Angeliki Frangou:The greatest challenge is the unknown, our task to evolve

by Anastasia Vamvaka

It posted its strongest performance ever in the first quarter of 2024. Navios' results exceeded analysts' estimates and pushed the share price to an eight-year high. The key move that was particularly welcomed by the investment community was the decision by Angeliki Frangou, President and CEO, to acquire in the open market over 317,000 common shares between February 15 and March 4, demonstrating management's confidence in both the company's prospects and its current value. The remarkable gains have now also pushed the shipping company's market capitalization above $1 billion. And that's just one link in a series of successful strategic moves that Ms. Frangou has made over four decades. 

One of the most powerful female entrepreneurs in the world, Angeliki Frangou has made her own history by rocking the waters of the shipping industry as well as the New York Stock Exchange more than once, with the merger of Navios Maritime Partners with Navios Maritime Acquisition creating the largest Wall Street-listed shipping company by fleet size. From 1990 and the risky purchase of its first bulk carrier, the 14,000-ton "Fulvia", at the age of only 25, to a fleet of 176 vessels with contracted revenues of $3.3 billion by 2037, Angeliki Fragou's perpetual mobility has kept her at the forefront of Greek and global shipping.

For several years now, your business transactions have been going "against the current". In 2022, the news of the year was the merger of your companies and the transformation of Navios Maritime Partners into one of the largest shipping companies on the New York Stock Exchange, when the dominant trend until then was the creation of spin-off companies. Two years later, what are the conclusions you draw from this?

- The logic of a diversified model is compelling. Indeed, in most other areas, diversification is seen as common sense. 

Today, we are experiencing the diversification benefits in our business. It allows steady progress to our stated goals of healthy cash balances, meeting the working capital requirements of a large fleet, and a glide path to reaching our goal of net loan to value between 20%-25%. Our goal is to fortify our balance sheet so that Navios will not only withstand the challenges of volatility that will occur from time to time in our industry, but will be positioned to take advantage of these opportunities. 

- A year after your merge there were a few other shipping companies that moved towards the logic of creating a large company, either through mergers or through acquisitions. Do you believe that it is an operating model that will dominate again in shipping?

For a long time, investors wanted single segment companies and we cooperated with this appetite. Our experience from operating different single segment companies was that while the various segments were similar, in that each transported cargo (wet or dry) over the ocean, each one had different dynamics. We realized that hosting these segments in a single entity would make for a much stronger and healthier company. While this would not eliminate volatility, we believed that it would largely mute it. In contrast, our experience in single segment ownership was that such a company would proper during the bull part of the cycle but be stressed when rates recede. Of course, our stakeholders needed to understand this new path. Over time I think we managed to have a good and frank conversation so that those who appreciated the wisdom of this path would remain onboard. 

- 2023 ended with revenues that exceeded 1.3 billion dollars despite major geopolitical challenges. How did you manage the disruptions that arose in a year full of major events (Russia-Ukraine conflicts, Middle East, Suez)?

We are conservatively biased. We approach decisions from the perspective of what can go wrong will go wrong, so we look for a path that insulates ourselves from foreseen difficulties and protects us from unforeseen events to the extent possible. Regional conflicts have an immediate impact on trading patterns, but over time the world adapts and customers find new sources of the needed commodity. Our job is to facilitate trade while keeping our crews safe and out of harm’s way.

- How do you see the developments of the Chinese and American economy? Are the forecasts for exports optimistic, given the previous years of stagnation?

They say it’s hard to make predictions, especially about the future... and we observe that economic projections are just as likely to be wrong as right... so while we read the reports carefully, we pay attention to what is happening on the ground. The US has been navigating its soft landing and it appears that it may be successful. At the same time, China, a dominant player when it comes to commodities, has had a difficult time in its domestical consumption. This may be further driving China’s export economy that favors shipping.

- Do you think the EU sanctions on Russia negatively affected or strengthened Greek shipping?

Shipping is affected by inefficiencies and this conflict caused a shift in trade patterns for various agricultural and mineral commodities as well as products and crude were also affected. Customers sourced their requirements elsewhere and in effect the conflict created more ton miles.

- Navios has one of the largest fleets both in number and type of vessels. The company has 176 vessels, dry bulk, tankers and containerships. Which market worries you the most and for which are you most optimistic about?

One of the reasons for diversification is that it reduces, to the extent possible, our reliance on predictions. However, we spend a great deal of time reviewing and studying the fundamentals of each segment within our business while also keeping current on segments as we look for opportunity. Some of the factors we consider are order books, the health of the important economies, including the US, Europe and China, and current and emerging trade patterns to get a sense of balance between supply and demand.

- What is the biggest challenge that Navios has to deal with in the next period of time? And respectively Greek shipping?

The unknown. The most recent global events materially affecting shipping were not capable of being anticipated. Think about the things that have transpired over the past five years – the Pandemic, the Ukrainian war, the Middle East conflict, and the drought reducing traffic through the Panama Canal. None of these events were capable of being anticipated. Consequently, our task is constantly to evolve our business model so that it can withstand all these unanticipated events and prosper.

- Currently, the company is implementing an extensive newbuilding program worth 1.6 billion dollars for 26 ships, of which 17 are tankers and 9 containerships. Should we expect more orders?

After we merged the various companies, we reworked our fleet so that we could have the latest technologies available and meet our green mandates. Our goal is to continue to be as energy efficient as current technology will allow until a new standard emerges. I would note that in maintaining a fleet this size you will see regular acquisitions and dispositions in the ordinary course as we maintain our technological advantage.

- In the container market, we are seeing a gradual normalization of freight rates. What are your views on this sensitive to geopolitical events sector?

The container segment has been materially impacted by the Red Sea conflict. Liners are avoiding the conflict area and this adds about 10 days to the transit. This has driven rates. It is difficult to understand the underlying fundamentals given this development.

- A few days ago, was in the news another double order for containerships that will operate with both methanol and LNG. Do you think methanol is the "green" transition fuel?

Ship owners are not technologists. We may experiment with innovative technology, but we look to the laboratories for their development, the manufacturers for new equipment and government and the IMO for new standards. While this is evolving, and we believe shipping will inevitably become green, we are determined to rework our fleet so that we can have the latest technologies available to reduce our carbon footprint. Our goal is to continue to be as energy efficient as current technology will allow until a new standard emerges.

- How should Greek shipping deal with green transition?

Navios believes in the fundamental importance of developing appropriate technologies and solutions for reducing carbon emissions. Reducing the society’s carbon footprint is a global issue, and Navios is committed to investigating locally novel approaches as responsible members of the global community. Thus, Navios is a founding member of the Global Maritime Emissions Reduction Centre in Piraeus.

Navios Maritime Partners L.P.A. owns and operates a fleet consisting of 76 dry bulk carriers, 46 container ships and 54 tankers, including 17 newbuilding tankers (11 aframax/LR2 tankers and 6 MR2 product tankers), which are expected to be delivered by 2027, and 9 newbuilding container ships (7 container ships 5.300 TEU and two 7.700 TEU container ships), which are expected to be delivered by 2025.