Making the case for independent dry bulk operators

The shipping industry is evolving, as external – some would say existential - forces act on more traditional market balances. Decarbonisation, digitalisation and geopolitics are in different ways transforming the industry, with experts commonly predicting that the resulting change will be seismic. One of the assertions made by futurists and other industry commentators is that decarbonisation and digitalisation spell the end of the road for small shipowners and vessel operators.

It is true that the fragmented nature of tramp shipping presents challenge in terms of adopting technology at scale, but reports of terminal decline take this argument too far. Dry bulk operators make up a critical component of the logistics chain but this has not happened by accident.

It reflects decades of experience in markets that are marked by volatility and disruption, prone to peaks and troughs and at the mercy of forces sometimes beyond their control. As a result, it could be argued that small operators are among the best placed to face the changes ahead.

At Sagitta Marine, we believe operational scale is no substitute for operational discipline. In particular we work to counter the false equivalency between smaller company size and higher risk.

The assertion that smaller owners or operators are automatically higher risk than larger ones ignores the reality that risk is a function of governance, transparency and operational rigor, not the dwt under management.

For smaller operators, reputational risk is existential. It’s for this reason that we hold ourselves to the highest possible standards. As was noted in the workshop, large operators can absorb the results of bad decisions and carry on sailing because they are making money on another and will look to net off losses.

We understand that one bad trade can undo years of credibility and as a result we judge ourselves on every business decision, time after time. There are no suitcases full of cash changing hands on a Friday afternoon. We choose our partners as carefully as our clients choose us.

It’s true that to be a successful small operator in dry bulk you have to punch above your weight.

Over eight years of operation, 400+ voyages carrying 12 million tons of cargo, we can demonstrate our credentials – and we are called upon to do this every day. This is despite – or perhaps because – we practice risk control and risk management in our daily operations. We rely on strict vessel vetting, P&I cover that understands our business, use of the futures markets to hedge freight and fuel risk. Managed conservatively, against a physical book of business rather than for speculation, none of these instruments increases risk; indeed, they act to mitigate it.

It's perhaps true that a small operator like Sagitta Marine is exposed to risk in some senses. We don’t have the structure to offset losses or hide them a drawer. For us there’s simply no-where to hide, so we don’t try to.

But as a small operator, our lean structure means we are necessarily close to our clients. That gives us short reporting lines and enables a more proactive attitude to opportunities and quicker response times when questions come up.

It is an oversimplification to equate a trend towards market consolidation with increased security for counterparties. In today’s market marked by trade disruption, tariffs and geopolitics, agility, niche specialisation and hands-on management are not weaknesses. Rather they are strengths. Many cargo interests today prefer to work with entrepreneurial operators who can tailor solutions and stay close to the trade rather than put their business into a conveyor belt where control and flexibility are reduced, not increased.

The biggest mistake would be to take anything for granted, especially in markets as unpredictable as we find them today. We are open to the conversation around how to de-risk shipping – and whether there is a way to do this that the wider industry would accept.

It’s undeniably true that the dry bulk space is undergoing a process of transformation that will play out over the next decade. But assuming that large owners are the only ones who can survive this process is fundamentally wrong. All actors - large or small, regional and global - have a role to play in shaping the dry bulk markets for the future. It’s a debate and discussion we welcome and wish to continue.

Let’s be clear though, that size is not everything. A large shipping operation is not by itself a proxy for trustworthiness, nor is a small, agile but engaged one an indicator of greater risk.

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Read the article online at: https://www.drybulkmagazine.com/special-reports/01072025/making-the-case-for-independent-dry-bulk-operators/