LL: As of now there is no threat to the Suez Canal waterway. What are you hearing from CEOs about this situation?
MC: First off, almost everyone who works in the shipping industry operates on a global basis, with friends and clients all over the world, and as an industry I think people are truly saddened by the ongoing crisis in Egypt.
As for the commercial implications of what is happening, none of the shipping CEOs that I have spoken with expect the Suez Canal or Ain Sukna pipeline to close, but they have also learned to expect the unexpected when it comes to ocean shipping and trading.
Let me remind you that when Egypt closed the canal in 1967, there were 15 ships trapped during what is typically a 1 day passage—clearly those guys didn't expect the Canal to close the day before it did either. By the way, those ships remained stuck in the Canal for 8 years.
I think the bigger, albeit more vague, risk for shipping today is the geopolitical instability in a region that is an important supplier and seaborne exporter of oil to the global market.
LL: There is a lot of talk about shipping stocks could positively impact on the Egyptian protests. If so, which stocks stand to benefit?
MC: It is a difficult thing to think about opportunities created by such political and social unrest, but you are correct that there are potentially significant implications for the shipping industry. As you know, distance has a huge impact on the supply / demand balance in the shipping industry because the longer a ship travels at sea, the more capacity is removed from the market place.
The closure of the Canal would have a potentially dramatic impact on charter rates and ship values. In terms of specific stocks, best in class companies such as Frontline ,Overseas Shipholding Group , Teekay and General Maritime which have relatively high markets caps and liquidity and substantial fleets (and therefore are likely to have vessels available to capitalize on increased vessel earnings) are the place to focus.
But don't forget, a lot more than oil moves through that Canal including about half of Europe/Asia trade so if ships are forced to transit around the horn of Africa, then entire industry should benefit.
LL: Moller-Maersk has suspended its Egypt port terminal operations as well as closed its shipping offices. Do you anticipate more of this?
MC: For AP Moller-Maersk Line, like most serious shipowners, the safety of people is the number one priority—with economics coming in a very distant second. To the extent that the conditions are unsafe, shipping services will be suspended and people will be sent home.
LL: How much can tanker rates go up?
MC:Well, they cant go down much further than they are today, so we're starting from a low base! The only ceiling on rates is alternatives sources of supply. You need to keep in mind that since commercial vessels carry so much volume, rates can rise dramatically (1000 percent) and still have a negligible impact on a per unit basis to end users and consumers. The fear of of course is the crisis in Egypt will cause in increase in the price of crude oil, which will actually reduce demand for oil and put further downward pressure on charter rates
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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."
