Month: June 2025

MSI Consultancy Case Study – Strategy Review

MSI recently completed a strategy review for a Middle Eastern tanker operator whose Board of Directors required a review of its operations to help the business benefit from changing market conditions.

The Board sought independent financial advice with an assessment of the financial performance of the business, current and forecast market conditions, commentary on the organisational structure and valuation work on the strategic options available.

Working together with an international accountancy firm, MSI performed the following tasks as part of a four-stage work plan:

Product and Chemical Tanker Market Overview: a review of global demand and supply factors in the product tanker market including forecast demand, supply and utilisation rates. The scope included market review including size, segmentation, trends and growth metrics.

Base Case Evaluation: an analysis of the client’s base case financial model for its existing fleet together with a financial analysis of the expected returns generated from changes to the fleet composition (for example: the effect of replacing LR1 tankers with LR2s). The work also included benchmarking the client’s fleet composition and financial results to leading competitors in the product tanker market.

Existing Strategy: a review, challenge and assessment of management’s business plan with an examination of fleet composition, staffing and organisational structure, identification of key risks and issues and an assessment of the Group’s working capital and funding position.

Future Strategy: develop recommendations for the future strategy of the business including advice on the chartering strategy, advice on the balance of long range and short range tankers, detailed analysis of financial returns, M&A options and group valuations in a range of scenarios.

In particular, the market review included forecasts for the following KPIs: global macroeconomic outlook, shipping market by sector, oil consumption by region, refinery capacity by region, regional product imports and exports, shipbuilding capacity and the outlook for the chemical tanker market. These KPIs were included in our sensitivity analysis.

The team prepared a detailed market review which comprised a single report addressing all parts of the scope as described above. In particular, the report combined a market review of both the product and chemical tanker markets, forecasts for time charter equivalent rates in the client’s vessel size categories, strategic options for the Board to consider and supporting rationale together with a valuation and returns analysis.

The report was issued in draft stages to the Board over the duration of the project and we provided a facility for comment and feedback from the management team. The final report was presented to the Board of Directors together with the conclusions of our work.

To learn how MSI’s Consultancy Services can help your business understand and profit from market dynamics in shipping, offshore and shipbuilding, please get in touch.

MSI Consultancy Case Study – Understanding long-term dry bulk freight dynamics and environmental legislation

recently completed a project for a major mining company which wanted to enhance their approach to understanding the long-term dynamics of the dry bulk freight. They were particularly interested in better understanding environmental legislation in shipping and how the decarbonisation of the industry will impact the freight markets. The project scope included:

  • A detailed overview of the structure of the dry bulk carrier market, including a comprehensive assessment of the market’s demand- and supply-side drivers, market balances and MSI’s base case forecasts.
  • A comprehensive overview of emissions targets at the international, national and industry levels and detailed introduction to green shipping regulatory frameworks, including technical, operational and market-based approaches.
  • Decarbonisation options available to shipowners, with a particular emphasis on EST, operational pathways and alternative fuels. An overview of alternative fuel contracting in the sector, with details on routes taken by all the major mining companies.
  • Conducted extensive interviews with stakeholders across the shipping industry, including ship owners/operators, financiers and shipyards to better understand preferred pathways forward and associated issues (cost, technical difficulties, risk, etc).

Also included were a review of the status of the shipbuilding industry’s available capacity, the retrofit option for alternative fuels, including uptake, costs and return on investment and the newbuild option for alternative fuels and factors that impact its commercial feasibility including CAPEX, fuel pricing, carbon pricing, etc.

MSI created a bespoke interactive forecasting model that allows for long-term fundamental forecasting through scenario-building.

Given the scale of the project, MSI developed a multi-stage series of deliverables in close cooperation with the client. The first deliverable was an interactive Excel-based forecasting model that allowed the client to run their own analysis of long-term dry bulk freight market supply and demand fundamentals through forecast scenario-building.

MSI also ran a workshop with the client and prepared a series of instructional videos to ensure the client understood how to best use the system. The second deliverable was a series of independent market studies on the topics detailed above.

Reports were provided in PowerPoint, with all supporting graphs and data in Excel. MSI also held workshops for each of the market studies to take the client through key findings and answer any outstanding questions.

To learn how MSI’s Consultancy Services can help your business understand and profit from market dynamics in shipping, offshore and shipbuilding, please get in touch.

MSI Consultancy Case Study – LNG Carrier Investment

Timing  of investments – especially in complex and costly shipping markets like LNG – calls for a unique combination of expertise and experience. This energy shipping market is among the most dynamic, with booming infrastructure matched by growing interest from a wide range of investors.

MSI was recently called upon to advise a leading international alternative investment firm that specialises in infrastructure and real assets.

The company was asked to provide an independent assessment of an investment opportunity in the LNG carrier space with a focus on the most widely available engine types in the sector and the risks associated with them.

MSI performed the following tasks:

  • A comprehensive overview of recent trends in the LNG market, including regional gas production, export and import capacity and developments in the energy demand mix and its flowthrough impact on LNG trade.
  • A high level overview of historical and forecast LNG carrier demand and supply trends and the commercial implications for the different segments by engine types prevalent in the market (steam turbine, DFDE, gas injection).
  • The impact of demand and supply factors on sector utilisation rates and achievable earnings.
  • A detailed focus on LNG carriers by engine type, including trends in fleet development, fleet employment and sale and purchase activity.
  • Asset valuations, including forecast fair market residual value and one year timecharter rates for the specific LNG carriers under review.
  • A cohort analysis of the specific LNG carriers under review.

MSI delivered a presentation to the client that incorporated all parts of the scope and detailing our latest analysis and forecasts with supporting data provided in Excel. After delivery of the presentation, the client was given the opportunity to compile a list of questions, which were then addressed by MSI during a conference call.

To learn how MSI’s Consultancy Services can help your business understand and profit from market dynamics in shipping, offshore and shipbuilding, please get in touch.

MSI Consultancy Case Study – Red Flag Review for Containership Newbuilding Project

Investments worth millions of dollars are not taken on instinct; MSI is regularly called upon to provide the expert consultancy that underpins newbuilding decisions.

MSI was approached by a European infrastructure investor which was considering an investment in a dual-fuel feeder containership.

The company requesting the funds had provided an analysis of the investment and the client asked MSI to review the investment opportunity and provide an independent red flag assessment.

MSI performed the following tasks:

  • Overview of the feeder containership market, including key supply/demand drivers, historic charter rates, regulatory headwinds, etc.
  • Provision of MSI’s inhouse forecasts for feeder containership asset prices and freight markets.
  • Assessment of the green energy transition and use of alternative fuels, both at an industry-wide level and specific to the containership market.
  • This involved a comprehensive review of the availability of green fuels, their attractiveness for charterers and the feasibility and likely timing of fuel switching.
  • High level review of shipbuilding and charterer contracts as well as counterparties.
  • Detailed commentary on alternative methodologies for determining ship’s residual values and forecast achievable earnings.
  • Commentary on residual value, freight rate and revenue forecasts provided by the company requesting funds, identifying potential areas of concern for the client.

MSI delivered in the report in a PowerPoint style format including text, data and charts, with additional supporting data provided in Excel. MSI also presented key findings to the client through a series of meetings. To learn how MSI’s Consultancy services can help your business understand and profit from market dynamics in shipping, offshore and shipbuilding, please get in touch.

Shipping lines go cool on Arctic Ocean route

Melting ice could make shorter transits between Asia and Europe a reality but there are economic and geopolitical risks.

Daniel Richards, a director at London-based consultancy MSI, points to the risks of using the northern route. He says container shipping lines tend to be risk-averse, and their customers are similarly reluctant to have their goods enter an ecologically and geopolitically sensitive region. Read more at FT.com.

MSI Consultancy Case Study – Theoretical Emissions Analysis

MSI is increasingly commissioned to research and analyse the impact of environmental regulation and decarbonisation on vessel operations and fleet profiles. This can be supported with access to MSI SEASCAPE.

Our expertise in understanding shipping markets extends to specialist analysis of the industry in the energy transition, including impact on vessel types, cargoes and supply chains.

When a large financial institution wanted to produce theoretical carbon emissions assessment for over 300 vessels in its portfolio, it commissioned MSI to construct an analysis without contacting individual owners.

MSI performed the following tasks:

  • Using AIS data extract individual vessel voyage characteristics (+300 vessels) and operational profile;
  • Adopt the IMO Greenhouse Gas Study bottom up assessments of emissions, incorporating Main Engine, Auxiliary Engine and Boilers;
  • Base analysis off vessel speed profiles distance covered assess fuel consumption
  • Model validation assessed against actual data;
  • Assess sections of the fleet performing above and below the wider fleet cohort
  • Identify ships significantly above “normal” levels;
  • Help client understand why some ships abnormally high and provide rationale e.g. layup, arrested etc;
  • Provide a framework for Poseidon Principles-alignment calculation to be performed (where the bank could enter and weight depending on debt outstanding on each vessel).

MSI provided a theoretical assessment of the bank’s fleet on a vessel-by-vessel basis utilising AIS data and MSI’s inhouse algorithms and processes.

The results were presented by ship to the client along with a presentation of the methodology and results. Further analysis was undertaken, and presented, for vessels that appeared to be outliers and explanations discussed. To learn how MSI’s Consultancy Services can help your business understand and profit from market dynamics in shipping, offshore and shipbuilding, please get in touch.

What will be powering ships in the 2030s?

MSI has given an early indication of the impact that the Net Zero Framework will have on the bunker market, based on data from its new SEASCAPE platform.

By extending the annual fuel consumption estimates calculated for 2024 through to 2035, and applying MSI’s forecasts for bunker prices, it is possible to project the future fuel costs for conventionally-fuelled ships alongside the projected IMO penalties. By this approach, the IMO’s penalties would be equivalent to an 82% premium on top of the fleet bunker costs by 2035 – almost $100bn for the 30,000 ships tracked in MSI’s database. Read more at Splash247.com.