Global Ship Lease, Inc. (NYSE:GSL) Q2 2023 Earnings Call Transcript

Thomas Lister: This is Tom, again. Very good question. I think with the exception of the super cyclical high that we saw as a result of COVID the shipping lines have always been focused upon getting the most efficient tonnage for their fleets that they can. It’s worth noting, however, that essentially since the global financial crisis, most of the investment that’s gone into the sector has gone into the bigger ships where you would see the biggest concentration of “eco tonnage” still in the midsize and smaller ships upon which we are focused. The lion’s share of the peer group is non-eco, meaning that it was built prior to around about 2013. So you’re right, EU ETS and other decarbonization initiatives are likely to sharpen the focus on efficient ships but the peer group against which we’re competing has a relatively low concentration or a relatively lower concentration of eco ships.

What we do expect on the other hand, is for EU ETS to prompt a further slowing of the global fleet. Because the decarbonization regulations that have been implemented so far in the shape of EEXI and CII are important, but they don’t have dollars attached to them. Of course, as soon as you start attaching dollars to the emission of carbon dioxide within EU waters. There is a very clear economic incentive to mitigate that carbon dioxide and by far, the most quick and efficient way to do that is to actually slow ships down. Sorry, a rather rambling response, but I hope helpful.

Climent Molins: No, that’s very helpful. That’s all for me.

Operator: Thank you. There are no further questions at this time. Mr. Webber, I’ll turn the call back over to you.

Ian Webber: Thank you very much. Thank you all for listening. Thank you for your questions. We look forward to giving you a further update after our third quarter 2023 results. After the summer vacation period. So wishing you all an excellent summer. Thank you.

Operator: This now concludes today’s conference call. You may now disconnect.