Genco Shipping & Trading Limited (GNK) Earnings Call Transcript & Summary

Hello, everyone. Thank you all for joining us today. My name is Omar Nokta, Managing Director for Clarksons Platou Securities. And I'm very happy to be joined today by the management team of Genco Shipping & Trading. We have John Wobensmith, CEO of the company with us; and also Apostolos Zafolias, the CFO; and Peter Allen, SVP of Strategy and Finance. As many of you know, Genco is one of the largest publicly-listed drybulk shipping companies trading on the New York Stock Exchange with a market cap of around $500 million. We think it's a very exciting time for the shipping industry and for the drybulk sector, especially and even more so for Genco. Genco's got a fleet of around 40 ships and it has a barbell focus on the large Capesize ships and the midsized Ultramax and Supramaxes given the company real direct exposure to the iron ore and minor bulk trades. Obviously, the [ check ] was off to a very strong start, and the outlook continues to be favorable in our view, and we believe the wind is really at Genco's back as we look forward. Capesize rates have pushed above $33,000 a day this morning, a level we have not seen for this time of year in many, many years, probably going back to 2010 or 2009. And Supramaxes have surpassed $20,000 a day for the first time since 2010 and are close to $22,000 as of this morning as well. So things are looking pretty strong. Genco expressed off their announcement on Monday that it's shifting its capital allocation strategy to a high dividend payout and low leverage structure. The company intends to focus, in the near term, on reducing its already low debt position and gearing the company up for a high dividend payout model. Also, Genco just announced the acquisition of a modern eco-design Ultramax in an all-cash transaction. I will shortly hand off to John to give a proper overview on the latest and greatest, especially on the capital allocation strategy. There's also a slide that's being used. You should see that on your screen. And John will go through some of the highlights of the presentation for about 15 minutes. We won't go through the whole deck, but we'll spend some of the -- we'll spend some time going through the media and more important and relevant items. And then after the remarks from John and Apostolos and Peter will do a bit of Q&A, I have a few questions and topics lined up to bring up and we'll take questions from the audience later on. [Operator Instructions] So I think with that, we can go ahead and get started. John, please go ahead.

Great. Thank you, Omar, and thank you very much to you and the rest of the Clarksons team for setting up this webinar this morning. It's very much appreciated. Just starting off, just to reintroduce who will be speaking today, myself as CEO, we also have our Chief Financial Officer, Apostolos Zafolias with us; and Peter Allen, who is Senior Vice President and Head of our Strategy and Finance. So [ portend ], just a real quick introduction on Genco. Omar went through most of this. We are the largest U.S.-based drybulk shipping company. We own and operate 40 ships with a mix between the larger vessels, the Capesize vessels, focusing on the iron ore trades as well as a good sized fleet in the midsized sector, focusing on the minor bulks. We are headquartered in New York, and we also have 2 satellite offices, one in Singapore, handling our Capesize chartering and then one in Copenhagen, which is focused on the minor bulk chartering along with the team in New York. We have a barbell approach and Omar went through this in terms of focusing on the major and minor bulk vessels. We want to have direct exposure to the commodities that are prevalent in the drybulk shipping industry. I'll go through that in a little more detail in just 1 second. And we're focused on iron ore, grain, bauxite, cement, nickel ore as well as other minor bulk commodities. The company has traded on the New York Stock Exchange under the symbol GNK. In terms of our differentiated approach, we have a very strong financial position, $164 million in cash as of March 31. It's the strongest balance sheet amongst the peer group which has allowed us to put a new value strategy, capital allocation strategy in place, which we announced yesterday, based on low leverage, returning cash in a sizable manner to shareholders on a quarterly basis, but also continuing to grow the company through accretive vessel acquisitions. We're focused on long-term sustainable operations in terms of making our fleet as fuel efficient as possible. We divested our older less fuel-efficient ships last year, and we are now focusing on acquiring newer fuel-efficient eco-type vessels to reduce our carbon footprint. We have a diverse global team, again, offices in New York, Singapore and Copenhagen, very strong culture of safety. And also extremely important, we have a very high corporate governance culture and approach We are a U.S. filer, so very transparent, no related party transactions whatsoever. Everything is contained within the publicly traded company. In terms of what we're moving, as I said, we want to have direct exposure. That's why we have the Capesize as well as the medium-sized Ultramaxes and Supramax vessels. You can see the commodities that we carry and the percentage of those commodities that we moved in 2020. We have 40 ships now as of this morning, 1 to come on the water between May and July. We did 400 fixtures booked by our in-house commercial team across the 3 global offices last year, and we added 20 new customers. And I will remind everybody on the commercial platform as we go to the next slide, we revamped the entire way we do business. We went from being a tonnage provider moving over in 2017 through an active commercial strategy, where, again, we're utilizing the 3 offices to directly move cargoes for our customers. That has worked out very well. It has allowed us to not only outperform the indices but really grow our customer base and generate good return on capital. Looking at our operating leverage. I think this is a very interesting slide, particularly with where we're seeing rates continuing to move up. So looking at just the fleet as a whole, every $1,000 a day increase in TCE is about $14 million of incremental EBITDA. But even more importantly, the highly operated levered Capesize vessels, those 17 generate $31 million for every $5,000 increase in TCE, and the $5,000 is clearly a very good realistic metric to use on the Capesize side, particularly with what is happening with rates so far this year. Looking at our stock performance, what I'm most focused on is the changeover in our shareholder base. We have had 2 of our large shareholders sell down over the last several months. So we have gone from having inside shareholding of approximately 60% down to 20% today. So we have approximately 80% of free float. That has been a very advantageous event that has occurred in terms of generating liquidity in the Genco equity as a whole and has increased our daily trading volume, which we view as very positive. So moving to what we announced yesterday, our capital allocation strategy I will, again, just try to hit the high notes on this, if I can move the slide, which -- Henry, I'm not sure why this is not moving.

We can see it moving, John. Is it -- you need to be on Slide 13?

Yes. I've got Slide 11 up. There we go. Okay. Now, I got it. Thank you. Okay. So looking at Slide 12, this is the layout of our new comprehensive value strategy. We do want to transform Genco into a lowly levered, eventually getting down to most likely 0 net debt, but having a very attractive dividend yield paid consistently on a quarterly basis. We will still maintain significant flexibility to grow the fleet, which is important. And that quarterly dividend is targeted on cash flow is less a reserve. I'll get into a little more details on that in just a second. There is a road map to year-end. We plan on taking advantage of this continuous strong market to pay down debt using operating cash flow and cash on the balance sheet. But again, we have built in to our plan to continue to acquire few vessels, one of this we did this morning. In terms of the time line, we are targeting paying out our first quarterly dividend in Q1 of 2022 under this new strategy based on the cash flows of the fourth quarter of 2021. We plan on continuing to pay the $0.02 per quarterly dividend that we have been now for a while. Corporate strategy. In terms of dividends, based on cash flow generation, very important to reduce the cash flow breakeven rate, which will be a part of paying down debt and also doing a global refinancing of our debt, which we are currently working on. And then again, in terms of growth, we plan to hopefully start to be priced off of dividend yield. We believe that our shares will trade consistently at a premium to net asset value based on that dividend yield. And we would like to take advantage of the arbitrage of using equity priced above NAV to buy further ships down the road that are accretive based on NAV. So just taking a real quick look at the road map where we are today, we're at 28%. On a net LTE basis, we are targeting a 20% net loan to value by the end of the year. This is under the assumption also that vessel values stay as they are today. which, by the way, I do not believe they're real. I believe they're going to continue to move up. And again, we'll get into that in a little bit. And the idea is to target $75 million of cash on the balance sheet after the paydown of debt. Looking at the formula. We tried to lay this out and we held a strategy of making this as simple as possible, where we start with operating cash flow for the quarter, less any debt repayments for the quarter, less capital expenditures for drydocking and special services, maintenance of our ships, less a reserve. The reserve is targeted based on quarterly debt repayments and interest expense. And what I mean by that is the idea is at least for the first 12 months during 2022 to build up a reserve that would cover 1 year of debt service going forward. Our credit facilities are typically structured where any prepayments that we do are not applied to the back end, they are applied to the next scheduled amort payments. So in our mind, if we have a year reserve buildup of P&I, principal on interest payments, we can effectively wipe those out for a year and bring the cash flow breakeven rate down to $7,200 per day, which consists of only our operating expenses, G&A and our drydocking CapEx. The reserve, in general, could be used for that debt repayment, but it could also be used for vessel acquisitions, it could be used for stock buybacks. It could be used for any other general corporate purposes. Most importantly, and the way this will work from a realistic standpoint is the Board will declare the dividend for the current quarter based on the formula that is on Page 15 and then at the same time, they will also declare the reserve for the following quarter. So you'll have visibility into how we are thinking about the dividend for the next quarter as well. Management will continue to put out our cash flow breakeven for that following quarter. So you should have all the tools necessary absent applying rates for the quarter to come to a relatively small box in terms of what will be distributed as dividends. On Page 16, we've done an illustrative cash flow sensitivity For example, showing a fleet-like TCE from $15,000 to $20,000 and what that would mean under our dividend formula on a per share basis. obviously very easy to apply a dividend yield to that. Even taking the middle column at 8%, I think you're well into the high 20s in terms of the stock price. And this is where we believe there's real value creation. Our low net leverage, clear differentiator in the peer group. This is what is allowing us to put this strategy in place without having to do any dilutive equity offerings in order to pay down debt. Our plan is to solely use cash flow from operations to get us down to that net debt of 20% by year-end. This is a very important slide. This is showing the market over really going back to the very beginning of 2000. The green line represents cash flow breakeven without debt service. And as I said before, we will build up that reserve so that we can effectively take out at least a year of principal and interest, getting down to that green line. And as you can see, very few situations, as you back-test this, where rates have gone below that cash flow breakeven, which is why we get comfortable with paying a dividend on a consistent basis on operating cash flow, obviously, less debt service and less reserves, but consistently on a quarterly basis. I would also tell you, as we all know, this is a highly cyclical industry. And we also believe that it allows the company to continuously play offense and not have to play defense again. So just in terms of the opportune time and putting this strategy out now, the low leverage and obviously attractive dividend strategy. We want to make the market aware. We will continue to update the market as we get into our earnings call in a couple of weeks and as we put into place a new credit facility. We have a very strong starting point with a low existing leverage. And as I said before, the key goal is to drive down that cash flow breakeven rate so that you can, without problems, consistently pay a quarterly dividend. I will skip over the drybulk market outlook just because I'll go into the market, and I'm going to go through this relatively quickly because I know I'm already running over on Omar's time frame here. '21, amazing that we seem to be gated in just a day. But the BCI is now standing at $33,000 a day and the BSI is at $21,750. Asset values have moved up, but I still think they have a ways to go. They are certainly -- they certainly have not leased up nearly as much as freight rate fab. So I think there is quite a bit more room for asset values to move up going forward. This is a -- I'll leave some of these slides for you all to look at later. This is posted on our website, obviously. You can see the record number of iron ore imports. Brazil, most importantly, is starting to recover from issues that they had in the beginning of 2019 from the Vale dam disaster as well as recovering from COVID-19 issues. Inventory levels. If you look at the Chinese steel inventories, they are reacting as they should from a seasonal standpoint. coming down. Iron ore forward inventories are still low from a historical standpoint. I will say we're in about 28 days on hand versus an average of 31 and we've been well into the 40s in terms of highs. So iron ore port inventory is still on the low side. Coal power stockpiles continue to come down, not just in India, but also in China. Strong grain driven by the U.S. season earlier. We're now getting into the South American season. And again, we expect a strong U.S. season as we get towards the end of the third quarter, early fourth quarter. Okay. This is -- this, I will spend just a few minutes on the newbuilding order book This is one of the major things that is allowing the drybulk industry to recover. We have a very low order book. It's at a historical low at 6%. You can see what is scheduled for delivery for the rest of this year and then dropping down going into next year. These are gross numbers. We do think scrapping will continue, albeit certainly at lower levels because of where our freight rates are. But I think our projections are somewhere around maybe net fleet growth of 2% this year and then dropping down into the high 1s, maybe 1.28% next year. The really important thing is to look at 2023 and beyond. It's just basically 0 at 0.4%. And if you take a look at what's been happening There's been -- actually, I'm going to go forward with 1 slide for a second here. There's been a lot of ordering on the containership side. So -- and to a lesser extent, on the tanker side, what that has done is it has filled up shipyard capacity. So if you are going to try and order a drybulk ship today, you're really talking about very late 2023 if you were able to get a slot. So we've got very good visibility on the supply side for quite a period of time here. Newbuilding prices have also moved up because of the price of steel, but also just the demand for slots. So I think that's helpful in also keeping a cap on things. And then I will go back to this slide because this is quite interesting to see what has happened to capacity in China, where we've gone from 435 active shipyards in the 2009, 2010 time frame, down to only 125 today. So again, these are very positive things for the drybulk shipping on the supply side. So just finishing up, freight rate catalysts for 2021, the record low order book, which I mentioned. Global stimulus, global GDP is forecast to rise more than 5% in 2021. China's economy has certainly recovered, but we're now turning our focus to the rest of the world. Europe is still a little on the slow side. But Asia, in general, has been recovering, and it's been very helpful. The recovery of the Brazilian iron ore export and getting their logistics sorted back out, their production figures continue and these targets continue to move up for 2021 and 2022. And we've also seen India continue to import higher levels of coal and their steel production continues to rebound. And then just on Genco, experienced U.S.-based management team, who was partially on the call today. We've got the drybulk market dynamics. We expect the demand to outstrip supply for this year and also going into 2022 as well. The capital structure and the announcement of the new value strategy, we think, is extremely compelling. The fleet modernization, we continue to do. Our commercial platform has been performing well, creating outflows over the indices. And then Genco's fleet in terms of barbell approach having direct exposure to each commodity. And the way we, again, we view the midsized sectors providing a more stable income stream, but we think it's very important to have the higher beta exposure to the iron ore market in the Capesize to provide real operating leverage for the fleet going forward. So Omar, sorry, I ran over a little bit, but thank you.

John, that was very good. That was, I think, an excellent run through of going through the company and also the fundamental backdrop on investment, obviously, the exciting new capital allocation strategy.

I've got a handful of question/topics to move forward with, and I encourage the listeners to also send in questions using the Q&A chat button and then I'll read those aloud. But maybe, John, first off, I think you've outlined a pretty solid strategy with this -- with your capital allocation going forward and it sets you up with a very strong balance sheet that you already have, but you keep the strong balance sheet and gives you flexibility basically throughout the cycles as I see it. And yet you're rewarding shareholders along the way. We go back, obviously, a long time going back to the IPO in '05. And Apostolos, I remember, going back to '05 in those heydays, but 15, 16 years later, you're shifting strategies. Maybe -- could you just give us a backdrop of what drove you to adopt this new approach with capital allocation?

Sure. Let me roll back the clock a little bit. So I took over as CEO in early part of 2017. At the same time, we did a global strategy for the company alongside the Board. And we focused on, really, 3 things revamping the commercial strategy, which I've gone through with you all in terms of being a direct owner operator and cutting out the middleman and lifting direct cargoes. Two, was to make -- really drive down, in a conservative manner or a responsible manner, our operating expenses, which we have done. And then three, focus on capital allocation and get the leverage down. So this has been something that has been in the making for quite a while. I would say specifically, we've been working on this strategy for call it, 6 to 9 months. We've had a lot of board meetings on this, and it really comes down to designing it and trying to make sure it is easily understood and transparent and people can at least predict the next quarter's dividend as -- particularly as analysts are doing their notes. There was a real desire to establish a solid company that will be around for the long term. And will not have to -- I think, as I've said before, we'll always be on the offense rather than being on the defense and not having to go through raising rescue equity when freight rates do move back down, which, again, we're very positive for the next couple of years. But this is a cyclical industry. We wanted to make the company bulletproof and really drive down that cash flow breakeven. We wanted to return cash to shareholders in a meaningful way. We wanted to continue to grow the company because we think this is a very good business. So it was a combination of things, but again, There's a lot of time spent on this. We spent some time with some advisers in talking to investment banks, in designing the formula and designing it would work. Omar, you're still there?

Yes. I'm on mute.

Okay. Very good.

Yes. I was going to follow up and ask the -- clearly, this is -- I think it's a unique strategy and one that -- we've seen other companies, either in the shipping or the energy or just, say, the commodity space that have done something perhaps similar. But one of the things that maybe is a bit different, and you mentioned this in as 1 of the 3 legs that you drove forward when you came on as CEO is the commercial platform. I think a lot of times, when we think of high dividend payout, we think of sort of like a passive company That doesn't really do much with its vessels aside from just simply being a pure tonnage provider. Here, you're setting this up a bit differently, it appears. And so just wanted to double check with you on the -- does commercial platform stay in this context?

Oh, absolutely. I mean, no doubt. So both -- the way we do business, again, being direct with the customer does a few things for us. It's -- again, it allows us to increase our margins. because we're not handing our ship over to someone else to use it. And the amount of real-time daily feedback to allow us what is -- to allow us to understand what is going on in the market on a daily basis is light years ahead of where we were when we were just a tonnage provider. So that has been extremely advantageous. The commercial platform, in general, it added $15 million of incremental EBITDA in 2020. So that's a real number. The -- what I would tell you is that irrespective of this strategy, I do think, particularly in the Capesize sector, there will come a time where we will want to take a portfolio approach and put some of our Capesize, our larger, more volatile ships away on time charter. So I do believe you will see us do that. We have been -- we've been watching the market very carefully. Again, I believe the time charter market is going to continue to move up, as I said before, I think values will continue to move up. So there's no doubt the platform will stay in place. And I think it will continue to do great things. But I think it's prudent, no matter what our strategy is in terms of capital allocation, but it certainly goes nicely with this dividend strategy even more so, is to take some of the Cape exposure off the table at some point by putting things away under 12-month plus time charters.

Yes. That makes sense, John. And I guess perhaps just kind of thinking about this. You spent 6 to 9 months, and you've done a lot of drawing up with different plans. and maybe the -- might be a little bit of a sensitive question, but I just wanted to maybe ask you, were there other alternative sort of concepts or ideas that you were honing in on? Or was this one just kind of -- you knew from the beginning of this is the way to go?

No, we looked at quite a few things. I would say the one that would be the obvious structure to look at would be to simply lever up and buy a bunch more ships. And I have to say, short term, that can certainly work well, particularly in a rising market. However, we really do take a long-term approach to this, and that is why we settled on getting down to loads to eventually no leverage and paying out large, sizable dividends to shareholders. We think there is enough operating leverage in shipping alone to give very good upside, particularly with our exposure on the larger ships in the Capesize, than having to lever up. I think the risk/reward is not there in the long term. I truly believe this is how shipping companies, in general, should be structured because of the volatility and that's ultimately why we settled on this. But yes, there was a lot of analysis, but I think the obvious one is what I just laid out, that'll be the -- I wouldn't even call it competing, because it didn't come down to that, but it was certainly something that we analyzed, we looked at, and it was part of the decision-making process.

Yes. And it's a great point you bring up, John, you mentioned it, yesterday, in your call, that there is a lot of operating leverage inherently in freight rates. And so having the financial leverage as well, obviously, goes both ways. And yes, but maybe it's a bit too much of extreme volatility, and we've seen kind of the results of that over the past decade when the financial leverage is too extreme. Maybe, John, one bit of feedback that we got initially yesterday was that while this Genco capital allocation policy, it looks like it's going to work great, and it helps us make money in a good market and helps us actually make money in a tough market. But the -- it needs to be followed very, very closely, and we can't deviate from that strategy, which you've outlined. And so what could you tell people who may be concerned about the potential of the risk of you deviating from the strategy and re-levering the balance sheet down the line. Just anything you can say to sort of alleviate that type of concern?

I mean other than pledging my first born, I think you have to look at the track record of this current management team along with the Board. Again, this was not something that we entered into lightly. This is a long-term strategy with a lot of work and a lot of thought that's gone into it. With the low breakeven levels, the flexibility under the reserve and the eventual ability to use equity as a currency, it just reduces our need to rely on debt going forward. But I think you've got to look at the track record over the last 4, 5 years of this management team, the decisions that the management team, along with the Board, has made. And ultimately, we're getting to this new strategy. And I agree with you, you've got to be disciplined. I think there are certainly other companies in the past that is tried to do, not quite the same thing here, but something similar, but I don't believe they were starting from the same low leverage position, and there were some mistakes that were made. And I had done and in some cases, we're successful, in other cases, made some mistakes. So we've taken all that in, in certainly how we structure this. And I simply think it goes in our track record going forward in what we wanted to do.

Well, I certainly agree with that and you guys have had a pretty sizable cash position for a long time now. And you could have easily spent it, but I think it does show restraint and like you said, discipline and just making sure that you identify the right opportunity. So yes, I think...

Omar, the one thing which I will say is it can be a little tough for a shipping company to be public. I think one of the main things you've got to have in shipping is patience. And I think we've exhibited that, and I think we've been very disciplined again in laying out our strategy and thinking through it before jumping into the pool. And so I know there -- we've had a lot of questions on capital allocation, and I certainly appreciate the patience that we've had from investors, and I believe they're going to be rewarded going forward now.

Yes. Yes. And I guess maybe the -- speaking of just kind of the environment that we're in today, you're talking in your presentation about where Capes are, where Supras are, obviously, very, very strong levels. And -- but in asset values, it's higher. You've acquired an Ultramax here recently, seemingly, as I look at it, at a fairly good price. But it does seem that where earnings are versus where values are, there's a bit of a discrepancy. And we like to go back and look at where things were in 2014. And in 2014, I would say, it was probably the last time there was this much optimism and excitement, although it never truly came to fruition. But at least the rate structure that we're at today, people had anticipated was going to be in place back then, yet today, values are probably 30% below where they were back at that time period. Do you -- can you envision values getting up? I know, obviously, you expect rates -- sorry, values to go higher, but can we get back to just where they were going back to 2014, where, say, a 10-year-old Cape was $35 million versus $27 million today? I'm not asking for much when I asked like the upside in valuation, but it let us feel the tides, if you will.

Yes. And yes, you're probably right. 10-year-old Cape. It's probably in the $27 million to $28 million valuation range. The -- if you look at -- I mean, I'll give you a prime example. The Ultramax that we just bought. So that lines up -- and this is one of the -- only one of the tools that we analyzed when we're buying ships. We're obviously very much focused on the forward accretion. But that Ultramax we bought, basis market, it's still in the lower second quartile of the last 10 years of values. So -- which would include 2014. But it doesn't -- that would not include any of the really high values that occurred in '07, '08. That would not be part of this analysis. So it's more of a normal type cycle percentile. So I still think vessel values have plenty of room to run based on the current freight environment, even based on the FFA curve, which can be somewhat of a proxy, at least it can be used directionally The return on capital numbers are fantastic right now. And so yes, I do believe values will continue to move up. Where the Capesize value settle out overall, I don't know. But to get back to $34 million, $35 million as in 2014. That doesn't seem like a stretch at all to me, particularly based on today's rates. I know rates don't need to go up anymore to be able to get to that number in theory based on return on capital.

Right. Yes. I mean definitely, the spot rates are there. And you mentioned earlier the idea of, at some point down the line thinking about putting vessels on contract or on charter, should those opportunities arise. What would you say, especially with your commercial platform and you're in touch with the end users, basically regularly, what does the time charter demand look like today given the big jump in spot rates we've seen this year?

We're starting to really see new liquidity come back into the market, particularly on the Capes. There's certainly 1-year rates available. We're even starting to see inquiry on a 2-year basis now. So it's becoming much more liquid than it was 6 months ago, 1-year rates. I haven't looked at where they might be today basis what's happened in the freight markets. But you're certainly talking about mid-20s. My guess is you're higher than that. 2-year rates, again, are just starting to get quoted All this is positive. We've seen the exact same thing in the Ultramax market as well. And the other thing I'll add is just in terms of going back to the values, is this is such a typically a strong correlation between rates and values That did break down for a period last year. It was a little weird, but it did break. But now we've started to see, obviously, that come back. And if you follow that normal historical correlation, these values have quite a bit of a ways to go. And then just in terms of that TCE rate and spot rates, the spot rates are important, but that curve -- that FFA curve, particularly in the Capesize sector, does support the time charter rates that are out there today, no doubt about it.

Yes. Definitely. Definitely.

Sorry I jumped around a little bit, but I thought the values are very important. Because I do continue to see them go up. And I can also tell you, from being in the market constantly, every day in the S&P market, it's not easy to buy a ship today. I will say that. We -- there are opportunities. But to get your hands on modern eco-vessels, you've got to have relationships, almost, to get things done today, which is why we were fortunate enough to get this Ultramax started, basically, overnight.

That's interesting. Yes. I guess...

That in -- I mean, that in itself pushes up values, right? So...

Right. I guess we've seen the S&P market come to life maybe around, say, August, September last year and then just saw a snowball, and we've heard many stories of just number of inspections that -- or people looking to inspect vessels and bidders and whatnot. It's just kind of gotten up through the pattern of a month?

Yes. No doubt. No doubt.

And maybe just with a few minutes to go here, just a couple of maybe additional questions on the market itself. From what you're seeing, obviously, rates are phenomenal for a Cape at $33,000 today on the spot market. We don't -- we haven't seen that in a long time, especially in April. I hate to say the word lagged, but it does feel at least that Capes lagged early on the previous -- looking back in February and March and they lagged relative to the other vessel segments, but we've finally seen some real improvement recently. What would you attribute what's going on in the Cape market, especially this recent surge over the past couple of weeks. What's driving that in your view?

Yes. I don't know if I would use the word lagged. I think with -- I mean, look, Capes, in general, typically have a soft first quarter, right? And what drives that is a slowdown in iron ore exports. There's a little bit of typical slowdown in demand, particularly steel demand because of the colder weather and building does slow down in the first quarter. But in the first quarter, you have, usually, heavy rains in Brazil, which slows down iron ore exports or the ability to export. We also have maintenance that typically takes place in the iron ore majors during the first quarter. I got to tell you, I mean, first quarter surprised us quite frankly, to the upside, even with all of -- even with the backdrop of heavy rains in Brazil and again, the typical maintenance. I do think some of it had to do with a very short, almost 0 Chinese New Year and factories and construction continued, which should be a little bit out of the normal. But We're seeing the Chinese steel industry react exactly how it should from a seasonal standpoint with building up of inventories and now we're starting to see those inventories decline. So I -- it's not necessary that Capes have caught up. I just think, from a seasonal standpoint, Brazil has started to be able to ship more iron ore because they're out of the rainy season. I think they're finally getting their logistics sorted out from the dam disaster that happened in early 2019 as they're in recovery mode from that. So I just think it's more of the iron ore market and a seasonal standpoint than anything else. The Ultramaxes did extremely well and continue to do very well on the back of a very robust grain season that started really in the first quarter. I think some people were surprised at how much grain the Chinese bought from the U.S. and out of the U.S. Gulf, which was on the back of, again, the recovery in their pork industry, their hog herds off of swine flu over the last few years and also a falling in the trade tensions that had been in place. So I -- again, I don't know if I would use the word lag. I just think Capes started at a much better position in the first quarter than they have in quite a long time. And now from a seasonal standpoint, they're moving up as more and more iron ore is being shipped and consumed particularly by China.

Yes, definitely. It's good to see the iron ore movements really starting to pick up steam here. And yes, I was going to ask you about the Ultras and Supras. It's been a phenomenal year so far. And I was going to ask if there was any particular cargo that's been driving that or if it was more widespread. You highlighted grain. And I guess, that in combination with just what we're seeing with economic expansion and, obviously, data points in the containership industry and INS raising its -- global GDP forecaster seems to be just a lot of underlying strength across the board. And when you get tightness in grains and tightness in iron ore, it appears that we've got these big, big increases in overall freight potential.

I mean, look, it's not just grain, right, in the minor box. They are -- there's no doubt they're highly driven by global GDP and economic activity. So we're seeing a lot of pet coke, fertilizer cargoes, cement, a lot of cement moving. So the grain, there's no doubt is leading the charge, but The other minor bulk commodities are responding very well to the global recovery post COVID. Supra rates are also, as I think you mentioned, I mean, it was the highest since 2010. And GDP growth, I believe, is also the highest since 2010. So a pretty strong correlation with the minor bulks versus global GDP.

Yes. And I guess what's exciting is as compared to 2010, you have the exact opposite with the order book.

Well, that's the -- so actually, I meant to bring that up. When we go back to 2010, we look at the order book then versus the order book now, I just can't stress it enough. And you've been in this industry for probably as long as I have and you certainly know that it's the supply side that can either help this industry out by being on the very low side, but then sometimes people over-order and that leads to downside. So the visibility that we have right now on the supply side in being at such a low growth level and almost dropping to 0 as you get into 2023, it's unprecedented during my career, for sure. And being in that 5.5% to 6% of the order book, that's at a historical low as well, overall.

Yes, definitely. Definitely an exciting time. Yes, I think, John, that this has been good. I think we've kind of reached the end here of our webcast. What do you -- any sort of final comment you'd like to give to our listeners before we wrap up?

Yes. I mean, look, Omar, again, I really appreciate you and Clarksons setting this up. We appreciate the support. We certainly, again, appreciate the patience that investors have shown, and I believe they'll all be rewarded for that patience. And we're just -- we're very, very excited about our new value strategy in terms of capital allocation. And we can't help but be excited about the market going forward. I think that's the very obvious one. So again, thank you to Clarksons, and thank you to everyone who has participated today.

Yes, indeed. Thanks, John. And yes, thanks for the discussion. I think it was very enlightening, and thanks, everyone, for joining. As you may be aware, we're obviously very big fans of Genco. And we definitely look forward to seeing John and his team execute on this new strategy and, really, against this fun and exciting market backdrop. And we're also very happy to follow up with anyone who's participated today, who would like to discuss things further. So thanks again, and have a good day.

Thank you, Omar.