The demand for the West Coast’s maritime fleet was increasing moderately prior to the dramatic market changes caused by COVID-19. We envision the market slowly returning to a new normal over the next two years, albeit with some significant structural changes. We expect there will be more demand for domestically produced goods, reducing the need for some imported products. The market for petroleum tankers should begin to stabilize as market volatility decreases—in times of wild market swings, floating storage is one of the only ways to deal with supply imbalances.
The supply side of the broader marine fleet is challenged in two big ways. First, the maritime industry is dealing with a shortage of dry dock and repair facilities, causing a backlog of service and repair needs. Portland-based Vigor recently shifted focus from servicing commercial fleets to the defense segment, further squeezing the capacity for the service of ships. We’re also seeing the aging of the fleet itself while maritime business owners are simultaneously nearing retirement age. We will soon reach the need for enormous reinvestment into the Alaskan Fishing Fleet.
Companies are in need of additional sources of capital to upgrade their fleets or enable a business transition. This can come in the form of a full exit, or for companies that wish to remain closely held, a better capital structure with minority equity or debt. There is a sense in the industry that many owners are looking to exit or retire but aren’t aware of the full range of options available to them. For many, their entire wealth is in their fleet or equipment, so this is a big concern. This generational shift also applies to the fishing fleet as owners and fleets are aging there as well. There is a great opportunity to engage with these owners to educate them on their options and help them find the solutions they need to best address their liquidity concerns.
What’s Your Why?
One of the main things that excites us about Cascadia is that we focus on family-owned and entrepreneur-backed companies. The impact that we can have for an owner is rewarding. We see how companies and the people they support can benefit from our advice and guidance.
About the Authors
Erik Einwalter, Managing Director
Erik provides leadership of Cascadia Capital’s Seafood industry coverage, with additional coverage throughout the consumer landscape. Throughout his career, he has completed over 40 transactions with over $2.0B in total value. Prior to Cascadia Capital, Erik worked at Salem Partners in Los Angeles where he delivered sell-side, equity placement, and valuation services to clients across numerous industries. Read Erik’s full bio here.
Jamie Boyd, Managing Director
Jamie has been a managing director and investment banker at Cascadia Capital for over fifteen years. He founded and co-leads the firm’s Energy & Applied Technologies practice, in addition to the firm’s Real Estate investment banking practice. Prior to joining Cascadia, he was a lawyer practicing corporate securities and M&A law. He has extensive experience working with family and institutional shareholders solving complex problems with innovative advice and has particular expertise in cross border transactions. Read Jamie’s full bio here.