Poe Fratt: When you look at – you’ve been talking about expanding the logistics business for a couple of quarters, if not longer. Can you just talk about strategically what you want to accomplish on the logistics side? It hasn’t hit the radar screen as far as materiality yet. But can you just talk about strategically what you want to do there? And then also give us an idea of sort of how much capital you might be able to deploy? And then if you could just talk about what kind of return on capital your targets might include?
Mark Filanowski: Okay. First of all, the strategy is really, Poe, is to get more cargo to put on our ships, expand the opportunity for shipping, right? So we can get closer to cargo by developing a relationship with a miner or a producer and get more cargo on our ships to deliver to customers on the other end of the voyage, then that helps our shipping business. But it also gives us a little return on the activity we’re doing, even during activity we might be doing in the low form. So overall, our margins increase. Our throughput increases. Our revenue increases and it gives us other opportunities for other movements that miner might be making. On the other side, where we arrived with cargo, say, in our Sabine terminal, we take the – we arrived with our ship or another person’s ship, another company ship and comes in and we discharge that cargo.
We get closer to the end user on that point. So maybe if they’ve got cargo to ship into the U.S. Gulf, they can ship it into Sabine, we can do the same thing and get more cargo on our ship coming to our managed terminal where we get additional margin for doing the extra work. So that’s really the strategy to expand the shipping business by doing these other things on each end. Now that gives – having the opportunity, having the operation going in Sabine gives us other opportunities to do business for other ships. Back last summer when Houston was very crowded, decongested, we did some business with third-party companies, either suppliers or buyers of commodities that were trying to get into Texas into Houston, but they came to Sabine instead and we helped them in that area, and we developed relationships with those customers that are ongoing.
So it’s just expansion of the whole touch of cargo from beginning point to end point is what we’re really after, Poe. In terms of capital, we could spend a lot of money going on buying real estate up and down the Mississippi River or in the U.S. Gulf Coast, but not in our target right now to do that. We’re trying to do it where our customers – our current customers are active. Maybe trying to get hold of another terminal that we can operate with existing customers to expand our business with them and expand, like I said, in different ways with suppliers, producers, shippers to get more cargoes on the ships. In terms of ROE, we’re looking at projects today that would be in the mid-teens, I guess, in terms of if we just took that opportunity by itself.
But really, again, what we’re trying to do is expand returns on the whole business by getting additional freight on carriage of cargo and extra services, stevedoring services, packaged altogether gives us an overall higher return. So again, that’s the strategy, looking at individual projects, probably mid-teens is our target right now.
Poe Fratt: Okay. And then, Mark, would you – I think I heard it, but when you characterized the logistics business is lower risk and a little more consistent than on the fleet side that there is risk adjusted, the volatility is going to be a lot lower, maybe the returns are lower in peak cycles, but there is more consistency, so it creates a little more consistency in the overall business?
