Navios Maritime Partners LP (NMM) 2022 Q3 法說會逐字稿

Thank you for joining us for Navios Maritime Partners' Third Quarter 2022 Earnings Conference Call. With us today from the company are Chairwoman and CEO; Ms. Angeliki Frangou; Chief Operating Officer, Mr. Stratos Desypris; Chief Financial Officer, Ms. Eri Tsironi; and Vice Chairman, Mr. Ted Petrone.

As a reminder, this conference call is being webcast. To access the webcast, please go to the Investors section of Navios Partners' website at www.navios-mlp.com. You'll see the webcasting link in the middle of the page, and a copy of the presentation referenced in today's earnings conference call will also be found there.

Now I will review the safe harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Navios Partners. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Navios Partners' management and are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements.

Such risks are more fully discussed in Navios Partners' filings with the Securities and Exchange Commission. The information set forth herein should be understood in light of such risks. Navios Partners does not assume any obligation to update the information contained in this conference call.

The agenda for today's call is as follows: First, Ms. Frangou will offer opening remarks. Next, Mr. Desypris will give an overview of Navios Partners segment data. Next, Ms. Tsironi will give an overview of Navios Partners' financial results. Then Mr. Petrone will provide an operational update and an industry overview. And lastly, we'll open the call to take questions.

Now I'll turn the call over to Navios Partners Chairwoman and CEO, Ms. Angeliki Frangou. Angeliki?

Thank you, Daniela, and good morning to all of you joining us on today's call. We are pleased to report our results for the third quarter of 2022, in which we recorded $322.4 million of revenue and $257.2 million of net income. Net income amounts to $8.36 per unit.

We are caught in the crossroads of unprecedented macro event. First, in terms of the general economic environment, several banks are reducing the existing liquidity in the financial system as they return to normalized balance sheet. At the same time, several banks are increasing interest rates to combat rising and enduring inflation. Second, China, the major consumer of raw materials and producer of finished foods to much of the world, has reduced appetite as it experiences slower economic growth and focuses on 0 COVID policies. Finally, the conflict in Ukraine has disturbed normal trading patterns for oil and gas, while also creating a scarcity of grains and mineral commodities.

In the face of these challenges, our diversified approach has served our stakeholders well. We have about 16 different vessel types operating in 3 segments. The average age of our vessels in each segment is below the industry average. In the container sector, we were able to take advantage of the market strength by selling 2 16-year-old container ships for $220 million. Given the appetite for container ships, we were able to order new vessels and hedging the ownership risk by chartering them out for long periods, ensuring a reasonable return on the investment.

We will also use our balance sheet strength to enter the new tanker class, the Aframax, because other tanker companies at the time were constrained by their legacy balance sheet issues. Today, we have 6 on order of which we have long-term charters on 4 of them. We continue to monitor events closely managing our risk as well as taking new opportunity.

Slide 6 takes a look at selected segment data. Today, we have 185 vessels with an average age of 9.5 years. Each segment has an average fleet age materially below the industry average. You can see the good work that we have done by developing a contracted revenue. In the third quarter alone, we generated $331 million of long-term contracted revenue from our various sectors.

Turning to Slide 7, we review recent developments. Our LTV has picked up primarily because of compression of container ship values. However, this is mitigated by the $3.2 billion of contracted revenue, of which $2.3 billion is from the container ships. I also would like to focus in our breakeven for the fourth quarter of 2022 and fiscal year 2023. You can see that we have $51.2 million contracted revenue in excess of total cash expense for the fourth quarter of 2022. So any revenue from our 4,000 open and index days will be profitable. We also have a very low breakeven per open day. For 2023 as of November 3, 2022, our breakeven per open day was slightly less than $6,000.

Slide 8 reviews our balance sheet initiatives. In the face of rising interest rates, we have been working to mitigate interest rate risk. 30% of our debt has fixed interest rates with an average rate of about 5.8% and 70% balance has floating interest rates. We have been actively working to reduce our average margins on our floating rate debt. So far, we have been able to reduce this margin by about 10% to 2.8% in 2022 as compared to 3.1% in 2021. We have done even better in our newbuilding program, where the average margin is slightly less than 2%.

We have a $1.1 billion debt program to finance our newbuilding. $740 million has either been approved or is in the process of approval. We are in a serious discussion on the remaining $340 million. We have been able to secure favorable terms on our newbuilding program, 60% of the purchase price must be paid all on delivery. In addition, $500 million of the newbuilding debt has no commitment fee.

At this point, I would like to turn the call over to Mr. Stratos Desypris. Stratos?

Thank you, Angeliki, and good morning, all. Slide 9 details our strong operating free cash flow potential for the fourth quarter 2022. With fixed 73.3% of available days at an average rate of $25,331 net per day. For Q4 2022, contracted revenue already exceeds total cash expenses by over $51 million. We have 4,022 available days that will provide additional profitability once fixed. For 2023, we have 60,591 available days. Approximately 65% of these are days with market exposure.

Slide 10 demonstrates the basic participants of our diversified platform in action. We benefit from countercyclicality, which creates opportunity to redeploy cash flow in from well-performing segments into activities in underperforming segments. Asset values can be volatile and a diversified asset base moves the balance sheet volatility. We consider this dynamic in our asset base. As of Q3 2022, container values dropped by 42% and dry bulk dropped by 4%, while tanker vessel values increased by 32%. In sum, the net sales to our fleet values a decrease of approximately 14%.

In addition, multiple segments allows us to optimize chartering. In segments with attractive returns, we can enter into period (inaudible). In other segments, we can be patient. As you can see from the chart on the bottom, the container segment was enjoying historically high charter rates. Not surprisingly, we fixed our container fleet on long-term charter with almost 90% of our available containership days fixed for 2023. This reduced market (inaudible) risk. We manage the credit risk of the long-term charters independently to ensure we are not simply trading one risk for another.

In our tanker segment, current charter rates are surpassing the 20-year average levels. We increased fixed and available tanker days to almost 40% for 2023, taking advantage of this market. We expect our tanker fleet will generate stronger days. Lastly, in our dry bulk segments, our rates are below the historical averages, so we remain patient by entering shorter charters, thereby fixing only 9% of available days. Over 90% of available days are exposed to market rates, which will be fixed long term as the market recovers.

In Slide 11, you can see our fleet renewal activities. We are always renewing the fleet so that we maintain a bank profile, benefiting from newer technologies and more carbon-efficient vessels. Navios Partners made $1.5 billion investment in 23 newbuilding vessels that will deliver to our fleet through 2025. In container ships, we are acquiring 12 vessels for a total of $860 million. We held our investment by entering into long-term creditworthy charters generating about $1.1 billion in contracted revenue for the 6.4 years average duration of related charters.

In the tanker space, we entered the LR2/Aframax subsector by ordering 6 vessels for a total price of $380 million. Four of the vessels are chartered out for 5 years at an average net daily rate of $25,971, generating revenues of approximately $190 million. The charter has the option to charter the other 2 vessels.

Slide 12 gives an update on our fleet activities. Starting with tankers, during Q3, we agreed to acquire 2 LR2/Aframax vessels for $60.5 million per vessel, plus $4.2 million in additional features. We have given the option to an investment-grade counterparty to charter the vessels for 5 years at a net rate of $27,798 per day plus additional 5 1-year options at increased rates. The option is declarable in Q4 2022.

We also contracted 2 of the LR2/Aframax vessels for 5 years at a net daily rate of $25,576 generating almost $95 million in contracted revenue. We also capitalized on the strength of the tanker market, chartering 8 [product] tankers for an average net daily rate of $24,045 and an average duration of 1.8 years, providing contracted revenue of $125 million. On the container ships. In Q3, we completed the sale of 2 8,200 TEU containerships for $220 million. Also, we fixed our only remaining open vessel for 2022 for 6 months at a net daily rate of $22,895 (sic) [$22,195].

Finally, on the drybulk vessels, we acquired 38 vessels, including a newbuilding Capesize vessel, while at the same time, we sold 4 vessels with an average age of 16 years for $52 million. On the chartering front, we created $112.6 million contracted revenue by chartering 3 of our Capesize newbuilding vessels for 5 years at an average net daily rate of $20,567.

Moving to Slide 15. We continue to secure long-term employment for our fleet. Our contracted revenue amounts to $3.2 billion. 72% of our contracted revenue comes from our container ships with charters extending through 2026 with a diverse group of quality counterparties. Almost 50% of this contracted revenue will be earned in the next 2.5 years.

I now pass the call to Eri Tsironi, our CFO, which will take you through the financial highlights. Eri?

Thank you, Stratos, and good morning, all. I will briefly review our unaudited financial results for the third quarter and 9 months ended September 30, 2022. The financial information is included in the press release and is summarized in the slide presentation available on the company's website. I would like to highlight that the 2022 results are not comparable to 2021, as in 2021, NMM acquired 2 companies and recently 36 vessels, significantly expanding its fleet.

Moving to the earnings highlights on Slide 14. Total revenue for the third quarter of 2022 increased by 41% to $322.4 million compared to $228 million for the same period in 2021. Time charter revenue is understated because of a $13.6 million adjustment required for accounting purposes due to the straight-line effect of container ship charters with the escalating rates. The overall revenue increase results from a 43% increase in available days to $12,897 compared to $9,027 for the same quarter last year. Our time charter equivalent rate decreased by 3% to $23,781 per day compared to $24,447 per day for the same period in 2021.

In terms of sector performance, both containers and tankers enjoyed rates that increased 45% period-over-period to $32,600 for containers and $21,828 for tankers. In contrast, our dry bulk fleet rate were 31% lower at $20,061. EBITDA for Q3 2022 increased by 81% to $321.4 million compared to $177.2 million for the same period last year. Excluding one-off items as described in our press release, adjusted EBITDA increased by $32.5 million to $177.7 million.

Net income for Q3 2022 increased by 59% to $257.2 million compared to $162.1 million for the same period in 2021. Per unit (inaudible) was $8.36. Excluding one-off items, as detailed in the press release, adjusted net income was $113.4 million compared to $130.1 million in 2021. Adjusted net income per unit was $3.70.

Total revenue for the first 9 months of 2022 increased by 89% to $839.7 million compared to $445 million for the same period in 2021. For the 9 months period ended September 30, 2022, revenue is understated because of a $30.1 million adjustment required for accounting purposes due to the straight-line effect of container ship charters with the escalating rates. The overall increase in revenue was a result of a 72% increase in available days to 35,394 compared to 20,521 for the same period in 2021 and an 8% increase in the fleet average TCE rate to $22,717 per day compared to $20,991 per day for the same period in 2021.

In terms of sector performance, TCE rates increased 39% for containers to $30,486 and 18% for tankers to $17,834. Dry bulk rates were in line with 2021 rate for the same period at $21,381. EBITDA for the 9 months period ended September 30, 2022, increased by 43% to $611 million compared to $426.2 million for the same period last year. Excluding one-off items, as described in our press release, adjusted EBITDA increased by $197.5 million to $467.3 million.

Net income for the 9-month period ending September 30, 2022, increased by 16% to $461 million compared to $398.6 million for the same period last year. Net income per unit was $15. Excluding one-off items described in detail in the press release, adjusted net income amounts to $317.2 million compared to $242.3 million in 2021. Adjusted net income per unit was $10.31.

Turning to Slide 15, I will briefly discuss some key balance sheet data. As of September 30, 2022, cash and cash equivalents were $110.3 million. During the first 9 months of 2022, we paid $95.5 million of predelivery installments under our newbuilding program. We also paid $380.4 million to acquire 36 secondhand and 4 newbuilding vessels. Finally, we sold 2 containers for $215.3 million net. During the period, we had $161 million scheduled repayments under our credit facilities. Long-term borrowings, including the current portion, net of deferred fees amounted to $1.9 billion. Net debt to book capitalization stood at 43.6%.

Slide 16 highlights our debt profile. Our debt and lease liabilities at 2.4x covered by the value of our fleet based on publicly available valuations. We continue to diversify our funding resources between bank debt and leasing structures while approximately 30% of our debt, including operating lease liabilities have fixed interest rates at an average rate of 5.8%, providing a natural hedge against current rate increases. Our maturity profile is target with no significant values due in any single year. Furthermore, we decreased the average margin on our drawn facilities to 2.8% from 3.1% at the end of 2021. The average margin for our newbuilding facilities is 1.9%.

Slide 17 provides an update of our recent financing activities. In September 2022, we signed an $86.2 million credit facility with a European bank financing 2 containers for delivery in 2023 at SOFR plus 2%, and we completed the bareboat agreement at an effective fixed rate of 5.5% for the financing of 1 newbuilding ship for delivery in 2023. In October, we concluded a $100 million leasing facility refinancing 12 containers at SOFR plus 2.1%. Currently, we are completing our first export credit agency facility for $161.6 million financing 4 containers for delivery 2023 and 2024 at SOFR plus 1.7% and the financing of a 2016-built Kamsarmax at LIBOR plus 2%.

We are progressing the financing of our new agreement program and we have signed or are in [testamentation] phase for an aggregate amount of $480 million, representing approximately 44% of our financing requirements. Including the facilities under approval process, we are close to $740 million or 2/3 of our newbuilding financing needs. Of this amount, $500 million represents financing arrangements with no commitment fee.

Turning to Slide 18, you can see our ESG initiatives. We aspire to have 0 emissions by 2050. In this process, we have been pioneering and are adopting certain environmental regulations up to 3 years in advance, aiming to be one of the first fleets to achieve full compliance. Navios is a social conscious group whose core values include diversity, inclusion and safety, with a very strong corporate governance and clear code of ethics. Our Board is composed by majority independent directors and independent committees that oversee our management and operations.

Slide 19 details our company highlights. Navios Partners is a leading U.S. publicly listed company. Our diversification strategy creates resiliency and enables us to mitigate individual segment volatility. Our diversification, scale and financial strength should make NMM an attractive investment platform as we take advantage of global trade patterns.

I'll now pass the call to Ted Petrone to take you through the industry section. Ted?

Thank you, Eri. Please turn to Slide 21 for the review of the tanker industry. Tanker rates rose sharply in Q3 and rates today continue firm in all sizes for both crude and clean vessels. What has negatively affected the container industry has positively affected tankers. That is, consumer activity has switched from purchasing goods to increasing travel and services. About 2/3 of seaborne product trade is related to transportation. Despite of economic uncertainties and the Ukraine crisis, the IEA still projects a 2% increase in world oil demand for 2022. The expectation is that oil demand will grow by 1.7% in 2023 and to 101.3 million barrels per day, exceeding 2019 pre-pandemic levels.

Turning to Slide 22. Tanker rates continue across the board and have risen due to solid supply and demand fundamentals, combined with the invasion of the Ukraine, which has redirected Russian crude and clean products to new and longer routes. Additional European refineries are replacing Russian crude and products with supply from the U.S. and Middle East Gulf, further increasing ton miles and trade inefficiencies.

Incremental support for crude tanker rates should come into effect as new EU sanctions and a price cap begin on December 5. Product tankers should also be aided by discounted Russian crude exported to the Far East returning to the Atlantic as clean product. This could add upward pressure on already strong rates. 2023 crude and product ton mile growth is expected to increase by 5.3% and 9.5%, respectively.

Turning to Slide 23. Vessel net fleet -- VLCC net fleet growth is projected at 4.2% for 2022 and only 2% for 2023. This decline can be partially attributed to owners' hesitance to order expensive long-lived assets in light of macroeconomic uncertainty and engine technology concerns due to upcoming CO2 restrictions. The current order book is only 3.4% of the fleet, the lowest in 30 years. Vessels over 20 years of age are 10.3% of the total fleet, which compares very favorably with the low order book.

Turning to Slide 24. Product tanker net fleet growth is projected at 1.8% for 2022 and only 1.5% for 2023. The current product tanker order book is 4.9% of the fleet, one of the lowest on record and it compares favorably with the 7% of the fleet, which is 20 years of age or older. We believe that the overall tanker order book and fleet are well balanced as the IMO 2023 regulations will lead to some vessels retirements in the coming months.

In concluding the tanker sector review, tanker rates across the board continue at strong levels. The combination of low global inventories, oil demand returning to pre-pandemic levels, new longer trading routes for both crude and product as well as the lowest order book in 3 decades should provide for healthy tanker earnings going forward.

Please turn to Slide 26. Focusing on the container industry since topping out at 5,110 at the beginning of the year, the Shanghai Container Freight Index, SCFI, currently stands at just below 1,600, which has dramatically weakened on the back of uncertain macroeconomic conditions, combined with consumer spending, switching back to services over goods, which has led to a decrease in container trade, easing port congestion and blank sailings. [Tumbling] rates have moderated recently. However, they remain above historical pre-COVID averages.

As you will note in the graph on the lower right, U.S. inventory sales ratio was off the recent low but still well below the long-term average. The graph on the lower left shows moderating purchases of goods, which have slowed import throughput easing port takeaway bottlenecks and port congestion. Slowing U.S. AU goods imports have not been helped by China's 0 COVID policy, which has slowed some finished goods exports.

Turning to Slide 27. Net fleet growth is expected to be 3.7% for 2022 and 7.3% for 2023. The current order book stands at 28.8% against 9.9% of the fleet 20 years of age or older. About 71% of the order book is for 10,000 TEU vessels or larger. In concluding the container sector review, supply and demand fundamentals remain challenged due to economic uncertainty, a pullback in demand for consumables and easing supply chain bottlenecks.

Please turn to Slide 29 for the review of the dry bulk industry. After a strong Q2, the BDI experienced a counter seasonally soft Q3 averaging 16.55, ending below both the previous quarter and the same period last year. The BDI started Q3 at a high of 20 -- 22.14, however, a combination of the cooling Chinese economy and the weather-related export disruptions saw the BDI decline to a low of 9.65 on the last day of August, before strengthening in September due to increased exports from Australia, Brazil and Guinea.

Since then, the BDI is up approximately 45% to about 1,400 on the back of higher Capesize and Panamax earnings. Overall, supply and demand fundamentals remain intact as the macroeconomic environment continues to evolve and uncertainties remain. For 2023, the historical low order book and tightened GHG emissions regulations remain a positive factor.

Please turn to Slide 30. Concerning coal, the Ukraine crisis continues to support increased global coal imports as European supply concerns persist. This has led European countries to reactivate coal-fired power plants. European seaborne coal imports are expected to increase by 17% in 2022 and a further 5% in 2023. Additionally, the EU ban on Russian coal will lead to shifting trading patterns towards longer haul routes. Overall, seaborne coal trade is expected to be flat in 2022, but supported by an estimated 1.7% growth in ton miles.

On the grain side, global seaborne grain trade is expected to decrease by 2.4% in 2022, followed by a healthy increase of 4.2% in 2023. Global grain trade continues to be driven by heightened food security issues driven initially by the pandemic. Currently, a severe drought in the northern hemisphere has reduced harvest and export estimates. The war in the Ukraine is negatively affecting grain exports from the Black Sea. These issues are moderated by new trading patterns resulting in an expected ton mile growth of 4.3% in 2023.

With regard to iron ore. China's 0 COVID policy and real estate concerns significantly impacted steel production and iron ore demand through September of 2022. Chinese seaborne imports decreased by 2% as steel production fell 3% through the same period. Expectations that COVID restrictions will be eased along with increases in infrastructure spending should bolster Chinese imports in 2023.

Please turn to Slide 31. The current order book stands at 6.9% of the fleet, one of the lowest on record. Net fleet growth for 2022 is expected at 2.7% and only 0.5% in 2023 as owners remove tonnage that will be uneconomic when the IMO 2023 CO2 rules come into force. Vessels over 20 years of age are about 8% of the total fleet, which compares favorably with the historically low order book. In concluding our dry bulk sector review, continuing demand for natural resources, war and sanction-related longer haul trades, combined with a slowing pace of newbuilding deliveries, all support freight rates going forward.

This concludes our presentation. I would now like to turn the call over to Angeliki for her final comments. Angeliki?

Thank you, Ted. This concludes our presentation, and we'll open the call to questions.

(Operator Instructions) We'll take our first question from Omar Nokta with Jefferies.

Just we've seen today your agreements to sell a handful of older dry bulkers. You're bringing in 2 younger ones. You've also added 2 more LR2 newbuildings. Given, I guess, your diversified platform, I guess, we'll be seeing this a lot more frequently going forward. But just generally, how do you see Navios now, especially with the platform you have today? You've got the strong earnings coming in from the tanker exposure, the solid cash flows from the containers.

With secondhand prices coming under pressure here in the container market and then obviously some softness here in dry bulk, are there opportunities starting to develop where you could take advantage of this weakness? Or are you may be taking a bit more of a wait-and-see approach in looking at the secondhand market?

Actually, Omar, this is a very good question. But you have seen that we already have done an acquisition. We show that we have a fleet of vessels on the -- both on the dry bulk. We have taken a position which we show that was quality vessels, Japanese vessels, and we have them in the water, waiting for the opportunity whether -- with the -- how China will develop, how the 0 COVID restriction will be, and that will give us an opportunity on the spot market.

Of course, we also have some newbuildings that provide us a more efficient vessel. On the container fleet -- on the containership fleet, we see -- we have taken an approach of -- we sold earlier vessels, we contracted our fleet, and we sold at the appropriate time. So -- on the container sector, we are more -- we have now positioned it in a situation where we enjoy cash flows. We have of about $3 billion of contracted revenue, about $2 billion is from the containers, and we are enjoying these cash flows.

On the tanker sector, as you very well said, we are in a position where we enjoy the spot market opportunity, while at the same time, we enter in a sector and we actually have bid some very nice cash flows there. So it is totally opportunistic. We see the opportunity and we move forward on disposal of assets and also on acquisition. On the dry bulk and in our overall portfolio, one thing you will see very often, we will move from -- we will be selling older vessels, older technology that they need CapEx and moving to a younger fleet that we will inevitably be more better fuel consumption, better carbon footprint. So this is a trade that we will be doing constantly, and you will see us doing it. That's why we sold the older vessels, and we substitute with our young and Capesize vessels. They are about 50% less -- they consume less fuel. They have about 50% better carbon emissions.

And then maybe just on the point there. The efficiency you saw that you've now taken up your LR2 orders to 6 ships. And I just wanted to double check. Is it now the original 4 that were contracted maybe 6 months ago, those are not chartered? And the latest 2 orders from today, those are under option to be contracted by the charterer? Does that make sense? So 4 out of the 6 are officially chartered?

Yes, you're absolutely right.

Yes. Sorry. I just wanted to double check that. And then maybe just a final question, and it's -- you'll probably be getting this or you've gotten this in the past, but how do you think now about how are you using some of your excess free cash. We've seen, obviously, you've been very dynamic with the fleet. But with the Navios Holdings' drybulk fleet now fully delivered into NMM as of September, how do you think about the $100 million buyback you've got in place? Do you use that a bit more significantly now? Or does the pullback in containers, even though you're contracted, but does the pull back there, there's a softness in dry bulk, does that give you a bit of pause in buying back shares?

We adopted the buyback because we wanted to have the flexibility. Yes, of course, because of macro uncertainties that we saw and the balance sheet consideration that -- balanced considerations, we have not focused in that yet, but it's something that we are looking. This is about Navios is concentrating on total returns. This is a very important thing and the decision of how we return to our shareholders, it depends on the (inaudible) value. But we are -- and this is something that we adopted because we wanted the flexibility to use it.

We'll take our next question from [Matthew Hodapan] of Citi.

So I was -- we were wondering if you could just touch on a little bit more about the softness in the container market right now and where you really see that going not only in 4Q, but also if you could potentially shed some light on the first half of 2023? And also in addition to that, if you wouldn't mind touching on the points of hedging out that newbuild risk with the longer-term charters? If you could just talk a little bit more on those 2 points, that would be very helpful.

I will start with the container ship market. This is a market that, to be honest, we show the opportunity of -- we saw that people move from the COVID period where we are all about product and purchases of products to services. Everyone is traveling, everyone is going to restaurants. So it was inevitable that we'll have a softer market. And that's why we contracted as we have hedged our position, and we took a couple of ways of maximizing our returns. We sold vessels. You saw the transaction of $220 million which was completed in September, of $220 million sale of 2006-built container vessels and also we contracted (inaudible).

And one of the things that we did is we have about from a $3.2 billion contracted revenue, $2 billion is in the container sector. And of that is a very front-loaded, about $1 billion we're going to get earned within the first 2 years. So it's a very front-loaded because we see that now the company is earning very well, good money. So the balances are very good, and we want to earn as soon as possible we come out. So we are very -- we have a credit committee that we monitor on this, but we also have taken measures from the beginning, front-loaded and had the exposure.

And then let's see, if you don't mind, just giving a little bit more detail on your puts and takes on the bulk market. On one hand, bulk demand remains -- it remains strong, but softening. So taking into consideration the supply issues, it's likely going to put pressure on what you're able to move. How would you break down this market dynamic heading into the winter and the first half of next year?

I will give you a very macro level. I'll let Ted speak to all this. But one thing I will say is, today, you have call, which is basically depends on the energy crisis in Europe, we will have more demand, it's an arbitrage there. And the other big issue is the 0 COVID policy in China. At the end of the story, China is a 50% buyer of all commodities. The moment you have an immediate COVID strategy, you will see that this will create an opportunity on the dry bulk and made on the larger vessels will be always iron ore, the larger commodities will be the driver of that market. And with that, I think Ted can give you a better details on it.

Sure. Thank you, Angeliki. Just taking a step back on the macro, let's just remember that the order book is under 7%. Net fleet growth next year is going to be 0.5%. You may have some softness here into the winter. Eventually, China will fix the 0 COVID policy, whether now or in a couple of months. That's why you're seeing the rates were -- will come off a bit from the spring, but the actual S&P values have not because there's a lot of confidence that the market is going to bounce back. They haven't come down as much as the rates, and the rate has actually starting to move up a bit, I would say. And I think you'll be seeing next year some really good grain ton mile increases of almost 5%. Coal is going to be 3%.

You're seeing longer haul routes for 2 out of the 3 majors, coal and grain. Iron ore will not have a ton mile, but it should come back next year as China infrastructure projects take hold in the spring and the COVID 0 policy goes away. So I think there's a lot of optimism, but you may have a soft touch in front of us right now.

That's very helpful. And then just finishing up. Would you be able to break down the available days specifically within dry bulk, container and tanker for the quarter?

Eri will talk about this. But one question I will get -- what I'll give you on a macro level for 2023, you have a 6,000 breakeven per open day, of which we have 40,000 days, 30,000 more or less on the dry bulk and 10,000 on the tankers, which gives you a good outlook on our 2023 earning capacity.

You wanted Q3 or the Q4 quarter? Sorry, which quarter you're looking after?

So we were looking at the third quarter.

The third quarter. So roughly, we have around 4,000 tanker days, of which 1,000 are WCC days, 900 (inaudible) days. Close to 2,000 MR1 and MR2 days and just below 200 chemical days. On the container side, we have 3,200 days. And this is the 10,000 days we have roughly 2 vessels, so it's a bit more than 600 days, 2,000 days in the 4,050 side and then 600 days for 3,450 and below. And then on the dry bulk side, we have roughly 6,000 days, I think.

I think we're done. Take this...

That is around 2,000 Cape days and then 3,000 Panamax days and third is Handymax.

Definitely, you can -- we can give you all your modeling questions so that you can reconcile your model.

I will now turn the floor back over to Angeliki for any additional or closing remarks.

Thank you. This completes our Q3 results. Thank you very much.

This concludes today's earnings call. We appreciate your participation. You may now disconnect.