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Data-driven hedge fund looking for partnership in dry bulk

Hedge fund Cargometrics, which counts Maersk Tankers as investor, is looking for a dry bulk shipping company willing to form a digital partnership, the fund's CEO tells ShippingWatch.

Photo: Marine Money/John Galayda

NEW YORK

US-based hedge fund Cargometrics is looking for a digital partnership with a dry bulk shipping company that wants to use data analysis and AI to make better decisions than its competitors.

Cargometrics has already developed a digital tool in collaboration with Maersk Tankers, but the fund is now looking to do a similar deal in the dry bulk segment.

"If there is a dry bulk company of the right size, that wants to be innovative and transformative and has its data organized, then we would like to talk to them," CEO Scott G. Borgerson tells ShippingWatch.

If there is a dry bulk company of the right size, that wants to be innovative and transformative and has its data organized, then we would like to talk to them

Scott G. Borgerson, CEO, Cargometrics

Cargometrics was launched in 2010 as a provider of shipping data, but the company has since then developed into a quantitative hedge fund. As such, it relies on algorithms to analyze large swaths of trade data to find investment opportunities which others might not see.

It uses information from a wide range of sources, including satellite data about ships' movements, commodity prices and energy consumption, which are combined in an effort to spot lucrative patterns in global trade.

According to Borgerson, it is basically a matter of replacing gut instinct with a more data-based approach. The decisions are still made by people, but who have the right knowledge to make informed choices about where to invest.

Keeping its cards close to the chest

In recent years Boston-based Cargometrics has caused quite a stir in the US shipping circles.

One reason is the cooperation with Maersk Tankers, which will test the tool Simtankers starting from July. The shipping company has also invested in the fund alongside prominent business people such as former Google Chairman Eric Schmidt.

Cargometrics is also somewhat shrouded in mystery, as the fund keeps its cards close to its chest. The ultimate goal is to create "full transparency over the supply chain," and use this to achieve higher returns than the competitors – or "to generate alpha."

But the fund is tightlipped about its methods and exactly how the money will be invested, which seems only to have spurred more interest in the project.

The collaboration with Maersk Tankers marks the first time Cargometrics joins forces with a shipping company, and this has kindled the fund's appetite for making a similar arrangement with a dry bulk shipping company of the same size and market position as the Danish tanker shipping company.

Resisting change

Borgerson says there is no doubt that the shipping sector will be forced to become more digital. So far the shipping companies are lagging behind most of the other transport sectors.

"I have given that a lot of thought. Why? Because there has been instances in the past, when shipping has been very innovative. The maritime container, dry docks, canals and so forth. If you take the long view a lot of innovation has come from shipping," he says.

The techniques of AI and machine learning are there. The computer science is ready, but shipping has yet to get its data together and organize it in a way that lends itself to the application of those technologies

Scott G. Borgerson, CEO, Cargometrics

"The techniques of AI and machine learning are there. The computer science is ready, but shipping has yet to get its data together and organize it in a way that lends itself to the application of those technologies," says Borgerson.

The fact that this has yet to happen is due to a combination of factors, he says. First of all, shipping is a complex industry that is affected by a plethora of different factors. And second, there is no clear market leader who can drive developments for the sector overall.

More digital initiatives now

Lastly, he explains that there are, in some cases, very few personnel changes among some shipowners, where it is often the same people that wind up in the roles without new blood necessarily coming in. These stalwarts rarely have an interest in changing things.

"There is also a strong cultural aspect to this. That means there is a lot of risk to being different, but also a lot of reward to be one of the first to try to solve these kind of problem," says Borgerson.

He says that the shipping industry has gradually begun to realize that it needs to find a new way of doing things. This is also why we are seeing far more digital initiatives now than five years ago, while the large carriers such as Maersk Line and CMA CGM are investing a lot of money in the area.

This is a development which Cargometrics hopes to become part of.

"We bring new technological and data driven approaches to the industry. We think that the trend is towards greater digitalization and not less. That is the bet we have made," says Borgerson.

English Edit: Daniel Logan Berg-Munch & Lena Rutkowski

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