Navios’ Angeliki Frangou: “The Pandemic Galvanized Us”!

by Kelly Fanarioti

“It’s been four years since the last Posidonia.  The pandemic changed everything. At Navios, the pandemic galvanized us. We understood that with over 4,000 sailors at sea, when the phone rang, we had to answer it.  Our office had to remain open. So – we went to work,” Chairwoman and Director of Navios Maritime Holding Angeliki Frangou stated speaking at the private dinner she hosted during the Posidonia 2022. The company reworked its operations in offices and on board the vessels and hired a new medical team to monitor the health of all employees and crew. Furthermore, protocols for contactless operations and repatriations have been created and IT systems were overhauled to facilitate all these.

Angeliki Frangou

“But most importantly, we were there for each other”, she said emphatically and added: “Oddly, the enforced isolation of the pandemic also provided time to reconsider our business.  As a result, we re-imagined the modern shipping company.  We consolidated our separate activities – in dry bulk and – in containers and – in tanker – under one roof.  We believe the sum is significantly more resilient than the individual parts. Not only does diversification provide strength but it also brings opportunity”.

In the long run, she adder, Navios’ people believe that their re-imagined business will provide reasonably stable returns as the financial results of stronger sectors offset the financial results of sectors performing less well. At the same time, being active in multiple sectors reveals opportunities.

In terms of future prospects, Angeliki Frangou remains optimistic but wished she felt that way for different reasons. “We stand at the crossroads, perhaps the crossroads of history. In the West, the worst impacts of Covid appear to be fading. The pandemic substitution of goods for services is returning to more normal levels; expenditures for travel and entertainment and services generally are skyrocketing. Indeed, in the US, air travel is at 2019 levels,” she explained. “Conditions are not as favorable elsewhere.  In the East – China is struggling with its zero Covid strategy.”

Τhen she referred to the Russian invasion of Ukraine and emphasized that the consequences of this war and the related sanctions are accelerating inflation and rising interest rates. “It’s impossible to know what this all means,” she underlined, adding that there are too many potential consequences to digest and analyze. “But – those of us in shipping will try to understand the impact of all these things based on a simple metric on ton miles –the cost of shipping one ton of freight for one mile. In this limited sphere we are optimistic”.

First, the pandemic highlighted the weakness of “just in time” manufacturing.  Everything works well, as long as the logistics chain is unchallenged.  However, the pandemic broke the logistics chain and basic materials had to be airlifted to combat shortages.

“I think we are evolving from a world of ‘just in time’ manufacturing to ‘just in case’ where countries and companies purposefully build redundant systems. People seem to have concluded that you cannot reliably provide goods if the system has a single point of failure.  From a shipping perspective, building for resilience translates into more ton miles as things are duplicated,”

Second, the war in Ukraine and sanctions on Russia have also introduced supply shocks. Over the last five years, around 40% of European natural gas and 27% of European oil was supplied by Russia. In addition, Russia and Ukraine account for about one third of the global wheat supply and 186.7 million tons of seaborne coal.

“The displacement of established suppliers not only increases price, but increases ton miles as countries and people are forced to source their needs from places further away.  We do not see this easing anytime soon, but we are watching it carefully”, Angeliki Frangou concluded.