Samuel H. Norton: Thanks for the question, Josh. A couple of observations that I would make. I think, longer term that participants in the TSP program believe that it is an attractive program, and that — as I have commented, well the expansion from 10 to 20 ships is something that is likely to spur over the next three to four years. I think the cadence of entry into, an expansion of the TSP however, is something that, in the short-term is somewhat problematic or not in alignment with the aspirations of the transportation department and Department of Defense. Two things stand out in contributing to that delta in expectations. One is, the continued high rate of, the price or the high prices for international tankers that currently, in my opinion, don’t reflect the existing spot markets or time charter markets for international MR tankers.
Just to give an example, there was announced recently a series of new buildings entered into, with a full methanol capable, engine design and specification for delivery, I believe, in 2025. And those ships were fixed, for long time charters, I believe, five to seven years, it in range of about $25,000 per day. Now, that would imply longer term time charter rates for more conventional vessels, probably in the gap between $20,000 and $25,000 per day. If you have scrubbers or eco or all the rest of that, probably based on variability there, but, we certainly see, equivalent time charter rates for international MR tankers in the lower-20s, let’s call it $22,000, $23,000, $24,000 per day. It’s probably being effective rates. And when you look at those types of rates vis à vis the actual prices for vessels in the market, it’s quite difficult to make any kind of sense, out of the returns that can be generated from that, whether trading internationally or trading in the TSP program.
I’ve spoken about this on calls and discussed it with you in the past. There is a — in my mind, there’s an overhang of the opportunities available to sanction insensitive traders to be able to participate in moving Russian crude oil and products, that I believe is getting close to the end of its development. By that, I mean, I think people that are going to engage in that trade are probably fulfill their appetite for ships to be able to buy to do that, and therefore, that buying nexus that buying appetite, it is either waning or completed. And once that process finishes, I think, then price levels for other buyers of anchors that participate in the normal non-Russian trades, you’ll start to see some decline in prices. And I think that, one of the reasons that, maybe you haven’t — maybe there’s only nine and, we have to go out and replace the vessel as well and we haven’t done it yet.
One of the reasons why you’re seeing that kind of lag is, I believe, that the normalization of prices to align themselves with time charter rates in the market will occur over the — for the coming months. Of course, it may not. There’s no guarantee there. But, I think there is a view out there that process may be beginning to materialize. The other important factor that I want to emphasize in terms of the trajectory of vessels entering into the Tanker Security Program is the continued shortage of maritime labor, which manifests itself, nearly every day in our normal business. And when you start to add, the number of new additional U.S. Flag vessels to the pool, is and will continue to put tremendous stress on the manning capabilities of companies participating in that program.
