Greek shipping company Drydel Shipping is concentrating all of its new bulk carrier orders on Japanese shipyards in order to maintain and expand its fleet of high-quality, state-of-the-art vessels. Following its first-ever order for Capesize-class vessels last year, the company recently placed orders for three medium-sized bulk carriers, each from a different Japanese shipyard. CEO Mr. Costas Delaportas highly praises the quality of Japanese-built ships, stating, "Japanese design and technology is the best in the world." Even as the quality of Chinese-built ships improves, the company intends to continue its policy of ordering new bulk carriers from Japanese shipyards. We interviewed Mr. Delaportas about the fleet expansion strategy and the outlook for the dry bulk market.

• Drydel adopts an owner-operator business model, which differs from that of traditional Greek shipowners.

"In 2010 (when it was still Medway Shipping), I established the first office in Singapore for a Greek shipping company and started operations. I wanted to try new things rather than just owning ships, and through these experiences I was able to gain knowledge and flexibility regarding the market, the ships themselves, and cargo. This is why I place importance on operations as well as ship ownership."

"When my father passed away in 2019 and my brothers and I split the business, I took over the operations as well. Other Greek shipowners have tried to imitate this style, but the operations business is not easy, and some withdraw within a year or two. Securing cargo is crucial for success in the dry bulk market. We collect cargo through our branches in Singapore, Dubai, São Paulo, and Houston. Our policy is 'Cargo is King.' We generate profits every year with this business model, have built a strong balance sheet, and are currently debt-free."

-What is the current size of the fleet?

"We own 14 vessels, and our controlled fleet, including long-term chartered vessels, numbers approximately 50. Our core fleet consists of handysize to Kamsarmax vessels, but we are diversifying our vessel types, for example, by ordering a Capesize vessel from Namura Shipbuilding last year."

-We recently placed an order for three bulk carriers from a Japanese shipyard.

"This brings the total number of new ship orders to 11. The breakdown is one 82,000 DWT Kamsarmax (Shin Kurushima Sanoyasu Shipbuilding, to be completed in 2016) and two 64,000 DWT Ultramax (Imabari Shipbuilding, to be completed in 2017; Oshima Shipbuilding, to be completed in 2018)."

—The average age of Drydel's fleet is under four years old, and given the high cost of ships, there is no need to rush into ordering new vessels. How do you envision future fleet development?

"Basically, we want to keep the average age of our fleet under five years, so we will gradually sell off older ships and order newer ones. 90% of our fleet maintenance will be new ship orders. All new ships will be ordered from Japanese shipyards, and we will continue this policy going forward."

"Japan's design technology and environmental performance are world-class. While the price of new ships built in Japanese shipyards is 10-20% higher than that of ships built in China, they are also more fuel-efficient, allowing us to secure higher TC rates. They also always command a premium when sold as used ships. Building ships in Chinese shipyards would require sending a large in-house supervision team, but we trust the quality of Japanese shipyards and therefore do not need to do that."

"We understand that some Japanese shipowners are opting for Chinese shipyards due to reasons such as faster delivery times and lower prices, but we have absolutely no intention of using Chinese shipyards for dry bulk construction. Regarding used ship prices, the price difference between Japanese-built and Chinese-built ships will likely not be narrowed anytime soon."

--What are your thoughts on increasing the size of ship designs?

"Nearly 50% of existing Capesize vessels are 15 years old or older, indicating a global aging of the shipping fleet. Around 2028, when the new Capesize ships ordered by Drydel are completed, there will be increased demand for replacements for the aging existing fleet. The aging of the shipping fleet is the primary reason for entering the Capesize market."

"The second reason is a change in trade patterns, such as increased shipments from West Africa. An additional 150 million tons of bauxite are expected to be shipped annually from the Simandu mine in Guinea, creating additional ton-miles."

—Drydel entered into the Capesize segment, and now has a full range of bulk ship types, including large vessels. What's the next step?

"We will continue to invest in the dry sector. While there is a trend towards larger vessels, we are not ruling out the possibility of investing in small and medium-sized vessels. We will continue to work with Japanese shipyards, trading companies, and financial institutions to explore the next order opportunities."

"Diversifying our business is an important theme. In the long term, we are considering entering the tanker sector, but timing is crucial. Currently, the market is high, making it unsuitable for new entrants. Regarding investments other than bulk carriers, we will consider shipyards outside of Japan, taking into account factors such as shipbuilding capacity."

--Could you give us your view on the shipping market?

"We remain cautiously optimistic about the shipping market. The situation in the Strait of Hormuz, the de facto blockade of the Suez Canal, and congestion at the Panama Canal are boosting market conditions in the short term. 200-300 bulk carriers are in the Persian Gulf, which is also contributing to supply limitations. With extra ton-miles and slower sailing to comply with new regulations, we expect a robust market for the next few years."

--The market for large vessels such as Capesize ships is expected to remain strong due to factors such as the aging of these vessels, but predicting the outlook for medium and small bulkers is more difficult.

"We believe the market for small and medium-sized vessels is also strong. For example, geared vessels. In the future, with the reconstruction demand in the Middle East, infrastructure-related cargo and steel will be transported from China and other countries, and due to port infrastructure issues, geared vessels that can access small ports will be responsible for this transportation. This is a positive factor for the market."

—What are your efforts regarding decarbonization?

"We have market clarity on which alternative fuels, such as methanol and ammonia, will become dominant in the future, and at this point, all of our new ships are conventional fuel vessels. Improvements to the engines and hull design allow us to reduce fuel consumption and emissions by 40% compared to existing vessels of the same type, making it the most realistic and clean solution at this moment. Paying an additional $10-20 million for dual-fuel vessels at a stage where infrastructure and supply chains are still uncertain is a waste of time and money."

"As the most effective environmental measure, the IMO (International Maritime Organization), classification societies, and flag states should stop operating and accepting aging vessels older than 25 years. Removing these aging vessels from the market, which place a significant burden on the environment, is of paramount importance. This is my belief in decarbonization."

—What are your thoughts on additional equipment such as wind power propulsion systems and onboard CCS (carbon capture systems)?

"Wind power propulsion systems are still in the testing phase, and even if installed, they would only provide minimal reductions. We are in business, and we don't want to waste time on trials (where the effects are unclear). We are focusing solely on developing new main engines and ship designs."

"We are closely monitoring the efforts of other companies regarding CCS. We have seen examples of CCS being introduced into sub-generators in China, and we will adopt it if it is feasible and a practical technology that will have a positive impact on our business."

—A shortage of personnel, including seafarers, is a major problem facing the shipping industry.

"It's becoming difficult to find not only skilled seafarers but also land-based workers. This is a structural problem for the entire shipping industry, and there's little we can do on our own, but we are undertaking various initiatives to secure young talent. For several years, we have partnered with NUT (Nanyang Technological University) in Singapore, accepting NUT students as interns and trainees at our Greek headquarters and Singapore office. The shipping industry is a high-status industry in Greece, and young people are eager to work for Greek companies with extensive networks. This is a very effective way to introduce the shipping industry to the younger generation, and in fact, two interns have joined our company. In addition, I visit several Greek universities every year to give presentations about the shipping industry. We have also partnered with the Magsaysay Group in the Philippines to financially support the training and development of seafarers and encourage them to work on our ships."

—You are also focusing on ESG and are receiving positive external evaluations.

"I myself received an Honorary Motivational Leadership Award from the ESG Shipping Awards International (an international organization that evaluates ESG and sustainability initiatives in the shipping industry), and Drydel was recognized as a shipping company that has demonstrated measurable results in ESG practices. This recognition acknowledges our investments not only in ships, but also in people, communities, and other areas."