Euronav NV

XBRU:EURN

Earnings Call Transcript 2020-Q2

[Operator]

Good morning, everyone, and welcome to the Euronav Q2 2020 Earnings Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Brian Gallagher, Head of IR. Sir, you may begin.

[Brian Gallagher]

Thank you. Good morning and afternoon to everyone, and thanks for joining Euronav's Q2 2020 Earnings Call.Before I start, I would like to say a few words. The information discussed on this call is based on information as of today, Thursday, 6th of August 2020, and may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements reflect current views with respect to future events and financial performance and may include statements concerning plans, objectives, goals, strategies, future events, performance, underlying assumptions and other statements, which are not historical factual statements.All forward-looking statements attributable to the company or to persons acting on its behalf are expressly qualified in their entirety by reference to the risks, uncertainties and other factors discussed in the company's filings with the SEC, which are available free of charge on the SEC's website at www.sec.gov and on our own company website at www.euronav.com. You should not place undue reliance on forward-looking statements. Each forward-looking statements speaks only as of the date of this particular statement, and the company undertakes no obligation to publicly update or revise any forward-looking statements. Actual results may differ materially from these forward-looking statements. Please take a moment to read our safe harbor statement on Page 2 of the presentation.I will now pass to our Chief Executive, Hugo De Stoop, to start with the main presentation. Hugo, over to you.

[Hugo De Stoop, CEO & Member of the Management Board]

Thank you, Brian. Welcome to our call today. In terms of the agenda, I will firstly run through the Q1 highlights before passing on to Lieve Logghe, our CFO, who will provide a full financial review of the income statement and the balance sheet. Then Brian, our Head of Investor Relations, Market Research and Communication, will look at the current themes in the tanker market and Euronav's outlook before we take questions.So turning to Slide 4 and the highlights page. Tanker markets continued to be very strong during Q2, even stronger than in Q1, which is surprising as usually the second and third quarter are seasonally weaker. What is remarkable is that we have already enjoyed 3 consecutive quarters of VLCC rates over $60,000 a day in the spot market, and this for the first time since 2008. This robust freight market has continued into Q3, with nearly half of our VLCC covered at rates just over $60,000 a day. The Suezmax also performed very well with just under $40,000 per day so far in Q3. This is a solid foundation to enter the second half, but admittedly, with far less visibility than usual.We told earlier in the year that Q2 would bring a strong and sustained storage market opportunity. This was not really the case. Yes, a number of VLCCs were and are still being used as storage unit but far less than what many analysts and ourselves had predicted. Nevertheless, as the figures illustrate, this has been one of the strongest markets for over a decade.With the super strong cash generation, Euronav has been able and very keen to return a lot of cash to our shareholders. We started to distribute a total of $1.57 per share in cash dividends since late May. And more recently, we have executed $75 million in share buybacks over the past 2 months, and we will do more.This brings me to Slide 5 and capital allocation at Euronav, which remains an important and key focus for the Board and management. Indeed, Euronav remains committed to returning capital and create value for our stakeholders. And obviously, a strong freight market has given us the opportunity to demonstrate this.Given the lower equity valuation, as illustrated by our share price in the last few months, we have started to buy back our own shares. So far, we have used $75 million from the Q2 earnings to buy our shares at an average value which is very accretive to existing shareholders. In addition, today, we announced that we will use a further $25 million to buy our shares using proceeds from the earnings of Q2, and we will do this by the end of September.At Euronav, we always try to be balanced and consistent in our allocation. We do have some mandatory debt repayment as well as some revolving credit facilities reductions, which aren't in cash. But given where our current leverage is, we do not need to repay more debt for the time being. We have designed our return to shareholders' policy, taking many aspects of the business into account. And indeed, we are very pleased to be in a position to pay a cash dividend of $0.47 per share related to the second quarter, in addition to the $100 million I just spoke about on the share buyback program that will be returned also to our shareholders.So overall, the shareholders will receive $196 million in cash from Euronav as they relate to the Q2 earnings, roughly half of it in cash dividends and half of it in share repurchase. At the same time, Euronav balance sheet is improved by $60 million cash to reduce our net debt position. When repurchasing shares, we will always try to create long-term shareholder value rather than giving support to a share price, which indeed has been very, very volatile during the quarter.This concludes my remarks, and I will now pass on to CFO, Lieve Logghe, to run through the financials. Lieve, over to you.

[Lieve Logghe, CFO & Member of the Management Board]

Thanks, Hugo. As you mentioned, the first half year of 2020, and more specifically the second quarter, was very strong in terms of performance, reflecting the strong tanker markets. Revenues generated are $535 million, while EBITDA generated was $355 million, resulting in a net income of more or less $260 million.Whilst navigating the COVID-19 crisis, the company's clear priority has been the safety and well-being of our employees and to provide support to the extent required in the communities in which we operate. Despite the extra costs to support our crew, combined with mask and other surgical material, strong cost control of the full scope more than offset the impact in the G&A line.Whereas the first quarter was including a positive impact of strategic fuel stock in 2019 compared to the market, we noticed a negative impact in Q2. We want to mention, however, that this fuel stock was actively managed as more than 85,000 metric tons were bought for an amount of $22.1 million for the Oceania. This represents more or less the consumption of the second quarter. Due to the strong cash management resulting in a reduced debt level and due to a beneficial interest rate environment, also interest costs reduced significantly in the first semester compared to last year.Moving now on to Slide 7 and the balance sheet. The company remains in a solid position with a strong financial balance sheet. I refer to the leverage ratio of 38.3% as well as the liquidity in excess of $1.1 billion. We have kept a strong level of cash at our disposal for an amount of $280 million, which is more or less in line with last year. Even though we were active during the first semester in purchasing 4 VLCC resales requiring a down payment of more than $100 million, this cash out was partially offset by the proceeds of the sale of the vessels, the Finesse, Cap Diamant and TI Hellas.Moreover, the business required more working capital because of increased outstanding cash to be received from the customers due to the high market rates. Also, clear focus has been put on the cash collection in order to create value for our stakeholders. The good performance, combined with the cash focus, allows Euronav to keep 20% of the net income to further deleverage with high cash returns to the shareholders.I will now hand over to our Head of Investor Relations, Brian Gallagher, for the market size -- slides. Brian, over to you.

[Brian Gallagher]

Thank you, Lieve. We now look at 4 broad themes in the presentation before moving on to our outlook commentary.On Slide 9, you can see how the contracting of VLCCs has actually been a positive for the wider tanker market. This provides a medium and long-term positive backdrop for the tanker sector and for investors, which Euronav believes is structural in nature. The light blue areas show the order book to fleet ratio, which has steadily reduced over the past decade and now stands at 20-year lows. The blue bars indicate per quarter new VLCC orders, and it is clear that there is a strong correlation with the green line, which is VLCC earnings.The interesting feature, therefore, is the development over the past 3 quarters. As Hugo said earlier, this has been the best 3 quarters from an earnings perspective for VLCC since 2008, and yet this has not triggered a rush to the shipyards and ordering of new vessels. This is very encouraging and reflects our view that there's a potent mix of structural, regulatory, financial and environmental factors, which will continue to keep new ordering at low levels going forward.Moving to Slide 10 and the global fleet itself, which is also providing positive messages. Both the VLCC and Suezmax global fleet average age are now back to levels not seen in 18 years. Having an aging fleet is one thing, but digging a little deeper, we see around 20% of the VLCC fleet alone, which is now not only over 15 years of age, but crucially, will have to undergo a special survey in the next 7 quarters.This is critical. Having a vessel over 15 years of age means a lower addressable market for that tanker as most charters will not take such vintages for their cargoes. But equally, there's no incentive for a vessel to leave the market either. A special survey costing upwards of $4 million, depending on the age and ship condition at that age, therefore, provides an important catalyst for an owner to effectively stick or twist. Should the sector have a period of lower freight rates, as we saw in 2018, for instance, when 50 VLCC equivalents were scrapped, then we will see pressure with this catalyst for owners to take their ships out.Slide 10 almost certainly underestimates the amount of VLCCs in this situation as it's unclear how many undertook special surveys during the first half of 2020 due to the COVID-19 restrictions.On to Slide 11. Disruption during this first half of the year, and in particular, in Q2, has actually been a positive development for the VLCC market. Slide 11 illustrates the positive level of disruption we've seen with around 150 or 18% of the global fleet of VLCCs having some form of disruption, but only part of this is related to the contango and related storage trade. 60 VLCCs will remain permanently on the sidelines covering Iranian sanctioned vessels and also those in longer-term storage and related to contango. Around 40 or so will find trading difficult, as we highlighted in line green because they have been engaged in Venezuelan trade over the past 12 months.That takes about 100 VLCCs out of the marketplace. This leaves a number of categories in blue, as we show on Slide 11, which have also helped underpin freight rates because they've also been largely missing from trading. The 3 categories, most notably the 35 or so, which remain on what we would term market storage driven by the contango or a need to store oil; 18 from a suspected full case in Singapore, which has seen that fleet more or less idled during the -- most of Q2; and another 20 or so, which have been held up over the last 3 months via congestion at the Chinese ports.We would expect this congestion at Chinese ports to remain for another couple of months, so we will see some of these categories coming in the blue returning to the world trading fleet, totaling around about 60 to 80 VLCCs. But this will be progressive, will not happen immediately and will take some time, but nonetheless, does provide a headwind for owners as we move towards the latter part of this financial and calendar year.Moving on to the final market slide on Slide 12 and what actually happened in Q2. Q2, as Lieve said earlier, was a story of the oil market, and in particular, oil supply, substantially reducing the potential storage opportunity for the tanker sector that we envisaged at the start of May. The rapid reduction in oil demand during March and April as restrictions for COVID-19 kicked in prompted an increase in inventory in both onshore and floating storage. And on Slide 12, this reached a peak of around about 200 million barrels of floating storage during May.During our last earnings call in early May for Q1, it was anticipated by ourselves and most commentators that this figure would be substantially higher, thus driving a very considerable but positive disruption for the tanker market as this requirement for storage would be acute. This didn't materialize to the scale we envisaged as we saw OPEC+ cuts kicking in very quickly, Saudi and partners also reducing voluntarily another level of supply cuts towards the end of May and U.S. production switching off quicker than expected as well.So the tanker market only benefited from an additional 200 million barrels of storage requirement, around half of which went on Suezmax and Aframax. This is important because these ships were taken because VLCC rates during April were especially high. And this helps to explain some of the rate differential between the tanker categories during Q2.Looking forward, the EIA forecast continued recovery of demand towards 97 million barrels per day in September before the rate of recovery eases off in Q4. But crude supply is expected to remain below these levels, implying further inventory drawdowns.Taking the EIA assumptions, as Chart 12 shows, most of the inventory will then have been drawn by Q3 of next year towards the 5-year average, with floating storage also needing to be reduced on VLCC and other tanker categories. These will provide headwinds to the tanker sector into 2021, along with the demand uncertainty with regard to COVID-19. Chart 12 does not assume deliberately any floating storage forecast beyond July. But as you can see, floating storage has already come off the peak but remains high in terms of the definition. There is no doubt that some congested barrels we spoke about earlier in -- off the Chinese coast are included in this definition of storage.I'll now move to Slide 13 and the return of our traffic lights, giving our outlook view for the tanker market. We didn't use the traffic light system given the extreme volatility in the oil and tanker markets during March and April when we last spoke in early May. Hence, there is more change than usual. Supply of and demand for oil moves from green, stroke green amber to both being red. This reflects mainly the OPEC+ production cuts but also OPEC's move to monthly meetings, suggesting they will be flexible in managing supply. Demand is clearly going to take some time to return to previous levels as recent spikes in COVID-19 cases globally and accompanying lockdowns have made clear.Ton miles moves from green to green to amber, reflecting the lower U.S. crude export potential as U.S. shale production is lower than before. But it's not all bad news. Vessel supply is moving in a positive direction and moved to a full green on our traffic lights, reflecting, as we spoke about earlier, the lack of ordering despite very, very high freight rates over the last 3 quarters. As we mentioned before, we continue to believe this is a positive structural feature, which provides a strong medium-term support for the tanker market. Our balance sheet with liquidity over $1 billion remains one of the strongest in the sector, and this remains on the full green.So in conclusion, there are clearly more negative moves than positive, reflecting the more challenging outlook for tanker markets, and as Hugo said earlier, a lack of visibility that we haven't had for quite a period of time. But the 2 drivers of demand, oil supply and ton miles, will continue to be subject to uncertainty on how quickly GDP growth will return to more normalized levels and in the meantime, how crude inventory, both onshore and offshore, is drawn down to match that return in demand. However, Euronav has very little control over these macro drivers. But what we can control is our own balance sheet and our positioning, which is what we will continue to do on a proactive basis.As we mentioned before, we have $1 billion-plus of liquidity to manage our business should we enter a period of sustained challenged freight rates. Our leverage remains amongst the lowest in the sector, and we have acted proactively over the summer months in our capital allocation by already repurchasing $75 million of the cheapest asset that's available to us, mainly our own shares. We've also added today the capacity to buy another $25 million of share buybacks derived from Q2's earnings.With that, I'll pass back to the operator and prepare for questions. Thank you for your attention.

[Operator]

[Operator Instructions] And our first question today comes from Amit Mehrotra from Deutsche Bank.

[Amit Singh Mehrotra, Director and Senior Research Analyst]

I appreciate the fair and balanced approach in the presentation. I mean the fact of the matter is a weak market could actually be quite good for a shipping company with a good balance sheet. And Euronav obviously has built the fleet through countercyclical investing via Maersk and Gener8 kind of earlier several years ago. With the balance sheet obviously getting better and better every quarter, even despite the big payouts, are there any opportunities for end block transactions, Hugo? There are obviously many private taker fleets out there that maybe there's not as much transparency or visibility on in terms of what's for sale and what's not, or the bid-ask spreads maybe are still wide. But if you can just comment on opportunities for growth in a market that's uncertain and a little bit weaker given the legacy of the company and how they've built the fleet.

[Hugo De Stoop, CEO & Member of the Management Board]

Yes. Amit, well, very good question. You know that when you talk about the 2 transaction that you mentioned, the Maersk and the Gener8 one, if you remember, it's something that came up and we act upon it very quickly. In the case of Maersk, I think we did it over a Christmas holiday, in literally 2 weeks. And in the case of Gener8, if we really are talking about the agreement that we made with the Board and the shareholders, it was certainly something like less than a month of negotiation.And I guess what I'm trying to say here is that you don't have a shopping list. You don't have a target fleet because that's not how the market works. I mean it seems that some people suddenly change their position and they decide to sell their fleet. And then it comes on to your desk. And when you have the capacity, and that is obviously balance sheet and liquidity, but also the management time to act upon those opportunities promptly, then you can seize those opportunities. And so we're not going to change that recipe. And I think that's really how it's going to happen.When it relates to your question, are there already small deals to be done, I don't think so, or at least I haven't heard any. And I think that the reason is that we are on the back of 3 super strong quarters, Q4, Q1, Q2. What we have booked, and I believe the others have also booked fairly good numbers in Q3, is very, very healthy. I mean no matter what environment we are in right now, the quarter will end up to be a very good quarter.And then there's a big question mark. And as I mentioned, and Brian did, too, there's probably more uncertainty about what comes in the future than in other period of time that we have seen in the past. But I just think that it's too early for people to sort of throw the towel or decide to sell their fleet or do something like that because the cash that they've generated very, very recently and up until today is phenomenal.

[Amit Singh Mehrotra, Director and Senior Research Analyst]

Right. Okay. So I guess as you accrue cash flows or reduce net debt, obviously, the capital allocation is just keeping it on the balance sheet, paying the dividend or buying back stock. I mean on the stock buyback, do you just keep on buying back stock as long as the equity is below NAV? I mean there's obviously some float and liquidity concern. And I think the AGM gave you the ability to kind of purchase 10% of the stock every year, if I understand that correctly. Can you just talk about, one, your limitations, kind of your -- how you think about the buyback in terms of balancing the financial positiveness of buying it below now but also kind of the limitations that, that gives you in terms of any liquidity inflow.

[Hugo De Stoop, CEO & Member of the Management Board]

Yes. So 2 very critical points. Yes, we believe that we are buying at a significant discount below NAV, but that's not how we're measuring it. And that's certainly not how we trigger it. The way we trigger it is by translating the current share price into a price of a VLCC or Suezmax for that matter. And at this price, we'll buy the cheaper vessel that we can buy in the market. Because if you only look at the NAV and the discount to NAV, then obviously, you're taking a picture of something that is moving target.If the market continues to be like it is today at $25,000, or let's say, between $20,000 and $30,000 a day, I have no doubt that the values are going to come off. And if the value come off, then the NAV comes off. And then potentially, you are improving your share price with the NAV decreasing and you go back to NAV.So fundamentally, we prefer to have a long-term perspective. And we say, okay, today, at the current share price, we're buying a ship at probably 72 million, 73 million. Is that good value a lot? Yes, it is. If we were to go back to maybe 80 or 85, that may become the NAV of tomorrow. And there would be less reason we would be less keen to buy back our shares.On the second point that you touched, which was liquidity. Honestly, I think that we are very, very, very far from decreasing the liquidity that it took us many years to build, by the way, over the 2 exchange. You have seen that we are buying over the 2 exchange. They are fairly balanced. I mean one has 60% of the trade flows. The other one has 40%, the European one. And I think we are adding sort of to the current volume of liquidity that we see in the share exchange. And it's not because you hold 5% of your capital that certainly you don't enjoy a very strong liquidity, which many investors cherish because that's the only way for them to make sure that they can buy and sell out at the time of their choosing without moving the share price.And that's maybe the last point, which we have said already in the remarks earlier, we're not buying to improve the share price. We are buying because it makes a lot of sense if we want to create long-term value for our shareholders. So you're not buying in order to push the share price higher in order to make a transaction the day after we've done that program. We are buying because it makes sense. That's it.

[Operator]

Our next question comes from Jon Chappell from Evercore ISI.

[Jonathan B. Chappell, Senior Managing Director]

Hugo, so the first question, kind of shorter term, the numbers you put up for the third quarter in both fleets, but especially the Suezmax fleet, substantially above what I would say have been market value since the start of the third quarter. So kind of a 2-parter here. First of all, was there any kind of legacy carryover from the strength of the second quarter, whether it was short-term charters or just extended voyages that got you to elevated level? And as we think about the rest of the quarter, should we think about benchmarks? Or do you have an elevated kind of starting point for the back half of the quarter as well?

[Hugo De Stoop, CEO & Member of the Management Board]

So no, there is no legacy. That's for sure. But it is true that when you take the Q1, the Q2 and now half of the Q3, and thirdly, if you compare it to Clarksons or even to some of our peers, who I know have yet to announce their results, but at least they did some trading update, you can see that the fluctuations among us are larger than usual. I think that we were way ahead of our peers in Q1. This quarter, we may be slightly below. And then in Q3, it seems that we are, again, a little bit ahead of that.But on average, it seems that we are all playing in the same territories. And that explains a little bit maybe the surprise of the market that we booked very good numbers for Q3. It's simply that voyages for VLCC, we've been talking about positive ton miles for the last 5 or even 10 years. Well, they get -- an average voyage seems to increase in number of days. And very often, we are very close to 90 days, and 90 days is a quarter.So depending on the positioning of your fleet, you may pick up some sort of bad voyage, but they are very, very good for your positioning. And then you will enjoy better rates the following quarters, but you have to endure maybe lower rates in the current quarter. And that's a little bit what we believe is happening here. So it's no legacy. But it's definitely part of a positioning of, I would say, majority of the fleet in order to benefit from rates that are higher in some part of the geographies than others.

[Jonathan B. Chappell, Senior Managing Director]

Understood. And then for the follow-up, the liquidity situation is obviously incredibly robust and something that really helps you stand apart. However, you shifted 2 of your stoplights to red. There's a ton of uncertainty. Your inventory chart, if we just follow that to the eye, it looks like mid-'21 before things get better. With the revolving credit facility rolling off, with the new bank financing coming on for the fleet renewal growth, are there any other measures you foresee taking to kind of establish a greater war chest given the cheap levels of debt right now?

[Hugo De Stoop, CEO & Member of the Management Board]

No. It's true that we are, obviously, refinancing some of the facilities that may expire next year because we believe that today is a better time to do that than next year. So -- but I wouldn't say that's a major program. And that's probably decisions that we have to take anyway, and whether we do it now or in 6 months, it doesn't matter. So we prefer to do it now. So there will probably be some additional subs that we can announce next quarter.But it's true that when you're buying back your own shares, and you're not destroying them, you're also adding a little bit of ammunitions into your toolbox. And so rather than a dividend, which is a one-off event, and then when the cash is out, the cash is out, here, we are buying some sort of an asset. I mean that's our own equity, and we are parking it on the balance sheet.

[Operator]

Our next question comes from Ben Nolan from Stifel.

[Benjamin Joel Nolan, Managing Director]

So I want to circle back to the question that Amit had or really, I guess, the answer that you gave, Hugo, about sort of the state of the market and asset values and how people are perhaps a little bit more insulated now than in previous down cycles given 3 really, really good quarters. Obviously, though, less cash flows probably do mean you have more sellers. How are you thinking about sort of the cadence? Do you think that ultimately, this down cycle will be substantially less severe from an asset value perspective even if it does stretch? Or what would you think about as sort of the tipping point? If you have any color there.

[Hugo De Stoop, CEO & Member of the Management Board]

Well, it's a little bit the same as when you guys ask us to predict the market freight rates. I mean it's very, very difficult because at the end of the day, it's a supply/demand mechanism. And then I guess people can drop their price or whatever they want to serve their vessel there, depending on how desperate they are. Obviously, after a strong period of cash generation, people tend not to be desperate. But at the same time, they don't want to see all this accumulated cash being used to compensate for potential loss. And if not loss, to me, as Brian mentioned, for further capital investment into a very expensive dry dock.And let's all remember, those are already expensive when the vessel is old, but they are even more expensive this time around because most of the ships that we are talking about, which are more than 15 years of age, don't have a ballast water treatment system yet, and that's something that costs 1.2 million to 1.5 million. So it's going to be a very expensive bill, and people facing that sort of decision will think about it and will say, "Okay. I've generated a lot of cash in the last 3 quarters. Do I want to sort of waste it, reinvest in my vessel?" So that's for the older part of the fleet.For the younger part of the fleet, I think that there are a number of challenges coming in the way of smaller ship owners, and you know how fragmented the market is. And that is related to many regulations and primarily the regulations around CO2 emissions, but not only -- I mean it's also access to capital.Banks today, they prefer to rent to a public company with a good corporate governance and a lot of transparency than to small players. So I think the small players are facing severe challenges which, to my mind, to our mind, can only be addressed with size, size of a big company like Euronav or like some of the other public companies. And so that gives us real hope that when the market will soften and the value will come up, people will realize that it might be a very good opportunity to exit the market and either becoming shareholders of a bigger entity or simply take the cash and then reinvest in something else. And I think that, again, the reason why we like the structure at Euronav is that we are very flexible.We can do mergers like we did with Gener8. We can do acquisition like we did with Maersk by paying in cash and raising some of that money in the equity markets and the rest in debt. We are very, very flexible, and we are ready to seize those opportunities when they arrive. But we're certainly not desperate to pay too much money for assets that we believe are going to become cheaper in the future when the market is not as strong as what we've seen in the last 3 or 4 quarters.

[Benjamin Joel Nolan, Managing Director]

Right. And to that end and to the -- well, actually, I'll leave that one for somebody else. I'm limited on my question. The -- I'm curious on something that probably is not very topical at the moment but something that you guys had hinted that you might be interested in, specifically scrubbers. Obviously, right now, scrubber investments made at the beginning of the year last year have not paid off very well. But I imagine that the prices are coming down. You guys said maybe we would look at it if -- in the future. Have you changed at all sort of where you're thinking on that or thinking about sort of longer term if the spreads widen, where do you want to be? And -- or is that just sort of not a path that you would want to go down?

[Hugo De Stoop, CEO & Member of the Management Board]

So I will only repeat what I said in the past. I mean we are absolutely not dogmatic about it. So we have -- we may have an opinion about whether a scrubber is going to be bad for the environment. But I think that's for the regulator's job. As far as the economics are concerned, which is very much what we are trying to study, at the moment, if you look at the forward curve, it is still not a very good investment if you're looking at a retrofit.When you're looking at a new building, then it's relatively less expensive. It's almost what I would call cheap. And that's also the reason why the 4 vessels that we took earlier this year in resales, we are very happy about the fact that they are equipped with scrubbers because it means that we can enjoy the spread. But when you look at the forward curve and the spread, you may find good reason to have the option of a scrubber on a new building.But as I mentioned earlier, we're not really keen to order ships at the moment, but certainly not to retrofit. I mean with retrofit, you're still talking about north of 3 million. And I know that a lot of those equipment are cheaper. That is not the very expensive part. The very expensive part is the yard bill, and you're going to make sure that it's properly installed. I mean we have seen enough now horror stories on where the boost keeps functioning or not. And we offer our time that will obviously depend on whether the market is good or bad. But with uncertainty in the market means that the market can be good as much as it can be bad.So once you have committed to something, you have to take an average rate of loss of hire, and you have to take that into account when you make your computation on the economics of whether it's a good investment or not. So for the time being, we continue to believe that it's not a good investment. And therefore, we're not going to retrofit any vessel. But if we were to buy a new building, it's certainly an option that we would take.

[Operator]

Our next question comes from Mike Webber from Webber Research.

[Michael Webber, Managing Partner]

Most of the near-term market stuff have already been handled. But Hugo, I wanted to touch base on, I think, something I even asked about last quarter, just in terms of propulsion and some of the shifts we're seeing and some trepidation in terms of building out the order book for a lack of -- for fear of obsolescence risk. In terms of -- we've seen a handful of LNG-powered VLCCs get ordered year to date. These are usually backed by sort of long-term business, but it kind of begs the question of what you think the right mix is for the future. So when we think about Euronav longer term, if maybe we fast forward 5 years, what do you think the fleet looks like? And do you think -- are we getting closer to the point where you guys can realistically pull the trigger on some sort of differentiated propulsion that might get more closely fit with some of the ESG mandates and renewable exposures we're seeing over the next couple of years?

[Hugo De Stoop, CEO & Member of the Management Board]

Yes. Well, it's a very complicated question because there is a lot of moving parts and certainly a lot of uncertainty. So we've seen so far only, to my mind, one contract for 2 vessels, dual-fuel LNG. And that was done, indeed, on the back of a time charter contract with one of the major, namely Total. And we bid for that contract, and we didn't get it because when we offer our service, we also want to have some sort of a return. And the return that the owner got was not something that we can tolerate in Euronav.So what we had said last quarter is still very valid this quarter. We believe that the premium that you have to pay in order to get a dual-fuel vessel still requires a contract to be compensated from because otherwise, you're giving the same freight in the market. And you may pay your LNG a little bit cheaper. But that's again a moving part. I mean cheaper than LSFO. That's again a moving part. And we're trying, by the way, to find ways to lock that discount in order to justify the premium. But so far, we're not managing or we're not seeing a good return on investment. And the ceiling that is being asked is, roughly speaking, 15 million compared to conventional vessel.Having said that, we also monitor the yard, and we see that the yards are becoming a little bit more desperate by the day on getting orders. And they understand very well that they are not getting orders for 2 reasons. I mean first of all, it's because the market has its own uncertainties. But secondly and more importantly, it's because there is a lack of certainty on the owner side of what technology will be the one to adopt for the long-term future. Because if we are only looking at a transition period, 5 years, potentially 10 years, that's only half of the life of a ship. So are you going to buy a technology for half of the life? Then it's not a premium of 15 million that you're paying. It's a premium of 50 million. So that becomes very expensive. So you can see that there's a lot of things moving.There has been also a lot of announcement being made recently around hydrogen. I mean people thought that this was a good fuel for the future, but it could only arrive 15 or 20 years down the road. But it seems that as we are moving, people are making this, well, theoretical fuel more accessible maybe within the next 5 years.So once we project ourselves in the next 5 years, I think that we will continue to have a little bit of uncertainty, which would not trigger a lot of newbuilding orders. We will see whether this hydrogen potential is a real -- I mean can materialize into real life. And I think that if that's the case, then people will start ordering hydrogen vessels. And I understand that in other markets, it's already the case. And then we will see whether the LNG dual-fuel vessel has a future because, of course, the LNG can also be produced synthetically. And in that case, then it's not a fossil fuel and then technology is available.So we are watching absolutely everything. I think a lot of owners are doing the same. The benefits, I would say, that we may have is because of our large fleet, if we were to order 2 vessels with a specific technology, we're not betting the farm doing that, whereas in older fleet, again, we'll bet more of the farm if they order 2 ships on the feed of less than [ 10 feet ], let's say.

[Michael Webber, Managing Partner]

Got you. Well, there's a good corollary there to take off-line in terms of blending hydrogen and natural gas and some of the bunkering infrastructure needed. But I guess it's interesting to hear that you participated in that tender. Maybe kind of thinking about it more specifically, and to your point, there's a lack of bunkering infrastructure to support LNG as a little water propulsion for merchant ships. I mean you couldn't even really feel in the U.S. Gulf right now if you wanted to. But in a sense that could provide an opportunity, and you guys have always -- not always, but you're certainly not averse to taking interesting angles on bunkers and some of your supply needs, I'm wondering, is there a realistic scenario that can look -- that you guys can look to vertically integrate to maybe provide some of the infrastructure that might be needed to facilitate that trade? Or is that too far afield?

[Hugo De Stoop, CEO & Member of the Management Board]

It's not too far, but it's never going to become a business line. I think if we have to bridge something, then we might do so. We preferably work in joint venture with people. Of course, if you order a ship on the back of a contract, it's not really your problem. So why should you solve it? Because the banks are being paid by your customer. And so the customer will be responsible to find a place where it can bunker.It might also be the reason why we're still talking about dual-fuel and not single-fuel LNG because I know that the yards are also now turning their heads towards ships that would be single-fuel LNG. Today, that would be way too risky, indeed, because of the infrastructure not being there for the move.If we were to order speculatively a ship or 2, usually we do it in pair, and there would be dual-fuel LNG vessels and single fuel. So there wouldn't be a contract attached. That's because we would have been able to secure the LNG at a discount to the LSFO in order to justify that premium. There, again, if you can do that, it's probably with the physical delivery. And again, it's no longer your problem. It's more the problem of the bunker provider, which is likely to be another major. So I don't really see that happening on the LNG.On the hydrogen, it's a very different picture because, obviously, the hydrogen is only as good as its production. So brown hydrogen is -- produce the same amount of CO2, if not more. And so you need green hydrogen. And green hydrogen, I don't see a lot of initiative being taken, even though in Europe, some of those are being supported by the EU.So if we get governmental money to do something, then it becomes very attractive, including for our shareholders because we are building an asset, we're building knowledge, we are potentially using it for our own purpose. And all of that is being subsidized by the state, which is always very interesting. So you can see that as a business line. Probably not. But there are a lot of things that could be interesting for us to do, and that could be beneficial for our shareholders.

[Michael Webber, Managing Partner]

Got it. And just to be clear, you're talking about hydrogen at the propulsion as a fuel as opposed to moving hydrogen on bulk with a specialized carrier?

[Hugo De Stoop, CEO & Member of the Management Board]

Yes. No, I would say both. I mean you cannot open a European newspaper or at least an economic newspaper that doesn't talk about a hydrogen project or at least the government pushing for hydrogen or the EU pushing for hydrogen. So it's absolutely everything. It's about the provision of it, it's about transportation of it, and it's about the delivery of that project. And most of the time, we're talking about ammonia rather than hydrogen because it's just easier to handle.But again, I mean we want to see how it develops. But again, I mean some of those programs are very, very generous. So yes, and I don't think it would be a big deviation because then it would mean that it becomes the fuel of the future.

[Operator]

Our next question comes from Randy Giveans from Jefferies LLC.

[Randall Giveans]

Obviously, congrats on the strong second quarter and the impressive 3Q rates here, obviously above kind of all-in breakeven levels in the seasonal trough period. With that, how has time charter rates, how has that market responded in terms of rates and also liquidity? And has Euronav signed any time charters over the past couple of weeks here in the summer?

[Hugo De Stoop, CEO & Member of the Management Board]

No. We haven't signed anything new in the last couple of weeks. I think that there was a frenzy for time charter, which were more related to storage activities or at least a combination of trading and storage. But that's for -- I mean a story of -- for the month of May rather than June or July. I think it's currently -- we've seen the rates running off. They came back relatively strongly for a few weeks. They are off again. And so on the back of that, I don't think you could hope for very strong rates in any time charter.So even if they were there, I'm not sure that we would be interested to sign sort of a long-term time charter more than a year at a rate that would not be very interesting, unless we have a profit element mixed into it or something like that. And so clearly, we haven't done anything. We are not seeing a loss of liquidity in the market. And even if we were seeing something in the market, I think that given where the spot market is, those rates may not be interesting enough for us to put some ships in it.

[Randall Giveans]

Got it. That makes sense. And then currently, your VLSFO prices are well below the, I guess, $440 a tonne of your VLSFO inventory that you're storing. So with that, what's happening to the fuel on the Oceania? Have you been drawing from it or maybe taking advantage of the weak VLSFO market and restocking that inventory?

[Hugo De Stoop, CEO & Member of the Management Board]

Yes. So in the proprietary remark that Lieve mentioned, so yes, indeed, we -- in fact, we can talk about phases. So at the beginning of the year, when what we had in stock was cheaper than the market, we obviously used only that even using swapping, delivering in Singapore and getting it back in the U.S. Gulf. So we have used -- that was Phase 1.And Phase 2 was oil price collapsed, and with that, fuel oil price collapsed as well. And we completely stopped using the fuel that we had on board the Oceania. We only bought from the market. Then the oil price -- and with it, the fuel oil started to recover, and we are now at $45. And we're probably around $350 for the fuel oil for VLSFO, and that is still cheaper than what we have on board the Oceania, but it's not as big of a difference as we once had and certainly what we announced at the end of Q1. The other thing that we have done -- so that was Phase 2.The other thing that we have done now in what we call Phase 3 is using the volume discount that we can benefit from. And you now use that if you have a place to store the oil, like on board the Oceania, and buying some funds in the market, I mean, lots of 30,000 tonnes or 40,000 tonnes, and mixing them, mixing them. I don't mean physical mixing but placing them into the Oceania and having averaging down your cost of inventory.So we had announced our cost of inventory to be around 450, 500 well in Q4 or even in Q1. And today, we would be below 400 , thanks to this policy of buying more, mixing down or averaging down the cost. But we are doing that meticulously and not in one go. So we're not buying another 200,000 tonnes. We are really buying, I would say, 20% more of our own needs in terms of consumption in order to mix down the inventory cost. And that explains why the mark-to-market has significantly decreased from the last time we reported on it. And we will continue doing that. And we believe that by the end of the year, the Oceania will either be empty or will be full of fuel oil at a price that is identical to the market.

[Operator]

Our next question comes from Greg Lewis from BTIG.

[Gregory Robert Lewis, MD and Energy & Shipping Analyst]

Hugo, I guess just going back to the slides, in the slide, what was that, 13, where you talked about ton miles and the downgrading of ton miles. It's interesting. It seems like ton miles had been expanding for at least a few years. So I guess what I'm wondering is kind of what drove this downgrade? And really, how should we think about what's it going to take to get this down? What's it going to take to get ton miles growing again in the tanker market?

[Hugo De Stoop, CEO & Member of the Management Board]

It's obviously -- the reason why it has been growing in the past was very much on the back of the U.S. production. I think that this crisis, to a certain extent, similar to the crisis that we saw in '14, '15, took part of the production down. But the minute you go over $40, and we are now at $45, you see that some of those fields are being exploited again. And I think if you were to go at $50, you would see even more.So it's a little bit difficult to predict what the production is going to be in the U.S., and that is a big driver of ton miles. But it's also true that people tend to forget that in the meantime, the Brazilian production has gone up tremendously, certainly more discreetly, but year-on-year, adding more barrels to be delivered. And that is also a provider of ton mile, which is much more stable and certainly systematically testing to the Far East because there are far less political tensions.And that leads me to the second point about, well, it's very hard to predict where ton miles are going to go because it seems that political decisions, trade wars, election, I mean, you name it, have a big influence on where the Far East in general and China in particular is sourcing its oil. And so at some point, they were the largest buyer from U.S. oils. Then there was a period where they didn't buy anything, and they became the largest buyer of Brazilian oil. And I think it was Korea and Japan who took the balance coming from the U.S. So it was the same destination, which was good. But again, there are so many political factors playing in that it's difficult to predict what -- where ton miles are going to go.Trade is the big word and is sort of the name of the game. As various people continue to trade oil to send it to different destinations, I think we're going to continue to have good ton miles. I don't think that we will see a massive increase of it, but I believe that it's going to stabilize at the levels where we are.

[Gregory Robert Lewis, MD and Energy & Shipping Analyst]

Okay. Great. And then just one more for me. I mean you talked a lot about the potential for vessel retirements. Just obviously, you guys have a modern, efficient fleet. But I mean you do have -- you have a couple of Suezmaxes that are plus 15 years old. As you think about what's going to -- and not -- maybe it's for Euronav, but maybe it's broader fleet. I mean is it going to be kind of that 5-year special survey? Or I mean could -- do you see interim surveys for 15-plus-year-old vessels, I guess, one on your 17, 18-year potentially being a catalyst to retire vessels where we are? Or do you think it's more, hey, once a vessel gets its 5-year survey, it's pretty much good till it's 20? Just kind of curious if you've been -- and maybe if you can elaborate on that.

[Hugo De Stoop, CEO & Member of the Management Board]

Yes. And I think we -- well, we need to differentiate Euronav and maybe some of the other players with the rest of the world fleet. And the reason is if you build a ship and you trade a ship for the better part of its 20-year life, 25-year life, dual service are not going to be as expensive as the ones who have been buying those ships or the ships has changed hands many times but also and very importantly, vessels in the hands of, I would say, second-tier owners who don't maintain their vessels at the same levels as a Euronav or maybe another public company would do.So that's where you need to differentiate Euronav with the others because when we are facing those builds and those decisions, first of all, as you have seen, we tend to sell the vessels when they are around 15. We don't wait until they are 20, and that's due to the fact that we try to market our services to the type of clients that don't want to trade vessels that are more than 15 years.But from time to time, we do. I mean in the last 5 years, I think that we kept ships until they were 20 years old or nearly 20 years, so 19. And that was because, again, the main one was so good that they were on time charter, namely to Valero, and there was no reason for us to sell them.So Euronav, usually we sell at 15. On exceptions, we keep them at 20, but that's more on time charter than spots. And then because they are in very good conditions, we're able to sell them, and you've seen what we've done this year, at a premium. And usually, those people try to trade them again, so not send them to the recycling yard, for at least another 2.5 years from their anniversary, beat 17.5 or beat 20.When you look at the market, which is obviously a much bigger population of ships, most of those ships have not been in the hands of the same owner since the beginning. And their aging is very much in relation to the way they've been maintained. And one can clearly say because you can see the bill that they are facing when they pass the survey that they will have to spend more money. And that is really the question and the dilemma that those owners will have.Do you want to spend $3.5 million or $4 million, including the ballast water treatment system for only another 2.5 years because at that point in time, it's every 2.5 years that you have to go to the dry dock? Or do you throw the towel and say, "Okay. I prefer to receive money. I prefer to receive between 7 million and 10 million for a Suezmax and maybe 15 million to 20 million for a VLCC, depending on where the scrap is -- stock prices are?" And we have seen no later than in 2018 that most of the time, people facing those dilemma will take their ships to the scrap yards because they believe that it's not good investments, to pass the survey and then to hope for the best in the freight environment that is, at the time of that decision, not very attractive.That's the reason why we insist so much on this age profile because we didn't have that feature for nearly 10 years. I mean since we swapped single hull to double hull, we have artificially rejuvenated the fleet. And so when you're vessel is 12 years old or even 15 years old, that's not really an easy decision. When it's 17.5, when it's 20, there are even vessels of 22.5 in our slide, it's much easier to take, but you need a low freight market.

[Operator]

Our next question comes from Chris Wetherbee from Citi.

[Christian F. Wetherbee, MD & Lead Analyst]

I'll leave it at one. It's been a long call. I wanted to talk a little bit about the vessel supply slide and understand maybe how the 60 to 80 vessels that are tied up and have the potential to come back into the market kind of factor into that thought process. It would seem that while the order book has kind of come in a bit, those vessels do present somewhat of an overhang. So I know the crystal ball is particularly cloudy at this point. But if you could help us maybe better understand how you would anticipate those vessels reentering the market, maybe the timing of that over the next several quarters, that would be very helpful.

[Hugo De Stoop, CEO & Member of the Management Board]

Maybe I will start, but then I would like to -- for Brian to jump in. And the start will be, indeed, it's not an exact science. There was a lot of contract -- about 50 VLCC contractors for storage, and that was for 6 months. So one should believe that those vessels are going to come back in October, November of this year. And that's certainly not going to be good for the market. It should put pressure onto the market.But then when you look at previous contango situations and how the fleet that was -- that had been used in storage was redelivered to the trading fleet, it's true that it's -- it happened over a much longer period of time. And the reason why it happened over a much longer period of time is simply because at the end of the contract, you usually have a month and maybe more of options. The guys who have taken those ships are traders, so they may want to deliver the oil in a place that is very different from where the ship is at the end of the contract. You can have a situation where you have a contango again.And it's interesting, I saw a report this morning talking about a contango situation very much in China because a lot of those vessels are in storing or in congestion around China. When you look at the forward curve of this new index -- new oil index called Shanghai oil index, there is nearly $11 of contango over the next 12 months. And so that -- just for that matter, you would incentivize a lot of people to store oil outside China just for that matter.So you can see that it's not an exact science, and you don't know when those vessels are going to return. But it is true that if they would return to the market, it's not good. And we will prefer them not to return to the market. And the more concentration that will be around those returns, the more pressure there will be on the market. If it's over a long period of time or longer period of time, then it seems to create less problems.Brian, do you have anything to add to that?

[Brian Gallagher]

Two things. The contango we had in '15, '16 peaked -- we didn't get the peak in the amount of ships that were held on contango for another 9 months after that. As Hugo said, today is a bit of a lag and a delay. There may be some lumpiness around October, November when we get these 6-month contracts coming back. But it's also very difficult to see, say, the ocean tanker situation or the ships being released at once. We expect them to be gone on the piece now.So look, it is a headwind. There will be some lumpiness, we believe, around October, November. But we do believe this will be over a reasonably prolonged period. It's not going to be dozens of ships all appearing at the same time.

[Operator]

And our next question comes from Omar Nokta from Clarksons.

[Omar Mostafa Nokta, Head of Shipping Research & Analyst]

You guys gave a fairly realistic overview of what's happening in the oil markets today and what's to be on the come. It's kind of hopeful and sobering at the same time with the red traffic lights in your presentation for both oil supply and demand. The market, as you say, is in transition with destocking now in play. Last week, the U.S. reported a 10-plus million barrel draw in crude stocks. And yesterday, it reported another 7 million barrel draw. So clearly, we're in this heavy portion of the destock, at least state side. And potentially, we can extrapolate that the same may be happening globally. Are you encouraged with these recent declines in stockpiles and that perhaps maybe this tells us that the market -- or at least the oil market may be getting into balance much earlier than we might otherwise think?

[Hugo De Stoop, CEO & Member of the Management Board]

Well, I think that's almost a fact. I think a lot of market participants have been taken by surprise. And certainly, we were also taken by surprise of how much has been drawn from those storage. And yes, we believe that it's a feature of certainly the OECD countries but probably also in the Middle East. The quicker it goes back to the 5-year sort of average, the better it will be to rebalance the oil market and therefore, the need for oil transportation services.So yes, it's quite good and it's happening at the moment because at the moment, we have a number of ships that are not part of the trading fleet, as we just discussed. And so the more we can draw -- or the more of the work we can draw on those stocks, why we have those vessels outside of trading fleet, the better it will be for the recovery. But that is a hope. That is a wish. That is not something that we can control. But at the moment, we are very pleased to see the rate at which it's taking place.

[Omar Mostafa Nokta, Head of Shipping Research & Analyst]

Okay. Yes, that's fair. And Brian addressed this just in the last question. But with respect to what we're seeing in China, clearly, congestion has been -- it's been significant, and it's really made the floating storage figures even larger. But those -- that congestion has been ongoing now, I think, basically since March, April, if not earlier. From your perspective, what is -- what -- I know you addressed it a bit in the opening remarks and throughout the Q&A. What really has been driving that congestion? Because it has been going for a long time. Is it strategic reserve building? And also, when does that start to thin up? Because it seems to have gone on a bit longer than we had anticipated.

[Hugo De Stoop, CEO & Member of the Management Board]

Brian, do you want to take that one?

[Brian Gallagher]

Sure. Yes. No, sorry, apologies. Yes, obviously. I mean it has been. I mean obviously, some of the recent congestion had a negative factor of weather. But I think you also have to remember in the last sort of 10 weeks has been -- one very, very good reason for that congestion is there's been a huge amount of heavy lifting, i.e., buying of crude by China. We've, simultaneously to the quarterly presentation today, put some -- an updated investor deck. 50 slides are there.And we look at the Chinese who have been very incentivized by their own government from the private sector to buy below $40 per oil in terms of price per barrel. And they've made a lot of orders, and their preferred mechanism or methodology of delivery is via VLCCs. And it tends to go to 1 or 2 ports. And they had the congestion. So the funnel is very thin at that end.So that's why, again, in the prepared remarks, we said we do believe there's a little bit more to come. This is going to take some more time just to unwind. It's just simply a question of a lot of volume going through a relatively small delivery channel. And of course, as we've seen from the data, they've each been record imports over the last 3 months or so.So yes, I think there are some 1 or 2 specific factors, but that really just explains it. It's been a largely VLCC trade, which has added to that congested angle. But as Hugo said earlier, if this can continue -- this will continue for the next 2 or 3 months, and they get inventory taken away from both other floating storage and from onshore, then that's going to add to a quicker equilibrium for the tanker markets. But that's the short answer on the Chinese. It's just been simply a big volume play over the last 2 to 3 months.

[Operator]

And our next question comes from Luc Van der Elst from Delen Private Bank.

[Luc Van der Elst, Executive]

Yes. Hugo, in the press release, you mentioned again the difficulties that you are facing to move the crews from the ships and to bring in the new crews. Is that actually taking part of the capacity out of the market for yourself and for the whole sector?

[Hugo De Stoop, CEO & Member of the Management Board]

No, not at all. In the sense that people that are on board continue to work. And therefore, there's no ship out there that stand still due to lack of crew. The problem is really changing the crew to get new people on board. But obviously, if we can't get new people on board, then the people that are currently on board do not disembark. And we have as many difficulties disembarking people as we have difficulties sending new crew to places where the ship is going to call the port and where the location would take place. But it's -- I mean thank you for your question because this is a real problem, and it's a growing problem.At Euronav, the statistics started to go down in July. And that was because some of the big hubs, the big ports like Singapore and Hong Kong, were opening up. And we were able to change some of our people and certainly the ones that have been very -- 19 months on board. But at the moment, unfortunately, it seems that there is a second wave hitting a lot of those countries. And so the numbers are growing again. And when I speak about Euronav, I also know that it is the case for the rest of the world, the rest of the shipping world.And people don't realize that at some point, something will happen, and it will create a big disruption. And we said we don't want to arrive there. We need to think about our colleagues on board our ships. That's our primary focus. But very quickly after that, you also need to realize that we're talking about human beings and everybody has its own limits. So today, it's not creating any disruption, but I'm afraid if we continue not to recognize them as key workers, it will create severe disruptions.

[Luc Van der Elst, Executive]

So it does not create any legal problems for the moment?

[Hugo De Stoop, CEO & Member of the Management Board]

What do you mean by legal problems? I mean everybody...

[Luc Van der Elst, Executive]

Well, how long can you keep a crew on a vessel? Do you need agreement of the crew to stay onboard?

[Hugo De Stoop, CEO & Member of the Management Board]

Of course. Well, I mean stay on board, if they cannot disembark, it's not in the hands of Euronav, indeed. You arrive to a port, and in today's world, it's very different than 50 or 100 years ago, where seafarers were disembarking and visiting the bars of those cities. Today, it's heavily restricted, heavily controlled. You need to have visa in place. You will be escorted to nearby airports. And at the moment, that is exactly what is not happening. People cannot leave the ship. I mean if they try to leave the ship, they will be arrested. That's how bad the situation is.So how long can you keep people on board? We keep those people on board because there's nowhere else to go. And then they continue to work because that's a very good way to earn a living and send that money to their families, where their families are. So how long it can be? It can be a lot longer, but then you have the mental health. And that is even more important than the physical health because, quite frankly, I mean working, we all work all year round. Onboard ships, you work 6 months and then you go off 6 months, or you work 3 months and then you go off 3 months. But if you are being asked to work longer, then you work longer.So the physical fatigue is not really probably. It's the mental fatigue. And what is really creating a problem is not to be able to tell those people you will be rotated on or off by this date. You have to tell those people, and we are very, very transparent with them, also with the success that we have because that's important, that we don't know.We don't know when we arrive to Singapore, for instance, the rules that was the rule 2 weeks ago will still be in place because when they change the rule, they change it overnight. And that's because the number of COVID case is increasing. And suddenly they lock down the city or the port or the country, and people are no longer able to be rotated on and off.So it's a very, very complex situation. And the only solution, as far as we are concerned, is to give the seafarers a status, and status is key workers because there's a lot of people that continue to travel all over the world as they have this status. And we believe that the shipping world is providing an essential service to the world. And for that reason, we should treat those human being with consideration and give them the status of key workers.

[Operator]

And ladies and gentlemen, with that, we'll conclude today's question-and-answer session and today's conference call. We do thank you for joining today's presentation. You may now disconnect your lines.