MPV Everest and DSV business models….

So it appears the Russians have paid equity and have fully taken delivery of the MPV Everest. Well done Keppel on getting paid the full contract value for such specialised tonnage in this market. I was wrong to cast aspersions on the soundness of the contract. And well done MCS for following through and taking full asset risk on this. I am not sure anyone esle can claim such a credit across most offshore asset classes?

The vessel looks close to signing some short-term work in Asia and will have the dive system commissioned as part of this. But…

The problem is the day rate… particularly as this is a vessel that looks set to operate at not that much more than cash breakeven on the first job and it has an empty schedule beyond that. The fact is the entirely speculative strategy of building high-quality DSV assets and thinking they would get a premium day rate, while displacing older tonnage, is having an extremely expensive initial experiment and proving its instigators both wrong and right…

Right in the fact there is a premium, but wrong in total economic terms because it is nowhere near enough for people to cover their cost of capital or hope to recover the builkd cost. The Everest was always a rescue job, having been built for a terminated contract, but others are not. UDS is rumoured to be getting USD 50k a day from McDermott for the Qatar job, but sitting in Singapore waiting for someone else’s boat to break is a high-risk strategy and unlikely to be profitable in the long run. The Everest looks like commanding a 10-15% premium to competitor vessels in the spot market but would need a ~400% premium to have any hope of recovering the build cost. This reflects the overspecification of the vessel, the fact it cannot command ice/polar rates, and the oversupply in the DSV market.

My only point on this has been that when a wall of oversupply meets a very weak market then economic returns will be substantially below economic costs. Continuing to deliver high quality tonnage to undercapitalised operators and chartering parties will just prolong any downturn for the existing fleet owners. But if initial indications are anything to go by MCS are in this for the long run, they have been burning c.10-15k per day Opex with Fox since delivery and purchased some second hand ROVs (from M2 I understand); and having put USD 200m into the vessel are unlikely to walk away quickly. Unfortunately the most logical, and likely, reaction from competing owners is simply to drop prices even more.

What is an offshore construction vessel worth?

There is an article from Subsea World News here that is sure to have bank risk officers and CFOs choking over their coffee… VesselValues new OCV is launching a new analytics tool for the sector. The ten most valuable vessels in the OCV sector are apparently:

  • Normand Maximus $189m;
  • Fortitude $99 million;
  • Deep Explorer $97 million;
  • Siem Helix 2 $96 million;
  • Seven Kestrel $95 million;
  • Siem Helix 1 $95 million;
  • Island Venture $94 million;
  • Viking Neptun $92 million;
  • Far Sentinel $90 million;
  • Far Sleipner $89 million;

Firstly, look at the depreciation this would imply? As an example the Maximus was delivered in 2016 at a contract price of USD $367m. So in less than 2 years the vessel has dropped about 48% in value. Similarly the two new DSVs the Seven Kestrel and Deep Explorer appear to be worth about 67% of value for a little over two years depreciation.

Secondly, the methodology. I broadly agree with using an economic fundamentals approach to valuation. And I definitely agree that in a future of lower SURF project margins that these assets have a lower price than would have been implied when the vessels were ordered. I have doubts that you can seperate out completely the value of a reel-lay ship like Maximus from the value of the projects it works on but you need to start somewhere. It is clear that SURF projects will have a lower structural margin going forward and logically this must be reflected in a vessel’s value so I agree with the overall idea of what is being said.

There is a spot market for DSVs on the other hand so their value must reflect this as well as the SURF projects market where larger contractors traditionally cross-subsidised their investment in these assets. A 33% reduction in value in two years might well reflect an ongoing structural change in the North Sea DSV market and is consistent with the Nor/Boskalis transactions on an ongoing basis. This adds weight to the fact York have overpaid significantly for Bibby, who would be unable to add any future capacity to the DSV market in the pricing model this would imply and not even be earning enough to justify a replacement asset. Given the Polaris will need a fourth special survey next year, and is operating at below economic value at current market rates, even justifying the cost of the drydock in cash terms on a rational basis is difficult.

Depreciation levels like this imply clearly that the industry needs less capital in it and a supply side reduction to adjust to normal levels. Technip and Subsea 7 are big enough to trade through this and will realise the reality of similar figures internally even if they don’t take a writedown to reflect this. Boskalis looks to have purchased at fair value not bargain value to enter the North Sea DSV market. SolstadFarstad on the hand have major financial issues and Saipem locked into a charter rate for the next 8 years at way above market rates, but with earnings dependent on the current market, will have to admit that while the Maximus might be a project enabler it will also be a significant drag on operational earnings. The VesselsValue number seems to be a fair reflection of what that overall number might look like.

The longer the “offshore recovery” remains illusory the harder it will be for banks, CFOs, and auditors to ignore the reality of some sort of rational, economic value criteria, for offshore assets based on the cash flows the assets can actually generate.

Random DSV write-off Friday …

The map above, in the yellow circle, shows the MPV Everest parked right outside Keppel in Singapore (this morning)… which is an odd place to park a SGD 265m vessel you have “delivered”. I mean you have literally delivered it, but normally in shipping terms it means to someone who has paid for it. Sooner or later Keppel is going to have to front up and admit they haven’t been paid for this. I am surprised that as a listed company they haven’t had to already, but they will also need to come up with a realistic impairment value here which will be interesting?

Because according to AIS the two UDS DSVs (Lichtenstein and Picasso) are also in lay-up effectively in Singapore. With three more being built having 0% utilisation on the first two in the fleet must be a minor concern?

Jumeirah Offshore ST.jpg

And now into the mix comes the Jumeirah Offshore DSV being built at Huangpu… At least the yard here is being honest and admitting that the buyers have defaulted. But in the next breath you are told they will only sell at 100% of book value… And the vessel is c. 80% complete apparently: just enough to have purchased all the expensive long lead items but not enough to recover their value. This is a nice vessel on paper, 24 man Drass system, ST design, 250t crane, and a fairly generous power capacity etc.

In fact it is possibly as nice as the Vard DSV, speaking of unsold DSVs (although without the build quality one suspects), that will also only be sold at book value. So when looking at the size of the financial write down that these yards will have to take why not look there given Vard have just published their accounts? It is not completely clear how much value Vard are acribing to the vessel as they hold it in inventory with another vessel, but amazingly the write-off for all their vessels is only NOK 54m, or around $7m!

Given the discounts going around in offshore at the moment for completed offshore vessels, and the price Boskalis recently paid for the Nor vessels, to pretend that the Vard 801 only lost a maximum of $7m on it’s build cost (Vard use realisable value) is really unbelievable. Preposterous in fact. Surely a discount of 50% to cost would be needed to actually sell the vessel in this market? The scale of the loss here is massive for Vard, not quite a solvency event but not that far off and hence their desperation to hold an unrealistic value, but this is really a case where it is hard to see how the auditor has been objective here? There is enough market intelligence to suggest that a North Sea Class DSV that cost c. $150m to build would need to be marked down more than 5% to sell in this market? Good news for Keppel because they are audited by PWC as well I guess?

The fact is there are a host of very high-end DSVs mounting up in yards now with no realistic buyers and yet somehow we are meant to believe these vessels are worth close to what they cost to build? This despite the fact that UDS has made a business out of offering to commercially market very similar vessels and apart from a small job in Iran, and short-lived contract with a company without an office or phone, has managed to get close to zero utilisation. I am going to share with you an extremely insightful piece of economic thinking: if a boat isn’t being paid to work then it it isn’t worth a lot of money (generally speaking).

And still they come… three more from UDS alone… will they really be finished or cancelled like the Toisa vessel in China?

Quite where all these vessels end up is a great unkown. Only a maximum of 2 could ever end up in the North Sea given current demand levels and replacement requirements, and more likely one, and just as likely Technip and Subsea 7 just decide to replicate their last DSV new builds with export financing and attractive delivery terms… in which case none are worth the North Sea premium.

That means these vessels are likely to end up in the Middle East and Asia where day rates have never supported North Sea class DSVs for a host of very good economic and environmental reasons. So either there are a whole pile of USD 150m DSVs sitting around idle, with no buyers, that are all worth nearly exactly what they cost indefinitely, or someone is going to start losing some real money soon, even if the auditors allow them to pretend they won’t for a while longer.

End of an era… goodbye to Orelia…

The end of an era as the DSV Orelia is scrapped (above). I would wager she has been one of the most profitable offshore assets in an economic sense over her life. With a build cost much lower in real terms than new build tonnage, and in a market with a much lower number of competitors, this asset would have paid for her keep many times over.

As she goes it is worthwhile considering that the huge margins Orelia generated were a signal for other players to try and replicate this formula and build competitive assets and businesses. Such is the long run nature of the supply curve these new assets continue to arrive long after the margins have vanished, and despite some new-builds costing vastly more in a nominal and real sense, it is not clear, beyond being more fuel efficient, that they are superior economic assets. It is notable that Technip has sold off a large potion of her diving businesses and assets and is only really present in the North Sea now, which is a clear signal how profitable they think the SAT business will be in the coming years. The unwillingness of Technip to commit to specialised replacement tonnage for the North Sea market I also thinks signals their view, and mine, that there has been a structural change in the North Sea SAT diving market and anyone going long on it should have a very robust business case, because without a rebound in construction work, the market looks oversupplied for years. Soon the well Wellservicer will join her and a new generation of assets moves to the fore.

The latest rumour I heard regarding replacement tonnage was that the Vard new build had been sold to Middle Eastern interests (specifically Bahrain) who were going to charter the vessel back to Technip. Given that this is the third version of this story I have heard (although from two sources now) I treat it with a degree of scepticism (linked to JMT!): surely with TechnipFMC’s balance sheet the best option would be just to make Vard a take-it or leave-it cash offer? Vard have always insisted on a clean sale, maybe time and reality have intruded on this wish.

UDS and Tiger Subsea… the mystery continues…

The image above is from the Tiger Subsea Services website. I was trying to find their address, switched on to Google Maps satellite, and helpfully noticed their office address, on which they (or their website designer) located their pin, is in the middle of intersection… Which along with explaining why they have no telephone (the desk being in a rather dangerous position that would conflict with an IMCA standard risk assessment) began to explain a lot of other things…

As a general rule, and please don’t take this as investment advice, chartering two of the world’s most advanced DSVs (with a capital value of c. USD 300m)  to a company whose head office is in the middle of an intersection, and doesn’t even have a telephone, is a bad idea. No good will come from this I predict.

Not only do they not have a telephone number but they also don’t appear to be registered as a business in the state of Louisiana (check for yourself: https://coraweb.sos.la.gov/CommercialSearch/CommercialSearch.aspx). Nor in Delaware which is the most logical place to register a business in the US.

I was driven to this because a friend of mine contacted me today to say that if you send an enquiry form regarding the vessels Shel will email back directly. Strange I thought. Another very UDS like quality also popped up on the TSS LinkedIn page:

ESV 301

This company, with no phone and an office in an intersection are building a self-elevating accommodation lift boat! 97m x 43m with a 250t crane! ESV is the nomenclature Ensco use on their jack-ups but they are not listing this unit and I can find no records of this ship anywhere. If someone can point me on the direction of this vessel, if it exists I would be very keen to hear?

I think we all know what is going on here. The audacity of this is astonishing, and coming from Downunder I appreciate this, like Stephen Horvarth’s car, but when all this ends, and the denouement would appear to be rapidly approaching, someone is going to have to work out what to do with these vessels.

North Sea DSV update… Has the Vard vessel been sold? Will IMR save the world?

We’re eyeball to eyeball, and I think the other fellow just blinked.”

Secretary of State Dean Rusk, during the Cuban Missile Crisis, 1962

It was a little windy (80-100 mph) up the mountain today as you can see from the photo… I thought it was a good metaphor for offshore at the moment anyway…

So in clearing out my emails I have now been told Technip have reached a deal with Vard on the 801. A price of ~$100m, but with no delivery risk and commissioning liability for Vard, has apparently been agreed. Technip is large enough for that to be a sensible risk to take as the Wellservicer needs to be replaced at some point. Unless ordered by SS7 or Technip I think this will be the last North Sea class DSV built without E&P company contract coverage for at least 10 years, maybe ever,  barring some unheard of change in the market. (This isn’t the place to get into why I don’t think any of the UDS vessels will end up North of the Med).

We are watching how an extremely illiquid and asset specific market clears in a huge market downturn. The interesting thing is that Technip and Subsea 7 seem to be making a renewed commitment to IMR having really lost focus during the construction boom, this graphic from Technip makes clear:

Technip Market Growth.png

If you are a smaller IMR contractor expect Technip to come up more often on tenders you are spending money on bidding. A near new DSV fleet fits this theme. It also shows you what sort of percentage/revenue increase on IMR a market leading company thinks it can get and how it is planning on taking market share. Smaller companies should be worried and anyone who publishes documents claiming they can grow organically at 50% in this market just isn’t serious.

I find the pricing of this asset fascinating: to Technip and Subea 7, taking a 25 year asset view it is an asset you could spend some real money on. One needs to replace the Wellservicer and the other the Pelican. But outside of those two companies the asset is almost unsellable at anything like it’s build cost. If you can’t operate that vessel in the North Sea (and it’s not even NORSOK) then it’s just an ROW DSV and you would be lucky to get $50-60m… and only then if you could find a bank to lend against it. So really they are just bidding against each other to take on the asset (not that I think Subsea 7 were)? How long do you make Vard sweat or risk seeing a really good vessel go to a competitor? Other vessels could also have been purchased from distress sellers e.g. How much better is the Vard vessel to the Toisa Pegasus (currently in lay-up)?

Both sides blinked at 100m if you ask me. More compromise than Mexican standoff.

The Seven Kestrel is arguably the best DSV in the world and as soon as construction work starts to pick-up SS7 will just ask the Koreans to build a replica (for less) if the need to relace the Pelican. And at that point that will be the last North Sea class DSV built for a very long time.

Both Technip and SS7 have some pretty new DSVs and both have an old (fully depreciated) one that operates when the market peaks… But as I wrote earlier the only realistic scenario for 2018 is for North Sea day rates to stay low for DSV work, and in this market making a trade off against a low capital cost to lose money on OpEx for a bargain purchase is getting ever harder to make? The lower than expected contract size for the Snorre Extension for Subsea 7 shows how low margins are for awarded work at the moment and how long it may take for day rates to recover. And if, as looks likely,  Boskalis and Bibby start a brutal price war to gain or keep market share, then dropping $100m on a vessel to go out at $100k a day (a cash loss amount in the North Sea) doesn’t seem that clever at the moment. Go back $10m a year for a few years on a DSV, easily possible in this market, and savings in CapEx were illusory.

Optimists point to graphs like this:

North SEa SAt MArket.png

But this ignored Boskalis taking the Nor vessels and Vard vessel replacing the Rockwater 1. [As a methodological point it is also worth noting that each movement on the vertical axis represents 3 DSV vessel years! showing you how easily the forecast could be out here]. It is also worth noting that if those Decom figures are wrong, and they look agressive, the market imbalance is illusory. No one in this market is going to force E&P companies to pay divers to remove mattresses etc off the seabed.. its just not going to happen. Just as importantly, a modest increase in day rates, which would see the DSV fleet operating at below economic cost, could curtail IRM or EPIC project demand as this graph seems to assume constant demand. There is a large amount of latent supply in the market that will come into the market as rates increase (which happened in 2014)… economic change happens at the margin… which is not reflected in a static graph like this.

Ultimately running vessels, even for companies the size of Subsea 7 and Technip, is a utilisation game as the fixed costs are so high that a small drop in utilisation and day rates /project margins can lead to a massive drop in profitability and cash losses. Shareholders would not welcome a cash call if it means they have overpaid for vessels and ultimately been diluted in a down market, and a North Sea class DSV is a very expensive vessel to have underutilised. I am always reminded mentally that Technip looked seriously at acquiring CGG not that long ago… in which case this would be a great bargain…

Let’s wait and see…I still have my doubts… but if the Vard 801 rocks up to the North Sea in April/May under Technip control for the North Sea summer my photo above will be a good reflection of economic conditions for North Sea DSV owners in 2018…

DSV age and new build demand… To Fathom the future…

In an insightful LinkedIn post Gareth Kerr, MD and owner of Fathom Systems (who make components for DSVs) raised a couple of important issues. Gareth noted:

As I recall, about 30% of the worldwide fleet is older than 30 years so when these vessels are scrapped (which will be soon) there will certainly be space at the table for a new generation of green, efficient and sensibly priced assets.

There is a lot going on in that sentence so let’s deconstruct it a little bit. Firstly, I agree with the fact that ~30% of the worldwide fleet is older than 30 years. The problem at the moment of course is that the global DSV fleet is nowhere near utilised at an economic level, so the safest assumption is that DSV owners will scrap tonnage when it cannot cover its economic cost of capital (eventually), and are unlikely to replace this tonnage until demand picks up signficantly and for a long period of time (and in reality there is a significant change in the financing market). The mistake Gareth has made here is only looking at the supply side of the market and not integrating it with the demand side.

Discussing the DSV fleet as a global market also makes no sense as it is in reality 3 regional markets with no inter-regional procurement. This lack of economies of scale in diving has confounded many people, most recently Harkand, who tried to claim they were building a global IRM business despite it being obvious that if people didn’t run procurement like that so there was no demand for such a business.

The three distinct markets are: 1) Norway, 2) North Sea other, and , 3) Rest of the World. I don’t intend to discuss Norway much as the total number of DSV days has fluctuated from about 480-620 for the past 10 years. It is a 2 vessel DSV market and will be forever, and I doubt anyone will ever build a new NORSOK class DSV without a firm commitment from an operator to cover the financing costs of the vessel (i.e. a 200-250 day charter for 10 years), but the reality is one won’t be needed. However, when it is very quiet in Norway these vessels trade down to the UKCS/North Sea sector.

Then North Sea other, a market that includes the UKCS, Canada, Denmark, Netherlands etc. Vessels can trade down from this market but ROW tonnage cannot trade up. It is therefore a supply constrained market in boom times and releases tonnage as the market contracts as the higher spec vessels seek to trade down and take work from other lesser spec boats.

From a demand perspective the outlook the North Sea region is grim: until shallow water construction returns to the region DSV rates will remain low. Construction work uses vastly more DSV days than IRM work and what made the market tight was the multi month construction work the North Sea fleet used to undertake. Now the same assets, that covered the 2014 boom year, are doing a reduced amount of IRM work. This isn’t going to change anytime soon as this data from Oil and Gas UK shows:

UKOG Capital Investment 2017

You get a sense of the drop from over £14bn in 2014 to c. £8bn in 2016 to a likely drop to under £8bn in 2017. It is not surprise that in 2014 IRM DSVs were going out at £180-200k per day (+ mob fees) and now the vessels are going out at £90-130k per day. Until that Capex number picks up the DSV fleet will not be fully utilised and an increase in IRM work. In 2014 Bibby had four North Sea class DSVs but the Harkand/ Nor vessels still had to go to Africa for work. The supply side was already peaking in the best year of demand.

It is no coincidence that the highest operating costs came in the regions with the highest DSV requirements that were pulled off maintenance work and into marginal construction projects:

UK Operatng costs.png

The E&P company plans are to drive these costs down and the increasing supply of DSVs, relative to their demand, makes this easy. In an environment with this sort of cost pressure and volatility in demand the investment risk for new assets, that operate in the spot market, is insurmountable. The pressure on operations departments will be to reduce DSV costs for years not to get to first oil and that creates a completely different contracting environment.

Unit operating costs

Ultimately DSVs are an expensive plumber connecting the wellhead to other infrastructure so a good leading sign of future construction is drilling that could lead to further subsea projects. Again its all grim for the North Sea:

Exploration wells spudded.png

And:

Appraisal and Development wells.png

 

The industry is just not building enough well “stock” that will lead to subsea development projects. And the projects that will be brought forward for development are just not the small, shallow-water, step-outs/ tie-ins that keep the DSVs busy. Oil and Gas UK notes the most promising areas for investment:

the potential of the UK remains exciting, with opportunities such as the fractured basement plays west of Shetland; ultra-high-pressure high-temperature prospects in the central North Sea; and the carboniferous resources in the Southern Gas Basin.

These are not projects that will require much DSV time (but Subsea 7’s new pipelay vessel will be useful). Clair Ridge, Mariner, Bressay, all these high flow/high Capex projects need next to no DSV time and they are driving the construction stats in volume terms.

Now let’s look at the supply side of the fleet. I put the core North Sea fleet at this:

North Sea DSV Fleet.png

That doesn’t include the Vard 801 (2017 build) that at some point will enter the market. I have been generous to DOF putting the Achiever in, I have left off a Subsea 7 vessel that is in lay-up and can be reactivated, and I have left out the Boskalis Constructor/ EDT Protea and others that are mainly Southern North Sea/ Dutch sector. There are also assets that could return to the market (the Mermaid Endurer and Bibby Sapphire were all working in the region in 2014). Toisa also have some vessels (Pegasus/Paladin) that could, for a fraction of the new build cost return to the region.

But it is obvious to even the casual observer that there has been a massive capital investment in the fleet and that this is a relatively new fleet for assets that can work for at least 20-25 years in the region before seeking more benign conditions. Since this fleet upgrade started day rates have dropped from c. 180k per day to c.90-120k (a 30% reduction) yet the cost of the vessels has increased from ~$100m for the Topaz in 2007 to ~$160m for the Vard 801 (a 60% increase). In that time the two independent operators and new builders of North Sea class DSVs have had their equity wiped out (Harkand and Bibby) and the assets trade at substantially below depreciated book value and has ensured debt providers have also taken a hit. This is not a market where it will be easy to order or finance new assets.

So you can hold all the positive meetings you want in Bergen and discuss cool diving technology, but the economics of this are pretty obvious: neither the demand side or the supply side will push for any new build North Sea class DSVs for at least the next 5-7 years. I don’t see any new buildings in this market commissioned without some sort of contract underwriting the financing cost, and even then it could well be a decade or more before someone (other than Helix) commissions one.

The one thing I can guarantee is that there is almost no chance of any of the sepculative builds in Asia entering the North Sea market. If Technip and Subsea 7 ever want a new DSV (as opposed to a project one) they will get a contract with a yard that has export financing and they will see the pickup in construction activity early enough to order it early enough such that it arrives in time for another boom and not too early. At this stage it is more rational to wait to order a DSV and lose some market share in IRM if they need to and bag the construction work at a higher margin, than to order or commit to a $150m vessel that only trades in the spot market. The high fixed costs and barriers to entry virtually ensure no new market entrants will follow Boskalis into the market, and the vastly reduced industry spend makes it questionable whether there is even room for more than three substantial SAT dive contractors.

The ROW market is almost irrelevant in supply terms. There is sufficient new tonnage for years and as the market booms there sre substitute products in the form of modular diving systems that will reduce the pressure on day rates. As I have said before there is a very obvious reason why no one has been building North Sea spec vessels for Asia: No one will pay for them. There are more than sufficient high-end DSVs to cover for demand and there are no signs that the market is coming close to absobing the new tonnage coming. Yard Inc. is rapidly becoming the biggest owner/financier of new tonnage in Asia with the Southern Star, all the UDS vessels, the Keppel new build, and others all being owned by the yard effectively.

Old DSVs will work out in Asia because the marginal cost of operating them i.e. the cost of one extra diving day, is substantially below the cost of building a new one and comparable in productivity terms to a modular system with a PSV. Day rates are substantially below the North Sea and vessels like the Mermaid Endurer simply don’t command a sufficient price premium to regional tonnage (although they have utilisation advantages). It is a cheap market for cheap ships and until customers pay more then it will remain so.

It is just not credible to suggest that in a market like Asia, where there is substantial overcapacity, rates at Opex breakeven on a full year basis, and massive utilisation risk for owners/charters/operators, that age alone will provide the route to new build demand. These assets have to be paid for and the assets in Asia are not generating an economic return and until they do they cannot be financed. The future could well be India where old assets eke out a living more or less indefinitely.

All the indications from brokers in Asia is that UDS is as desperate as anyone else to get work. They cannot achieve a price premium for these assets and the assets operate at substantially below economic return levels. A wave of new buildings will only occur if Chinese yards decide they want to build DSVs that they then operate at below economic levels more or less indefinitely. I just don’t see that going on for more than the ordered vessels at the moment.

Gareth also asks the question:

We have all seen the industry restructure over the past 3 years where companies were losing money at >$100 oil but are now making profits at $60 oil.  Why should the DSV market be any different?

I think I can answer that question. The major reason is that at $60 oil companies sell 100% of their output above the cost of production, overhead, and finaning and at a rate that allows them to meet dividend commitments. At $60 oil, and with an increasing amount being produced via US tight oil, there is not enough DSV demand to cover the cost of operating the vessels and associated overhead, yet alone making an economic return. Gareth has again made the mistake of looking at only the supply side of the market.

So let’s leave the ‘black magic’ diving stuff to the people who know best (clearly not me). But let’s also let discussions on likely future demand for extremely expensive capital investment decisions be guided by economics and data rather than meaningless prayers of hope for the future. The fact is the DSV industry needs less capital not more in order to help the market to equilibrium.