Leases

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

Leases

Leases

The Company has two primary types of contracts that are accounted for as leases: time charter agreements and office lease agreements.

Time charter-out contracts

The Company’s shipping revenues are principally generated from time charters and voyage charters. In a time charter contract, the vessel is hired by the charterer for a specified period of time in exchange for consideration which is based on a daily hire rate. The charterer has the full discretion over the ports visited, shipping routes and vessel speed. The contract (also referred to as a charter party) generally provides typical warranties regarding the speed and performance of the vessel. The charter party also provides the vessel’s owner certain protective restrictions (e.g., the vessel is sent only to safe ports, the operation of the vessel maintain compliance with applicable sanction laws and the vessel carries only lawful or non-hazardous cargo). In a time charter-out contract, the Company is responsible for costs incurred for running the vessel (e.g., crew costs, vessel insurance, repairs and maintenance and lubes) and the charterer is responsible for voyage-related costs (e.g., bunker costs, port charges and canal tolls) during the hire period. Lease terms for time charter-out contracts generally range from 30 days to 2 years, however, typically include options to extend the lease term. Time charter-out contracts are accounted for as operating leases. The Company records revenue generated from time charter-out contracts on a straight-line basis over the term of the related time charter agreement as Revenues, net in the Consolidated Statements of Operations. See Note 13.  Revenue for additional information.

A summary of lease payments expected to be received on fixed time charter-out contracts, net of commission, assuming no off-hire days, other than those related to scheduled interim or special surveys of the related vessel and excluding any voyage expenses associated with such contracts, as of December 31, 2023 is as follows:

Year:	Time Charter-Out Contracts
2024	$	16,401
2025	—
2026	—
2027	—
2028	—
Thereafter	—
	$	16,401

Time charter-in contracts

The Company charters in vessels to supplement our own fleet and employs them on both time charters and voyage charters. Lease terms for time charter-in contracts generally range from 30 days to 2 years, however, typically include options to extend the lease term. Lease terms typically commence upon delivery of the vessel to the lessee. Time charter-in contracts are accounted for as operating leases. The Company records operating lease cost for time charter-in contracts as Charter hire expenses in the Consolidated Statements of Operations on a straight-line basis over the lease term. Due to the volatility of freight rates, the Company generally concludes that it is not reasonably certain to exercise any options to extend the lease term at lease commencement.

Generally, the implicit borrowing rate within time charter-in contracts cannot be readily determined; therefore, the Company uses its incremental borrowing rate in initially measuring operating lease liabilities and related right-of-use assets. The Company utilizes its implied credit rating and related yield curve data to determine its incremental borrowing rate at lease commencement based on the related lease term.

A summary of time charter-in contracts with lease terms greater than twelve months outstanding as of December 31, 2023 is as follows:

Vessel	Description	Dwt (in thousands)	Hire Rate	End of Minimum Period	Available Options (1)
Tai Stamina	2021-built Ultramax	64.5	$6,300 plus 58% of the BSI	July 2024	10 to 12 months at $7,500 plus 58% of the BSI
Tai Star	2016-built Ultramax	62.5	$17,500	May 2024	11 to 13 months at $19,500
Tai Stride	2022-built Ultramax	64.5	$8,500 plus 57.5% of the BSI	April 2024	11 to 13 months at $9,500 plus 57.5% of the BSI

(1)Options available under time charter-in contracts are solely the Company’s as charterer, however, due to the volatility of freight rates, the Company generally concludes that it is not reasonably certain to exercise any options to extend the lease term at lease commencement, and therefore, does not include these option periods in the measurement of lease liabilities and right-of-use assets until such options are exercised.

For the years ended December 31, 2023 and 2022, the Company recorded impairment losses on operating lease right-of-use assets of $0.7 million and $2.2 million, respectively. These losses were driven by declines in the freight rate environment as compared to certain operating leases with relatively higher fixed hire rates.

Office leases

The Company leases office space at 300 First Stamford Place, Stamford, Connecticut 06902. In addition, we lease offices in Singapore and Copenhagen, Denmark. Our office lease in Stamford, Connecticut expires in December 2028. Our office leases in Singapore expire in March 2027.

The Company records operating lease cost for office leases as General and administrative expenses in the Consolidated Statements of Operations on a straight-line basis over the lease term.

A summary of the components of the Company’s operating lease cost for the years ended December 31, 2023, 2022 and 2021 is as follows:

	Year Ended
	December 31, 2023		December 31, 2022		December 31, 2021
Operating lease cost
Time charter-in contracts greater than 12 months	$	21,819	$	28,282	$	16,548
Office leases	797		748		642
Short-term lease cost
Time charter-in contracts less than 12 months	14,724		52,821		20,553
Total lease cost	$	37,340	$	81,851	$	37,743
Sublease income
Time charter-in contracts greater than twelve months (1)	$	23,057	$	32,980	$	25,372

(1)Sublease income (time charter-out revenues) generated from time charter-in vessels is recorded in Revenues, net in the Consolidated Statements of Operations. Amounts do not include voyage charter revenues generated from time charter-in vessels.

A summary of operating lease right-of-use assets and operating lease liabilities balances, by asset type, and certain additional quantitative information related to the Company’s operating leases as of December 31, 2023 and 2022 is as follows:

	December 31, 2023			December 31, 2022
Operating lease right-of-use assets
Time charter-in contracts greater than 12 months	$	4,810		$	19,116
Office leases	2,372			3,890
	$	7,182		$	23,006
Current portion of operating lease liabilities
Time charter-in contracts greater than 12 months	$	5,405		$	21,328
Office leases	748			717
	$	6,153		$	22,045
Noncurrent portion of operating lease liabilities
Time charter-in contracts greater than 12 months	$	—		$	—
Office leases	2,576			3,173
	$	2,576		$	3,173
Weighted average remaining lease term (in years)
Time charter-in contracts greater than 12 months	0.4			0.6
Office leases	4.4			4.7
Weighted average discount rate
Time charter-in contracts greater than 12 months	6.6		%	6.0		%
Office leases	7.2		%	6.9		%

A summary of cash flow information related to the Company’s leases for the years ended December 31, 2023, 2022 and 2021 is as follows:

	Year Ended
	December 31, 2023		December 31, 2022		December 31, 2021
Cash paid for operating leases with lease terms greater than twelve months	$	25,339	$	29,130	$	18,051
Non-cash activities
Operating lease right-of-use assets obtained in exchange for lease liabilities	$	11,685	$	38,956	$	22,499

A summary of total lease payments on an undiscounted basis for operating lease liabilities, by asset type, as of December 31, 2023 is as follows:

	Time charter-in contracts greater than 12 months		Office leases		Total Operating leases
Year:
2024	$	5,412	$	897	$	6,309
2025	—		909		909
2026	—		922		922
2027	—		638		638
2028	—		577		577
Thereafter	—		—		—
	5,412		3,943		9,355
Implied interest	(7)		(619)		(627)
Total operating lease liabilities	$	5,405	$	3,324	$	8,728

Leases

Leases

The Company has two primary types of contracts that are accounted for as leases: time charter agreements and office lease agreements.

Time charter-out contracts

The Company’s shipping revenues are principally generated from time charters and voyage charters. In a time charter contract, the vessel is hired by the charterer for a specified period of time in exchange for consideration which is based on a daily hire rate. The charterer has the full discretion over the ports visited, shipping routes and vessel speed. The contract (also referred to as a charter party) generally provides typical warranties regarding the speed and performance of the vessel. The charter party also provides the vessel’s owner certain protective restrictions (e.g., the vessel is sent only to safe ports, the operation of the vessel maintain compliance with applicable sanction laws and the vessel carries only lawful or non-hazardous cargo). In a time charter-out contract, the Company is responsible for costs incurred for running the vessel (e.g., crew costs, vessel insurance, repairs and maintenance and lubes) and the charterer is responsible for voyage-related costs (e.g., bunker costs, port charges and canal tolls) during the hire period. Lease terms for time charter-out contracts generally range from 30 days to 2 years, however, typically include options to extend the lease term. Time charter-out contracts are accounted for as operating leases. The Company records revenue generated from time charter-out contracts on a straight-line basis over the term of the related time charter agreement as Revenues, net in the Consolidated Statements of Operations. See Note 13.  Revenue for additional information.

A summary of lease payments expected to be received on fixed time charter-out contracts, net of commission, assuming no off-hire days, other than those related to scheduled interim or special surveys of the related vessel and excluding any voyage expenses associated with such contracts, as of December 31, 2023 is as follows:

Year:	Time Charter-Out Contracts
2024	$	16,401
2025	—
2026	—
2027	—
2028	—
Thereafter	—
	$	16,401

Time charter-in contracts

The Company charters in vessels to supplement our own fleet and employs them on both time charters and voyage charters. Lease terms for time charter-in contracts generally range from 30 days to 2 years, however, typically include options to extend the lease term. Lease terms typically commence upon delivery of the vessel to the lessee. Time charter-in contracts are accounted for as operating leases. The Company records operating lease cost for time charter-in contracts as Charter hire expenses in the Consolidated Statements of Operations on a straight-line basis over the lease term. Due to the volatility of freight rates, the Company generally concludes that it is not reasonably certain to exercise any options to extend the lease term at lease commencement.

Generally, the implicit borrowing rate within time charter-in contracts cannot be readily determined; therefore, the Company uses its incremental borrowing rate in initially measuring operating lease liabilities and related right-of-use assets. The Company utilizes its implied credit rating and related yield curve data to determine its incremental borrowing rate at lease commencement based on the related lease term.

A summary of time charter-in contracts with lease terms greater than twelve months outstanding as of December 31, 2023 is as follows:

Vessel	Description	Dwt (in thousands)	Hire Rate	End of Minimum Period	Available Options (1)
Tai Stamina	2021-built Ultramax	64.5	$6,300 plus 58% of the BSI	July 2024	10 to 12 months at $7,500 plus 58% of the BSI
Tai Star	2016-built Ultramax	62.5	$17,500	May 2024	11 to 13 months at $19,500
Tai Stride	2022-built Ultramax	64.5	$8,500 plus 57.5% of the BSI	April 2024	11 to 13 months at $9,500 plus 57.5% of the BSI

(1)Options available under time charter-in contracts are solely the Company’s as charterer, however, due to the volatility of freight rates, the Company generally concludes that it is not reasonably certain to exercise any options to extend the lease term at lease commencement, and therefore, does not include these option periods in the measurement of lease liabilities and right-of-use assets until such options are exercised.

For the years ended December 31, 2023 and 2022, the Company recorded impairment losses on operating lease right-of-use assets of $0.7 million and $2.2 million, respectively. These losses were driven by declines in the freight rate environment as compared to certain operating leases with relatively higher fixed hire rates.

Office leases

The Company leases office space at 300 First Stamford Place, Stamford, Connecticut 06902. In addition, we lease offices in Singapore and Copenhagen, Denmark. Our office lease in Stamford, Connecticut expires in December 2028. Our office leases in Singapore expire in March 2027.

The Company records operating lease cost for office leases as General and administrative expenses in the Consolidated Statements of Operations on a straight-line basis over the lease term.

A summary of the components of the Company’s operating lease cost for the years ended December 31, 2023, 2022 and 2021 is as follows:

	Year Ended
	December 31, 2023		December 31, 2022		December 31, 2021
Operating lease cost
Time charter-in contracts greater than 12 months	$	21,819	$	28,282	$	16,548
Office leases	797		748		642
Short-term lease cost
Time charter-in contracts less than 12 months	14,724		52,821		20,553
Total lease cost	$	37,340	$	81,851	$	37,743
Sublease income
Time charter-in contracts greater than twelve months (1)	$	23,057	$	32,980	$	25,372

(1)Sublease income (time charter-out revenues) generated from time charter-in vessels is recorded in Revenues, net in the Consolidated Statements of Operations. Amounts do not include voyage charter revenues generated from time charter-in vessels.

A summary of operating lease right-of-use assets and operating lease liabilities balances, by asset type, and certain additional quantitative information related to the Company’s operating leases as of December 31, 2023 and 2022 is as follows:

	December 31, 2023			December 31, 2022
Operating lease right-of-use assets
Time charter-in contracts greater than 12 months	$	4,810		$	19,116
Office leases	2,372			3,890
	$	7,182		$	23,006
Current portion of operating lease liabilities
Time charter-in contracts greater than 12 months	$	5,405		$	21,328
Office leases	748			717
	$	6,153		$	22,045
Noncurrent portion of operating lease liabilities
Time charter-in contracts greater than 12 months	$	—		$	—
Office leases	2,576			3,173
	$	2,576		$	3,173
Weighted average remaining lease term (in years)
Time charter-in contracts greater than 12 months	0.4			0.6
Office leases	4.4			4.7
Weighted average discount rate
Time charter-in contracts greater than 12 months	6.6		%	6.0		%
Office leases	7.2		%	6.9		%

A summary of cash flow information related to the Company’s leases for the years ended December 31, 2023, 2022 and 2021 is as follows:

	Year Ended
	December 31, 2023		December 31, 2022		December 31, 2021
Cash paid for operating leases with lease terms greater than twelve months	$	25,339	$	29,130	$	18,051
Non-cash activities
Operating lease right-of-use assets obtained in exchange for lease liabilities	$	11,685	$	38,956	$	22,499

A summary of total lease payments on an undiscounted basis for operating lease liabilities, by asset type, as of December 31, 2023 is as follows:

	Time charter-in contracts greater than 12 months		Office leases		Total Operating leases
Year:
2024	$	5,412	$	897	$	6,309
2025	—		909		909
2026	—		922		922
2027	—		638		638
2028	—		577		577
Thereafter	—		—		—
	5,412		3,943		9,355
Implied interest	(7)		(619)		(627)
Total operating lease liabilities	$	5,405	$	3,324	$	8,728