the faster ships. So, if a ship is moving slowly, you wouldn't put, like, a silicone paint on that one, but you would put it for a higher-speed ship, because it will give you some good results. When it comes to hull optimization and the hull shape, then, again, it depends on the type of ship that you want to do it.

So, it's not like one size fits all, but you can combine also couple of technologies together, but also, don't go too far, because you won't achieve... I mean, these technologies, when you put them together, they don't result in, like, a total of 15% or 20% saving. They will be limited to, at this stage, you will be talking somewhere below 10%, but that is good enough to show that the company is aware of its responsibility when it comes to the environmental responsibilities, when it comes to complying with the regulatory requirements, [inaudible 00:10:25] and also when it complies with the green, kind of, like, green fuel technology. John: Excellent. Turning now to the clean market, Asyad also has a large presence in the clean market.

Dr. Al Nadhairi: Yeah.

John: Do you see the clean as perhaps having a stronger growth potential than the crude?

Dr. Al Nadhairi: Well, very good question, John. Thing is, I would say, though, as of today, of course, the global requirement is mainly for the crude... It's more. There's more requirements for crude, because when you go on crude, there's no limitation to what sort of product you would give. But to go for clean product itself, straight away, then there's limitation, and limitation even on types of ships that you can carry the clean product on, as well as the size of the ship. So, a VLCC, for example, will take crude oil that is up to, like, 300,000 tons, or 2 million barrels of fuel. But then when you go for product tankers, you won't reach that state. You will be somewhere, maybe 50% of that, at the most. So, it makes it much more, I would say, efficient to go for crude oil.

Saying that, I mean, there is, also, when it comes to the regional refining context, for example, within the Middle East, being, of course, an important energy hub, despite all the geopolitical tensions that is happening nowadays, but then, of course, you could see there's an increased number of refineries around. There's, the throughput of crude and the output of product is also increasing. We do have a refinery here in Duqm, which is considered one of the big refineries in the Middle East. And the refinery's, like, working at its, well, I would say 100% capacity. You know, that sort of figure, it gives you also an indication that, of course, though the crude is very important, the product will also remain as an important market. And for us, when we expand our fleet, when we renew our fleet, it's not just only on the crude side, but we also put a good focus also on the product side, as well as other segments, of course.

John: We certainly have seen that in the Atlantic, and we've seen, for example, in West Africa, the Dangote refinery has turned West Africa from being a crude exporter, that we may even now see them being a product exporter, following on from, you know, the way that Oman and the Middle East have evolved. And it's really reshaped the Atlantic market in recent years. Do you think that it's going to continue to reshape the Eastern markets as well?

Dr. Al Nadhairi: It will. Let me just maybe put it this way. Don't wanna say... I mean, the VLCC market will remain the important player. We do have clean tankers that [inaudible 00:13:43] represent the largest vessel, in terms of numbers. In terms of size, of course, the VLCC segment is bigger. However, just back maybe to your question, I think we'll see, what matters to us is basically the trade pattern. And it evolves. It keeps evolving. So, for us, we ensure that our fleet is positioned to serve those flows, as well as our focus is mainly is on maintaining a presence across key tanker segments, whether it's in the crude or the product, the clean product. But then we don't rely on a single [inaudible 00:14:24] because that is, to me, that is suicidal. The market keeps moving up and down. And our philosophy is, by going into different segments of the market, including sub-segments of some main segments, like in the tankers, is basically, when one market falls, then the other market will basically support it.

And for that, we do see growth, in terms of shipping, in terms of the crude and the clean segments. They, I mean, at the same time, we are also strengthening these segments, as I said, by adding more ships, and by maybe divesting from the old tonnage, and introducing new tonnage to the fleet, to ensure that the fleet remains also young and competitive. And that diversification, of course, is important for us, because, I mean, thinking about it, I think the fleet renewal remains as a central to maintaining competitiveness. Having our own internal operation, whether it's a commercial operation or a technical operation, gives us also a competitive advantage, by providing a full suite to the charters, or to the kind of the customer. We will continue to reshape the fleet profile, of course, in line with our long-term investment strategy. And we are not going to just focus on one specific segment, but we will make sure that we make use of any opportunity that rises in the market.

John: Has that pushed you to look at gas carriers as well? I saw that you have a number of gas carriers in your fleet.

Dr. Al Nadhairi: Yes. Well, when it comes to gas carriers, especially the energy gas carriers, I mean, considering the capital investment...and also, right now, there is quite a big supply of LNG ships in the market, compared to the restricted demand. So, for us, the strategy when it comes to LNG, of course, as you rightly said, we are expanding in that one, but what we've done, we sold our old, non-efficient and non-competitive ships, and we purchased new ships. So, we are expecting two ships to be delivered in the first half of this year, or maybe by the end of second quarter of this year. And these ships are already chartered out to a local charter. And that is a long-term. So...and more to follow, of course. Our strategy, when it comes to the energy, in particular, is it's different than the products and the VLCCs. The VLCCs, we will maintain some, to play the market. I mean, some we will have a long-term, or TC, time-chartered ships, and others, we will try to put them in the market, to just make use of the upside of the market. However, for the LNG segment, we rather not to do that. We just go for, normally, long-term charter. As I said, given the cost of the projects themselves, the capital expense, as well as the market sensitivity and the cyclics, cyclicity of the market, it actually makes us think twice before we think of putting an LNG ship in the spot market, given that the supply and demand are not, well, in favor of the ship owners at this stage.

John: So, you've touched on a really interesting point there about the split between long-term and spot charters. So, on the crude and tanker side, you aim to keep, would it be a significant portion of the fleet, or less than 50% of the fleet on spot?

Dr. Al Nadhairi: Well, for us, okay. I would say, see, it's, we play it the way it should be. We think it's right. So, we do not approach chartering as an either/or decision.

John: Right.

Dr. Al Nadhairi: It's basically, what is the right approach? Do we need to put ships more into the market, or do we need to charter our ships? Of course, chartering ships in long-term, it limits our exposure in the market. It gives us, of course, a kind of, I would say, security, and long term. However, we also end up, like, losing good opportunities. So, we think of, like, having stability and flexibility at the same time [inaudible 00:19:24] You know, this is very important. The objective for us is disciplined long-term value creation. That's what matters. How we do that is basically either by putting ships in long-term, or trading them in the spot, or together. As of now, what we follow, at this stage, we are, like, to, like, 60/40. So, 60% of [inaudible 00:19:48] fleet is already fixed, and long-term, and about 40%, around that figure, is in the spot market. And because the market is still volatile, but it's also thrilling. I mean, right now, the tanker market is fantastic. You would put as much as possible when it comes to a spot market. Of course, there's limitation to that one.

But also, the past few years have demonstrated how quickly the freight market can change. As you are aware that the geopolitical events as well, and the supply chain disruption, do affects the rates and routing. But there's also the regulatory requirements and local requirements, tax regimes also, they do, from time to time, constrain us from maybe moving into a specific direction. However, we are living with this. This is part of our day-to-day life. So, when you say markets cycle, that, for us, is actually the best day for us. If it becomes routine and there's no challenge, then we don't feel it. So, our responsibility maintains that we perform throughout the cycles, and we maintain, like, a balanced and adaptable approach, to remain in the center of our business, and to ensure that our diversified fleet, when I say diversified, in terms of chartering and long-term, remains in a way that, as I said previously, that it gives us a good exposure. But also, it's careful in responding to these shifts.

John: Yes, you mentioned geopolitics there. It's one of the fascinating areas for analysis at the moment, because one of the things that we've been looking at is that every first quarter, for the last five years, has had a significant geopolitical shock. Whereas the first quarter is normally what we would expect to be very slow, and that's not how it's gone in recent years.

Dr. Al Nadhairi: Not at all. Not at all.

John: Speaking of geopolitical shocks, before we end the podcast, I thought I'd just touch on one that's been a significant disruptor, Venezuela. Everything has changed there in the last two months. What are your thoughts on the situation?

Dr. Al Nadhairi: Well, I think, well, perhaps it's a bit too early to judge at this stage. But what to think that, of course, shipping will continue to operate in a global interconnected environment. That is something we cannot deny. We've done this through COVID, not only just on the geopolitical, through COVID, where shipping continued to operate, despite all the other means of connecting countries were closed. Like, land borders were closed, airports were closed, but sea ports continue to operate. So, disruption can quickly affect the routing. It can, as I said from the very beginning, it can affect insurance and freight dynamics. However, I think the good thing about shipping industry, that it's agile by its nature, and it's also disciplined. So it can adapt to these sort of challenges. It's resilient to a stage where even if we faced, like, the [inaudible 00:23:17] well, the most significant stress, we will continue to operate. And we faced that during COVID, as I said previously.

At this stage, I think the focus from us is basically to reinforce the importance of our operational reliability and commercial responsiveness, by basically maybe watching from a distance of what's going to transpire from this. But we believe that Venezuela coming into the market is going to give good opportunity to the shipping market, not to deny the ability of that country to produce much, I mean, good amount of oil. However, for us, the intention is to focus on being agile and financially disciplined, enough to withstand these sort of shocks. And we will continue, I want to emphasize on this one, we will continue to basically operate with our internal governance and strict compliance standard. That is important for us. Safety and lawful operations and customer liability is also part of our mandate. And our strategy is built around resilience, rather than reaction. So, Venezuela is there. What happens tomorrow? We don't know, but we will always be flexible to work within these parameters.

John: Excellent. Well, I think that about wraps it up today. We've had an excellent deep dive into the tanker market, and the robust outlook moving forward. It's great to hear a ship owner's perspective on these things. So, first of all, I'd like to thank our guest, Dr. Ibrahim. Thank you for being here today.

Dr. Al Nadhairi: Thank you very much, John. It's been really inspiring to speak with you and the rest of the team. And I wish all the best to the entire world, not just only the shipping market.

John: Thank you very much. And thank you for tuning in. If you want to learn more about Asyad Shipping or Argus Tanker Freight, then all the details are on the website. We hope to see you all again in the next "Weight of Freight." Goodbye.