ISSUE TWO 2014
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34 3 At The Prow
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34 Cover Story Scorpio 37 Ridgebury Tankers 39 Laurin Maritime 41 Grieg Star 42 Thoresen Shipping 43 Paragon Shipping 45 Globus Maritime 45 Tristar 46 Almi Tankers 49 Hansa Heavy Lift 50 Zeaborn 51 HĂśegh Autoliners 53 Swire Pacific Offshore 53 Pacific Radiance 55 Dynamic Drilling
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56 Gadgets 57 Wine 58 Books 59 Travel 60 Golf 61 Yachting
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18 The 50 wealthiest owners
62 The Secret Broker 63 The Contrarian 64 MarPoll
Executive Debate 30 Why women aren’t seafarers Issue TWO 2014
1
At the prow
An ASM publication Editorial Director: Sam Chambers sam@asiashippingmedia.com Associate Editors: Jason Jiang jason@asiashippingmedia.com Katherine Si katherine@asiashippingmedia.com Correspondents: Athens: Ionnis Nikolaou Bogota: Richard McColl Cairo: Camelia Ewiss Cape Town: Joe Cunliffe Dubai: Yousra Shaikh Hong Kong: Alfred Romann London: Craig Jallal Mumbai: Divya Lad New York: Suzanne Smith Oslo: Hans Thaulow Portland: Joshua Samuel Brown Shanghai: Colin Quek Singapore: V Subramanian Sydney: Ross White-Chinnery Taipei: David Green Tokyo: Masanori Kikuchi Contributors: Nick Berriff, Andrew CraigBennett, Charles De Trenck, Paul French, Chris Garman, Lars Jensen, Jeffrey Landsberg, Peter Sand, Siddhartha Sanyal, Eytan Uliel Editorial material should be sent to sam@asiashippingmedia.com or mailed to Office 701, 9 Renmin Lu, Zhongshan District, Dalian, China 116001 Commercial Director: Grant Rowles grant@asiashippingmedia.com Sales Director: Helen Ong helen@asiashippingmedia.com Maritime ceo advertising agents are also based in Japan, Korea, Scandinavia and Greece — to contact a local agent email grant@asiashippingmedia.com for details MEDIA KITS ARE AVAILABLE TO DOWNLOAD AT: www.maritime- ceo.com All commercial material should be sent to grant@asiashippingmedia.com or mailed to Asia Shipping Media, 20 Cecil Street, #14-01 Equity Plaza, Singapore 049705 Design: Tigersoft Design Printers: Allion Printing, Hong Kong Subscriptions: A $120 subscription is charged for 2014’s four issues of Maritime ceo magazine. Email subs@asiashippingmedia.com for subscription enquiries. Copyright © Asia Shipping Media (ASM) 2014 www.asiashippingmedia.com Although every effort has been made to ensure that the information contained in this review is correct, the publishers accept no liability for any inaccuracies or omissions that may occur. All rights reserved. No part of the publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior written permission of the copyright owner. For reprints of specific articles contact grant@ asiashippingmedia.com Twitter: @Maritime_CEO LinkedIn: Maritime CEO Forum Facebook: ASM Maritime & Offshore News
Issue TWO 2014
PE’s tricky exit
M
y job as a moderator at one of our exclusive high-level shipowner gatherings we organise from time to time is to fill in any quiet moments with a question or two. That was 100% unnecessary at our most recent Maritime CEO Roundtable Lunch, sponsored by Univan Ship Management, at Singapore’s iconic Fullerton Hotel. I kicked off discussions by asking about private equity (PE) in shipping and the next two hours just flew by. Everyone at the table had their take on PE and its good or bad tidings for shipping – from the worrying ballooning in size of the heavylift sector to the advantageous position it gives shipmanagers and much more besides. Some at the table viewed PE’s growth in shipping as part of something more substantial, generational change. The first generation of shipowners were sea captains – the ‘my word is my bond’ era, the second came with an MBA, while the third generation is less interested in shipping per se and puts its money into PE. “The whole industry is just maturing. If you look at other industries this happened years ago. The romance and family things are slowly going away,” said one of the owners at the table. A piece of advice to shipowners from someone in HR was that they must be really careful to get the right people as private equity are happy to pay top dollar to get the top executives. Others reminded those attending that PE was in many ways nothing new. The story is repeating itself if one looks back to the early 1990s and all the money that came in from Norway’s KS funds. After that there were the KG funds from Germany. However, over the fifth course of the meal we were told there’s a crucial difference between KGs and KSs on the one side and private equity. In the KG system no manager was ever incentivised to sell a ship, it was all about holding on for as long as possible and many good opportunities to monetise investments were missed and the banks were left holding the can. PE, if structured correctly, only makes money once a ship is
sold – the incentive kicks in on the realisation of the investment. It is much healthier for the lenders lending to these people as they know the managers are incentivised. However, while they are incentivised to sell, it’s tricky to offload ships in today’s market. Take the MR tanker segment, for example – a favourite destination for PE cash in the past couple of years. There’s some 220 of these ships on order, and resale prices have dropped from $40m to less than $38m of late. “There is now a natural lid on MRs for the next few years,” said one attendee, who wondered what sector might follow thanks to PEs over ordering. The views on the tricky exit strategy for PE players resonate with many of the leading shipowners interviewed in this magazine. “Private equity is only there when they see returns that beat the mean in any industry,” Bob Burke from Ridgebury Tankers maintains. However, the majority of PE funds who thought they could dip in and out of shipping in a couple of years will struggle, says our latest cover star, Emanuele Lauro, the chairman of Scorpio Group. “You need to plan more long term in shipping.” As to when PE’s interest in shipping will wane, well, you, the reader, in our latest set of polls (full details on page 64) are very undecided. ●
Sam Chambers Editor Maritime ceo
3
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ECONOMY REGULAR US
Out of the freezer Yes, the country is warming up, but hold off the suntan lotion for now
R
ecent US economic data indicates that the American economy may be out of the freezer but it’s not yet quite sun bathing. Economists expect the US economy to grow at an annual rate of 3% or more from April through June, up from an estimated 1.3% the first three months of the year. Many are blaming the long and protracted winter for slower growth, especially in retail sales. Still, the wheels appear to be turning again with, according to the Federal Reserve, factory production climbing 0.5% in March. This seems to suggest that manufacturers anticipate that demand from businesses and consumers will increase. And, crucially for household finances and consumer spending, it appears American firms are hiring again - the four-week
Issue TWO 2014
average for unemployment claims has plunged to a 6 ½-year low, according to the Labor Department in Washington DC. With more people in work and earning, the economy is seeing a lift in new credit approvals, shopping spend and home loans to get the domestic financial sector excited again. According to the Fed, growth in the US is projected to reach 2.7% this year compared with 1.9% in 2013, outstripping the Eurozone in terms of economic recovery (and with lower average unemployment rates too). All this means sentiment is growing and rebounding, both consumer and employer. According to former Federal Reserve chairman Ben Bernanke America is now firmly on the road to a full recovery. Though there are naysayers, of course.
The worries remain the straightened finances of the middle class, important politically of course but also the biggest consumer spending group. While there has been job creation once more, much of it has been part-time and temporary which doesn’t make for necessarily stronger spending as households still feel fragile and exposed. But it’s manufacturing where the US recovery (if such it ultimately is) will be most proved or disproved. Orders for American-made capital equipment, such as computers and machinery, climbed in March by the most in four months. But analysts still believe firms need to invest more to get back on track and compete with Germany, China and other major manufacturing economies. According to a survey by PwC, US manufacturers are feeling more confident and so may be ready to start taking loans to invest in their businesses, both upping output and hopefully creating jobs (or at least buying robots!). The crunch question is whether the rest of the economy can follow the upswing in manufacturing? It may take a while but the answer is yes, maybe. US consumer confidence rose in March to its highest in more than six years as expectations brightened. The Conference Board, an industry group, said its index of consumer attitudes rose to 82.3 in March 2014, the highest since January 2008, from an upwardly revised 78.3 in February. If that filters down to Main Street and the housing market then domestic growth will get a boost too. ● US Manufacturing PMI Getting Above 50 Means Growth Year
January PMI
2008
55
2009
32
2010
53
2011
54
2012
54
2013
56
2014
57
Source: Markit
5
ECONOMY REGULAR EUROPE
Tightrope time European nations need to agree a series of measures to help the region pull through
A
s ever Europe is a game of two halves – economies such as the UK and Poland are growing again now with some renewed strength and a host of smaller nations too. However, others such as Greece, Italy and Spain are lagging. The good news, if it happens, is that many analysts expect these countries, and others, to rebound this year making it a strong year for the Union overall with growth of between 1% and 1.7% across the Eurozone and slightly stronger in the UK. The major reason for the bounce back in Europe though is Eurozone Unemployment Rate Declining, But Still A Worry Month/Year
% of labour force
July 2012
11.4
January 2013
11.9
July 2013
12
January 2014
11.9
April 2014
11.6
Source: Eurostat
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not necessarily significantly better competitiveness or productivity, but the ending of many austerity packages that are freeing up capital for investment and allowing for a feel good factor for consumers. Government consumption will as a result no longer act as a drag on output, as it did with such disastrous results during the recession. Falling unemployment helps too – Portugal seems finally to be tackling its persistent unemployment problem. Exports are growing from the region though consumer confidence could still do with a boost to up domestic spending to pre-2008 levels. Households across the continent are finding their feet again and while wages (at least in the private sector) are upticking people are now saving again – though as families rebuild their savings the rebound in consumer spending will lag somewhat. Unsurprisingly, Germany remains the model in the Eurozone – strong exports and rising domestic demand too. Unemployment remains under control in Germany and wages are growing allowing households to rebuild their finances - collectively agreed wage increases will exceed 3% in 2014 and 2015. Still there are a few clouds.
Obviously the current tensions with Russia are a major factor that could play out to the EU’s detriment, not least in higher gas and oil prices (which will be a major drag on Germany in particular). Additionally, Euroscepticism remains high across the continent – obviously in the UK but also elsewhere in Europe’s heartlands causing concerns for Brussels. But it’s deflation that has analysts most concerned. Inflation is currently low – the most recent monthly headline figure was just 0.5% – and is on a persistent declining trend. Monthly figures for core inflation – consumer prices excluding energy, food, alcohol and tobacco – are consistently around half the European Central Bank’s (ECB) inflation target of just under 2%. Wages are up, but not enough to pump much inflation into the system. Many believe that now is the time for the ECB and governments to launch new programmes of quantitative easing, purchasing asset-backed securities in support of lending to small- and medium-sized enterprises in the countries worst hit by the crisis. This though requires wide agreement within the Union. So, in short, the long protracted recession appears to be over, brighter weather is ahead, but EU-wide policy will still need addressing and this may be a problem at a time of heightened Euroscepticism. ● maritime ceo
ECONOMY CHINA
Running out of steam Beijing must accept that the pre-2008 glory days of manufacturing are over for good
F
or nearly 30 years now China has been driven by manufacturing for export. The global financial crisis did slow export orders but, around the same time, China’s domestic market boomed and eager PRC shoppers picked up much of the slack. The difference was made up by Beijing’s economic stimulus package prime pumping the sector. However, with orders from overseas still not back to their pre2008 levels and consumer demand in China levelling off, manufacturing is now taking a major hit and slowing down. Beijing has declared that it will not introduce another stimulus package, but it may have to rethink that one. Indeed, what has been dubbed a ‘mini-stimulus’ has been announced – in April the State Council, or cabinet, outlined a package of spending on railways, lower income house construction and tax relief to support growth. More stimulus hidden as investment is likely with the start of construction on a number of major energy projects as part of efforts to stabilise expansion and adjust the nation’s energy structure. The knock-ons from the manufacturing slowdown reveal how fundamental to China making things are – the renminbi has slipped against the dollar hitting the lowest since December 2012 in April. Still, growth is the trend China’s economy grew 7.4% in the first quarter of this year from a year
“
More stimulus hidden as investment is likely
Issue TWO 2014
”
ago, according to China National Statistics Bureau and premier Li Keqiang believes that 7.5% both indicates a growth rate China can live with and one that does not presage a major new stimulus package announcement. The word Beijing uses constantly now (perhaps in a throw back to Gordon Brown’s days as UK chancellor and prime minister) is ‘prudence’. More worrying for China Inc in the longer term is that, despite recovery in the EU and US, the contractions in new orders are continuing. It was to be expected that economic recovery in China’s major export markets would see export orders return to pre-recession levels. But this does not appear to be the case. Exports declined 6.6% in April this year from a year earlier, according to China’s customs administration. This may be temporary – recovery in Europe and America may see stores clear unsold inventory before restocking – but may also indicate that orders are going to other countries around
China’s Exports Slump Date
Export growth /decline
January 2010
+21%
January 2011
+4%
January 2012
-1%
January 2013
-4%
January 2014
-20%
Source: CEIC
Southeast and South Asia, Latin America and the fringes of Europe (North Africa, Turkey), all of which are now often cheaper than China in terms of manufacturing and logistics. All of this suggests that a new reality is now in play. China had expected to see orders come back as strongly as before but rising costs in China, a wider range of alternative sourcing operations, a slight weakness in the domestic market are all showing that life post the global financial crisis for China will not just be a return to the good old days of pre-2008. ●
7
Economy India
From BRIC to Fragile Five The new prime minister faces an enormous task to point the nation back in the right direction
E
conomic progress and success is, sadly, never guaranteed. India, once a darling of the so-called BRICs, is now being relegated to the recently coined club of the Fragile Five (as Morgan Stanley has dubbed Indonesia, South Africa, Brazil, Turkey and India). Entry to the Fragile Five club is largely determined by having a large current account deficit indicating a significant trade gap and an economy increasingly relying on external financing. All also have a high degree of political risk with crucial elections slated for this year and likely to lead to investor uncertainty. India’s election is first up and takes place in May – analysts seem largely to favour Narenda Modi of the opposition Bharatiya Janata Party (BJP) over Rahul Ghandi believing Modi will institute much needed reform from New Delhi while Ghandi will simply continue the policies in place now. However, what can we expect from Modi? Modi’s record of reforms in the state of Gujarat (where he has been chief minister) largely relied on quick, but not long term, fixes mostly based on tax breaks and subsidies to large corporations. It’ll be a tricky India that the winner inherits. There’s a need to balance a growth in exports and manufacturing against raising living conditions for both the country’s
“Indian shipyards are now positioning themselves as able competitors in the world arena” — Arun Sharma, IRClass chairman
8
legions of poor as well as its growing, but fragile middle class. Living costs have been racing ahead in India by an average of a whopping 10% per annum. India’s economic growth slowed to 4.7% in the final quarter of 2013, down from a near 9% expansion in the fiscal year 2011. Whoever finally triumphs in the Indian election (we went to press as votes were being tallied) they’ll be faced with one major problem – New Delhi’s large and intricate role in the fabric of India’s economy. Even compared to other heavy top down governments, such as China and Russia, Delhi is the most intertwined with the fate of the economy. India’s banking sector remains significantly exposed to high levels of company debt. With the government’s role within the banking system so large this debt falls ultimately on the government who will need to prop up distressed banks if the bad debt crisis worsens. Similarly large amounts of capital investment in infrastructure projects designed to improve India’s competitiveness and lift the country out of poverty are government financed and represent another heavy burden on the country’s coffers. Hence the major question being
asked in economic analyst circles regarding India – has the economy bottomed out? Consequently the formation of a new government is being viewed by many as a make-or-break event for the economy. There are pluses – for instance, India’s savings rate is high at 30%. Yet still projects are taking longer than expected to complete – why? Most analysts think that bottlenecks in the completion of projects are the root cause of the problem and that New Delhi is not doing much to speed up the process and insist on completion dates. Ultimately, whatever the result of the elections what India appears to need right now is a boost to get things done and return to high GDP growth to shore up anti-poverty campaigns and cement the high spending middle class. ● India’s Erratic GDP Growth Year
% growth
2008
9.3
2009
6.7
2010
8.6
2011
9.3
2012
6.2
2013
5.4
Source: Indian Central Statistics Of fice (CSO)
maritime ceo
Economy Brazil
The death of the matrix Dilma Rousseff’s economic policies are not working. Poverty is still widespread and growth next to non-existent
B
razil’s president Dilma Rousseff came to power partly based on her so-called ‘new matrix’ of economic policies designed to boost the country into the next phase of growth. The matrix was supposed to be a combination of low interest rates and a weak exchange rate via currency controls and temporary tax breaks for industry. The idea was to get Brazil back to an annual 4% growth rate. Now though the new matrix – rather like the sequels to the Hollywood blockbuster starring Keanu Reeves - looks decidedly dead in the water. Brazil’s historically low interest rates are now rocketing upwards – around 6% - under inflationary pressure and the Central Bank has had to repeg interest rates upwards from 7.25% in 2012 to 11% in mid-April. The new matrix has collapsed due largely to the oldest economic argument in Brazil – the need to balance economic growth with subsidies at home. For instance, as world fuel prices rocketed meaning big profits for producers, Petrobras, Brazil’s state-owned oil company, was forced by the government to sell fuel imported at international prices for subsidised rates in Brazil. Similarly the major electricity producers were
Issue TWO 2014
forced to reduce their prices to consumers while, following widespread street protests, public transport providers were ordered to reduce fares. The trade off to industry in the form of supporting a weaker currency against the American dollar to stimulate exports and tax breaks to stimulate consumer spending and the growth of the domestic middle class has meant high levels of inflation now seemingly structurally locked into the system. The end result is lower growth - Brazil’s economy grew at just 0.24% in February, compared to the previous month, according to the country’s Central Bank. Prospects of any significant recovery for the rest of the year look unlikely, according to most analysts. This is a slump from a GDP growth of 2.3% in 2013. The government, ever bullish, is claiming the economy will hit 2.5% this year but few analysts are predicting more than 1.65%. The discrepancies between government and analyst views mean there will be a lot of concern over Brazil for the rest of the year. Finance minister Guido Mantega claims the inflation spike is only temporary and due largely to surging food import prices. He believes Brazil can still
Brazil’s Inflation Month
Rate %
July 2012
4.9
January 2013
5.8
July 2013
6.7
January 2014
5.9
April 2014
6.2
Source: Brazilian Geographical and Statistical Institute
reduce its budget through fiscal savings this year (though details on what will and what won’t be cut are scant). Most believe the government is hoping for a World Cup bounce to fill the coffers but this is far from assured. The World Cup begins on June 12 and will certainly bring in tourists and other revenue sources, but it is of course only temporary. Indeed, many argue that the focus on the World Cup has done lasting damage to the wider economy. The focus on building stadiums has meant that other infrastructure projects, crucial for Brazil’s longer-term future have been left uncompleted at best and totally ignored at worst. Everyone expects to have a hangover at the end of the World Cup, but it seems Brazil’s post-economic boom hangover will be decidedly more longer lasting. ●
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Markets REGULAR Dry Bulk
A story so far not being told Commodore Research’s Jeffrey Landsberg takes the media to task for failing to report on record China steel and iron ore figures
A
funny thing has happened in China during the last few months. Steel production, iron ore imports, and iron ore consumption have all set new records, but these events have gone quietly unnoticed by many in the media. Over the last few months, several dubious statements have instead been made in various articles suggesting that Chinese demand for iron ore has been weak. In fact, one of the largest global media outlets published an article recently stating that Chinese iron ore demand during the first quarter of this year had been “anaemic”. This statement, however, is simply not true. A healthy amount of crude steel was produced during the first two months of the year (that exceeded 2013’s level), which in turn led to healthy Chinese demand for iron ore. In addition, a record 70.3m tons of crude steel was produced in March. Record steel production points to a simple fact: a record amount of iron ore was consumed in China during March. To suggest that Chinese demand for iron ore has been “anaemic” is irresponsible and ignores the recent robust levels of steel production and iron ore consumption. China has just come off of a month where more iron ore was consumed in March than during any other time in history. Rather than acknowledging such a historic feat, a doom-and-gloom portrayal of China has continued to make a large amount of the headlines. Steel production and iron ore consumption in China remained strong in April as well, but the improvement in China’s steel market has not been fully recognised yet and is being swept under the rug by some of the media.
Issue TWO 2014
It is true that Chinese economic growth has slowed, and that China continues to be faced with a myriad of daunting challenges. Shadow banking must be reined in further, inflated commodity financing needs to fully come to an end, and rampant pollution needs to be curtailed. Overall, it is clear that China will continue to be faced with an extremely challenging environment where sacrifices will have to be made as far as supporting economic growth versus carrying out real reforms are concerned. While the outlook regarding China could certainly be rosier, shouldn’t the record levels of steel production, iron ore imports, and iron ore consumption also be addressed in the media at large? While some may look at China’s record 70.3m tons of crude steel produced in March and suggest that an excess amount of steel is simply being produced, Chinese steel stockpiles fell by a large amount throughout March and April which points to steel consumption in China continuing to increase. Chinese steel stockpiles ended April at approximately 17.4m tons, which marked seven consecutive weeks of decline. In addition, the 17.4m tons of steel stockpiled in China at the end of April was 3.4mtons (-16%) less than was stockpiled a year earlier. Steel production has increased – and steel stockpiles have declined – as China’s
annual construction season is now fully underway. Regarding the dry bulk shipping market – particularly iron ore trade and the capesize segment – the improvement in China’s steel market and record amount of iron ore being produced globally is leading to a continued surge in Chinese iron ore imports. This will ultimately lend significant support to capesize rates. A total of 222m tons of iron ore was imported by China in the first three months of this year, which set a record for Q1 imports and marked a year-onyear increase of 19%. The robust iron ore import total should come as no surprise, and imports are poised to increase further during the months ahead as Australia and Brazil continue to ramp up ion ore production. The only real surprise, though, is when will an improving Chinese steel market make the news? There’s a story here, but so far it is not being told. ●
Chinese Crude Steel Production (March 2012 - March 2014) 80mt 75mt 70mt 65mt 60mt 55mt 50mt Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
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Markets REGULAR Tankers
Joyride over BIMCO’s Peter Sand reckons the sector has calmed down after a tempestuous start to the year. He also has cause for optimism
T
he crude oil tankers’ joyride has ended for now – with the second quarter expected to be less eventful. As the recovery continues to move forward, the bumps in the road stay put. New PMI data from the Eurozone and China suggest that momentum has turned positive again. We are still concerned with the lack of inflation in the US, Japan and Eurozone, as production capacity far exceeds demand. Russia is likely to become a minor drag on economic expansion, as the Crimea crisis begins to affect trade. The spike in VLCC earnings that began at the end of 2013 continued into 2014. Suezmaxes and aframaxes enjoyed the ride too. The winter strength in the crude oil market is a result of a rise in oil demand from the fast growing economies of Asia. The first quarter was disappointing for product tankers, with a flat rate environment. Early in the second quarter, all product tanker segments from handysize to LR2 settled for $10,000-17,000 per day. This was slightly higher than expected, and comes down to the steadily improving market. Product tanker rates have since then disappointed.
Issue TWO 2014
US oil consumption increased by 2.1%, or 380,000 barrels per day (bpd) in 2013, to reach 18.9m bpd. Consumption was driven forward by hydrocarbon gas liquids where consumption grew by 6.2%. Particularly relevant for the product tanker market was that motor gasoline consumption experienced the largest increase since 2004. Consumption grew by 1.1% to reach 8.8m bpd. Unfortunately that did nothing good for the product tanker market, as gasoline imports at the turn of the year were at a record low level. While BIMCO is forecasting a fouryear high for delivery of new product tanker tonnage, very few ships are being sent to the breakers to counter the influx. There have been just 12 ships in total, with eight of them being below 40,000 dwt. Owners are displaying a rock-steady belief in a strong product tanker market just around the corner. Whichever way you look at it, 2014 will be the year of the MRs. Another example of more confidence being around is the resale of seven VLCC orders, placed in South Korea in December 2013, all due for delivery in 2016 and booked at a price tag of $93m. The resale price of $100m
confirms both the increased optimism in the VLCC market as well as owners opposite expectation for the future. The crude oil tanker fleet has only increased by 0.2% since January 1, despite delivery of seven new VLCCs, as demolition took its toll too. Only two suezmaxes and zero aframaxes entered the fleet, signalling the effect that the extremely poor freight markets of recent years have had on the appetite for placing new orders. In the second quarter, lower oil demand, primarily from Japan, is the main driver behind this. Lower jet/kerosene and ‘other gasoil’ demand is set to be felt, as oil product demand enters a couple of weak quarters in Japan. Refinery throughput in Japan is also low this quarter. Fortunately, Chinese and Indian demand for crude oil from West Africa is on the rise, as the price of Nigerian and Angolan crude is favourable to Middle East crude oil (Dubai benchmark). This provides more tonmiles primarily to the VLCC segment. As the energy intensity of global economic growth is slowing down, changes in economic activity will translate differently into oil demand growth than during the past decades. However, a significant global economic step forward (+3.6%) is expected this year by the IEA, which should result in a 1.5% higher demand for oil. ●
13
Markets REGULAR Containers
Cancellations escalate SeaIntel’s Lars Jensen notes an inevitable increasing trend in services being nixed, something that is frustrating shippers
A
s the structural overcapacity in the container shipping industry has gotten worse in recent years, carriers have resorted to different means of mitigating the problem. Initially with slow steaming, which then became super-slow steaming. This absorbed a significant amount of capacity in itself, but remained insufficient to balance the markets on the main trades. During the past year, they have increasingly used a different approach: blank sailings. Fundamentally the carriers provide a regular liner service, that is to say they sell, typically, a weekly product. By cancelling a sailing for a single week, called a blank sailing, they reduce the overall market capacity in a given trade, hence easing the overcapacity and increasing the likelihood of actually getting a General Rate Increase. Using data from SeaIntel Maritime Analysis’ weekly Total Capacity Outlook report, it is possible to monitor the actual capacity
Issue TWO 2014
developments week-on-week based on the named vessels sailing – or not sailing – in each week. When these datasets are analysed, we can also measure the percentage of sailings cancelled in each week. The graph shows the amount of service cancellations in the two main trades from Asia to Europe and from Asia to the US West Coast. Some major spikes in service cancellations were to be expected – those are related to Chinese New Year in January/February of each year as well as Chinese Golden Week around October. However, we see a steadily increasing trend from mid-2013 in the proportion of weekly cancellations, especially during the last quarter of 2013 and further into 2014. These service cancellations are major disruptions to shippers’ supply chains, and are as such not appreciated by the shippers as they add cost and complexity to the supply chain. However, the key driver is the carriers’ need to deal with the structural
overcapacity problem. As the current orderbook is set to outgrow demand in both 2014 and 2015, the problem will only increase for the carriers, and hence shippers’ might do well in planning for a continued high level of blank sailings. The solution to this problem might gradually be emerging in the form of daily services where carriers mix their weekly services in such a way as to ensure the customers’ containers are shipped, albeit not guaranteeing a specific vessel. This is the exact principle as used by small parcel couriers such as UPS and Fedex whereby the customer only knows that they hand in the parcel and it is delivered within, say, 24 hours. The actual flight time is much smaller, but it is not the operational flight time that defines the product sold to the customers. The Daily Maersk product was an early pioneer of this in container shipping, effectively decoupling the operational transit time from the transportation time sold to customers. With the increasing size of alliances – and hence the breath of the networks on main trades – it is likely that the concept will be further used not only by Maersk but also by other main industry players. ●
15
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Markets REGULAR Finance
Greek buying binge Maritime CEO columnist Dagfinn Lunde gears up for Posidonia
T
he biannual Greek jamboree, Posidonia, is soon on us once again. Personally, I love the show and the events around it; it is like nothing else. When it comes to mixing business with fun, the Greeks are hands down the best in the world. This year’s event comes at a very interesting time as the Greeks go about significant fleet expansion taking the nation’s fleet size to record levels and staving off any immediate thoughts that this shipping Leviathan might be overtaken by the likes of China. The amount of secondhand tonnage taken in by the Greeks this year is stunning. According to figures compiled by shipbroker Golden Destiny, Hellenic shipowners spent more than $3.3bn on 131 secondhand vessels in the first quarter alone. In the same period of 2013 they spent just $1bn. They are not hanging about either when it comes to newbuilds, chalking up $3.5bn in orders in the first three months, a 126% increase over the same period in 2013. Greek owners have been using a lot of equity for all this buying, although there have been some problems with leveraging. Secondhand financing is not so easy. Banks have so many
restrictions nowadays – some only focus on long term customers, some just on newbuilds, there is so little flexibility, with most just too wrapped up in little boxes. There is a clear huge gap in the market for secondhand tonnage financing. It is a problem for private small owners who cannot leverage up, so their equity covers less additional ships. My advice to smaller private owners in this climate is to ensure operations are running super efficiently and for these owners to stick to their knitting, so to speak – focus on what they know and do not be tempted to try new sectors. I will be very interested to see what kind of presence private equity has at this year’s Posidonia. Will they still be keen to do new investments in shipping, or will they will be happy with what they have and stay away? Or are they now soon looking for a way out? I do actually sense a waning of interest in shipping among the hordes of private equity folks. A lot entered from the outside thinking the setback in rates was temporary and the market would pick up again but – surprise, surprise – enough credit came in (mostly via export credit agencies) to give a huge,
unprecedented contracting boom again to take the air out of many segments. The problem for many in private equity is they are now stuck, as if on a rudderless supertanker far out in the ocean. If you look at the market there is little possibility to exit. Private equity will sell when shares are worth more than the net present value, but that is not the case for many at the moment. Some in private equity, such as Navigator Gas, have a much longer view and are looking at consolidation and strengthening their positions. This is a good move to strengthen the company and create more value for the shareholders. No doubt, this and plenty more besides will be discussed at what I am predicting will be a very lively and interesting Posidonia. See you there! ●
“Without private equity investments, the shipping industry would not survive” — Tobias Koenig, founder of Lexington Maritime
Issue TWO 2014
17
RICH REGULAR LIST
The Maritime CEO Rich List 2014 Editor Sam Chambers introduces our debut study into the world’s most valuable fleets
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maritime ceo
RICH REGULAR LIST
T
imed to coincide with the greatest shipowner gathering of them all, Posidonia, we have launched this issue our annual roll call of the world’s wealthiest shipowners in terms of ships owned. Maritime CEO has joined forces with VesselsValue.com to produce this special report. The maritime media is awash
with subjective lists of who is more powerful than others, which more often than not exposes a title’s ignorance more than anything else. What we have set out do is to publish an annual objective list that lays out owners by fleet value and shows readers what each company owns. Readers can find out about the leading global f leets with details on value and size, broken down
What’s in Containers Bulkers Tankers LPG LNG
into ships af loat and on order. What’s more, this is just a start. While this inaugural list is derived from five sectors that VesselsValue. com currently tracks, going forward the data will become richer. Richard Rivlin, CEO of VesselsValue.com, says the online ship pricing site will add offshore, car carriers and reefers by the end of the year. ●
What’s not Offshore Car carriers Reefers Passenger/Cruise
In association with:
Issue TWO 2014
19
Five star service across the seven seas Did you know that very few luxury hotels are actually owned by the brand on the door? The vast majority are managed, hotels being but one of many industries to have embraced outsourcing. However, from Shanghai to San Francisco, step into a top branded hotel and you can expect the same five star service wherever you are. It’s the same with Univan. Shipowners can expect their ships to be treated to the very best standards. We select our owners to join our exclusive club based on a shared commitment to quality and safety. Find out more and join our award-winning privilege club today – visit www.univan.com
RICH REGULAR LIST
1
#
327
“The key is to make clear in our organisation that this is a business; we have to make a profit”
DWT
9.11m
— Søren Skou, CEO, Maersk Line
A.P. Møller-Mærsk
S
11.63bn
Fleet Breakdown Containers
S
#
DWT
9.36bn 1.59m
DWT
7.53m
88
#
467
“Longstanding problems cannot be solved overnight”
DWT
31.9m
— Ma Zehua, chairman, Cosco Group
S
S
3.45bn
DWT
0.62m
11.17bn
S
5.69bn
DWT
23.58m
Tankers
S
2.06bn
DWT
7.69m
#
123
Bulkers
#
2.27bn
Cosco
Fleet Breakdown Containers
#
S
#
239
2
Tankers
53
LPG
S
0.0015bn
DWT
0.01m
#
288
3
Key S
Total value of owned fleet including afloat and on order
#
Total number of owned ships including afloat and on order
DWT
Total owned tonnage including afloat and on order data taken on May 2, 2014
Issue TWO 2014
21
RICH LIST
3
China Shipping
S
4
10.75bn
#
364
DWT
22.03m
NYK Line
S
9.66bn
#
246
DWT
23.67m
TOP
5
Nationalities in the Rich List 7 7
5
6
MOL
5
S
5
#
206
DWT
22.28m
Fredriksen Group*
S
#
DWT
7
9.26bn 187 26.2m
3
“I think we have spread ourselves out quite well” — Frontline CEO Jens Martin Jensen
K Line
S
8
9.66bn
9bn
#
194
DWT
20.02m
Scorpio
S
7.6bn
#
174
DWT
17.16
Key S
Total value of owned fleet including afloat
#
Total number of owned ships including afloat
DWT
Total owned tonnage including afloat data taken on May 2, 2014
* Fredriksen Group includes 11 different companies
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maritime ceo
RICH LIST
TOP
Teekay
S
7.08bn
5
#
124 14.69m
Tanker Owners By Value S Scorpio 4.38bn
9
DWT
Petronas** 5.96bn
S
109
#
12.58m
DWT
10
Teekay 2.99bn Petronas 2.86bn
MSC
NITC 2.76bn
5.63bn
Fredriksen Group 2.72bn
190 1.36m
#
DWT
BW Group
“We are not financially stretched like some of our competitors” — BW Group chairman Dr Helmut Sohmen
S
5.41bn 80
9.73m
#
DWT
S
26
#
6.14m
DWT
Seaspan
and on order
5.17bn
and on order
104
and on order
0.77m
12
S
Nakilat 5.18bn
11
13
14
S
#
DWT
** Petronas includes AET and MISC Issue TWO 2014
23
RICH REGULAR LIST
15
16
17
18
19
20
TOP
Economou Group*
S
5.07bn
#
120
DWT
15.92m
5
Dry Bulk Owners By Value S
Zodiac Maritime
S
5.02bn
#
122
DWT
8.33m
Shoei Kisen
S
Cosco
5.7bn
K Line
4.38bn
China Shipping
3.45bn
Fredriksen Group
3.32bn
Scorpio
3.22bn
4.76bn
#
136
DWT
7.9m
Ceres Group**
S
4.31bn
#
46
DWT
5.88m
Sovcomflot
S
4.15bn
#
91
DWT
9.12m
Sinotrans&CSC
S
4.07bn
#
172
DWT
12.87m
$227.2m
Priciest vessel afloat in the VesselsValue.com database. The QMax LNG ship, Zarga, owned by Nakilat. The highest valued vessel on order smashes this out of the park. An ice-class LNG ship being built at Daewoo for delivery in 2016 clocks in at $317.9m
Key S
Total value of owned fleet including afloat
#
Total number of owned ships including afloat
DWT
Total owned tonnage including afloat data taken on May 2, 2014
* Economou Group includes eight companies * * Ceres has seven companies within the group
24
maritime ceo
RICH REGULAR LIST
TOP
5
Containership Owners By Value S A.P. Møller-Maersk 9.36bn
Claus-Peter Offen 4.03bn 112 2.01m
S
21
#
DWT
Maran Gas Maritime 3.98bn 22 3.58m
S
22
#
DWT
MSC 5.56bn Seasapn 5.17bn China Shipping 3.66bn Hapag Lloyd & CSAV 3.64bn
“Scorpio at number eight have come out of nowhere. They have a very low number of live vessels, but the highest number of newbuilds – actually double the second highest, the Fredriksen Group”
Hanjin Shipping 3.72bn
S
111
#
7.96m
DWT
Hapag Lloyd & CSAV 3.64bn
S
88
#
0.58m
DWT
— Richard Rivlin, CEO, VesselsValue.com
BP 3.64bn 75 7.75m
3.61bn
and on order and on order
Issue TWO 2014
24
25
S
#
DWT
UASC
and on order
23
S
44
#
0.49m
DWT
26
25
RICH REGULAR LIST
27
Navios
S
28
3.59bn
#
118
DWT
10.52m
CMA CGM
S
#
DWT
3.55bn 88 0.59m
TOP
5
LNG Carrier Owners By Value S Nakilat 5.1bn Maran Gas 3.98bn
29
30
SK Shipping
S
69
DWT
10.37m
S
3.27bn 95 10.36m
Peter Dรถhle
S
#
DWT
26
Ceres 3.1bn
32%
Pan Ocean
DWT
32
MOL 3.16bn
3.33bn
#
#
31
Teekay 3.31bn
3.26bn 116 1.65m
Doun Kisen
S
Showing just how splintered shipping is, the Top 50 in our Rich List make up less than a third of the total value of ships worldwide tracked on the VesselsValue.com database
3.22bn
#
103
DWT
7.68m
Key S
Total value of owned fleet including afloat
#
Total number of owned ships including afloat
DWT
Total owned tonnage including afloat data taken on May 2, 2014
maritime ceo
RICH REGULAR LIST
TOP
5
LPG Carrier Owners By Value S BW Group 2.24bn
Quantum Pacific 3.2bn
S
93
#
5.75m
DWT
Nissen Kaiun 3.17bn
33
S
87
#
7.91m
DWT
34
Dorian LPG 1.71bn Petredec 1.71bn
Oldendorff
Solvang 1.17bn
3.13bn
Eletson Gas 0.83bn
91
DWT
TAI NE RS
68 9,4 $9
S
m
TAN K
ER
MULT GAS & COMBO $957m
LNG $65 ,97 1
M
96m 4,6
BU LK
RS
CO N
#
$7
E
8.73m m ,931 $73
S
35
LPG $18,746m
Tsakos 3.06bn
S
83
#
8.03m
DWT
Priciest ships
The top 19% of the most expensive vessels account for 50% of the global value of the ships in the VesselsValue.com database
Oman Shipping 3.01bn 42 8.4m
2.92bn
and on order and on order
Issue TWO 2014
37
S
#
DWT
Evergreen and on order
36
S
94
#
0.46m
DWT
38
27
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RICH REGULAR LIST
Dynacom 2.85bn 65 10.16m
S
65 5.99m
58 13.74m
S
60 0.45m
51 0.33m
S
80 3.96m
40
2.59bn 104 6.03m
41
2.55bn 67 0.44m
42
#
67 6.72m
DWT
S
43
S
2.48bn 76 7.07m
DWT
44
#
S
#
DWT
66 1.05m
47
#
DWT
S
48
#
DWT
S
49
#
T DWT
Yang Ming 2.45bn
46
DWT
Shipping Corporation of India
#
S
#
Thenamaris 2.49bn
45
DWT
Costamare
DWT
S
S
Daiichi Chuo
#
Eastern Pacific 2.76bn
9.82m
DWT
Hamburg S端d 2.77bn
101
#
OOCL 2.78bn
2.7bn
DWT
NITC 2.78bn
Sinokor
#
HMM 2.85bn
39
S
50
#
DWT
Richer list to return The Maritime CEO Rich List, created in association with VesselsValue.com, will be back next May in time for NorShipping in Oslo. The survey will be boosted with additional sectors such as offshore, car carriers and reefers.
Issue TWO 2014
29
‘In no other profession would it be acceptable to have the current male-female ratio’ Why aren’t more women serving at sea? How can the situation be remedied? Top names debate the issue of women in shipping
A
little while back we interviewed Doris Ho, who runs Philippine crewing giant Magsaysay. In the wide-ranging interview (accessible via the QR code below) she called for more women to work at sea. Her thoughts got us thinking and since then we have canvassed the industry to try and address this fundamental imbalance between the sexes in this industry. According to UK maritime HR firm Spinnaker Consulting women are 52 times less likely to join the maritime industry than men. The outcome of a number of surveys by the Women’s International Shipping & Trading Association (WISTA), International Transport Federation and the International Labour Organisation prior to the World Maritime University Female Global Leadership Conference found that women make up just 1 to 2% of the world’s 1.25m seafarers. Moreover, 94% of women working at sea are working on passenger ships. “In no other profession would it be acceptable to have the current male-female ratio,” says Nicholas Fisher, ceo of Singapore’s Masterbulk. “The industry continually bemoans the trials of attracting good people into the sector, yet we are effectively cutting the available talent
30
pool in half,” comments Fisher. “And true to shipping form,” he continues, “we are quick to look for reasons why female crew and staff will not work. Discrimination, hardships, family focus, the physicality of a life at sea. The excuses flow easily.” Yet, if one looks at defence forces around the world, women are increasingly to the fore. Fisher notes around 10% of the UK’s Royal Navy and 17% of the US Navy are women. One of the age-old arguments against women onboard ship has been that they will eventually want to have a family, something that is not compatible with being thousands of miles from the nearest landmass. This line of thinking, however, is outdated too, says Spinnaker chairman Phil Parry. The average seagoing career for at least the last 30 years has been short enough for the issue of women and children to be a moot point, he says. “Like it or not, most seafarers come ashore by the age many people start families nowadays,” the recruitment specialist observes. As well as the often-cited potential family issues for women mulling a career at sea, there are also “unspoken assumptions”, according to Rose George, an author, whose recent exposé of the shipping industry in her book, Ninety Percent of
Everything, caused quite a stir. “These assumptions suggest women can’t be engineers or don’t have the strength to be ABs, which are outdated and unfounded in many cases,” she says. A major concern for George is the number of cases and anecdotes of sexual harassment or abuse. “The industry really needs to address the issue of safety at sea,” she says. Ex-seafaring contacts tell HR firm Spinnaker that sex discrimination in the industry is very common – some subtle, some very blatant
“An idea to address the shortage of officers – onboard and ashore – is to encourage women to take up a maritime degree, have a career plan so they can advance to a management level officer onboard” — Doris Ho, president, Magsaysay
maritime ceo
EXECUTIVE In profile Debate
Equal opportunities policies and courses are great, but it’s very different to monitor and regulate this onboard ships “If bullying or discrimination does occur onboard ships, the only way to help the situation is to report inappropriate behaviour and make sure that the individuals are held accountable to improve the situation for female seafarers of the future,” says Spinnaker’s Parry. This hostile work environment is borne out in statistics from the surveys done in the run-up to the recent World Maritime University conference mentioned above. 34% of the interviewed reported bullying and verbal abuse by their colleagues. 19% of the interviewed reported sexual harassment and 6% of the interviewed reported physical violence. “The more women who choose this as a career path means the more it will seem a natural career path
“
for other women in the future,” says Parry. Quite so, agrees Glenys Jackson from the UK’s Merchant Navy Training Board. “Companies must take account of the shipboard environment and make sure it caters for women seafarers so that when women are recruited into the industry they are not alienated and are given every encouragement to succeed and to progress in their career,” she says, adding: “The shipping industry is historically male-dominated, but unless shipping companies specifically target women then they can’t expect women to naturally see it as a career option.” Rajaish Bajpaee, ceo of Bernhard Schulte Shipmanagement, says that it will take “a big mindshift”, but he reckons the perception is slowly changing that seafaring is no longer a career limited to just
men, likewise for counterparts in other fields of transportation such as aviation. How then to improve the retention rate of female seafarers? Karin Orsel, president of WISTA International, has a long list including occupational safety and health improvements, maternity policies, training opportunities with a view to creating a sustainable career, better physical working conditions, childcare provisions, flexible working hours and efforts to make a less hostile workplace with gender sensitivity training for all workers. “It is vital,” she says, “to encourage stakeholders in the maritime industry to recognise that education is key to promote the integration of women in the sector.” Excuses about officer shortages should not wash when this industry has consistently failed to employ half the available workforce. ●
Most seafarers come ashore by the age many people start families nowadays
Issue TWo 2014
” 31
Joerg Roehl p.49
Gerry Wang p.38
Jan-Hendrik Többe p.50
Emanuele Lauro p.34
Bob Burke p.37
Michael Bodouroglou p.43
In profile this issue Maritime ceo’s 17 correspondents around the world have been in touch with many of the world’s top shipowners. Highlights are carried over the next 23 pages
32
maritime ceo
In profile
Camilla Grieg p.41
Ingar Skiaker p.51
Mikael Laurin p.39
Ian Claxton
Stylianos Dimouleas
p.42
p.46
Eugene Mayne p.45
Manav Kumar p.55
Georgios Karageorgiou p.45
Neil Glenn p.53
James Pang p.53
Issue TWo 2014
33
In profile
Shipping’s man of the moment He might be just 35 years old, but already plenty of Emanuele Lauro’s wheeling and dealing manoeuvres with Scorpio have entered shipping folklore
E
manuele Lauro is in a bit of a hurry when we meet up. There’s a plane to catch to Seoul where he’s got a couple of meetings, and then he’s on to Tokyo, before heading back to Europe, with Posidonia just around the corner. For shipping’s man of the moment, his feet are rarely touching the ground these days, such is the frenetic activity at Scorpio. Scorpio’s tail is up. The company’s history dates back to the 1950s and pioneering entrepreneur Glauco Lolli-Ghetti’s rise in the Italian shipping concern Navigazione Alta Italia. Lolli-Ghetti founded Scorpio Ship Management in 1973. The legendary shipowner then wheeled and dealed his way through many a cycle, before slashing his shipping portfolio in the late 1990s. He selected his grandson, Lauro, to take over from him. Lauro spent much of the last decade focusing on third party commercial and technical management, pooling and bulk logistics. Nevertheless, Lauro was biding his time, a chip off the old block, and in the depths of the bear market in March 2010 he took three product tankers and spun them off into Scorpio Tankers. The four years since
“There is a broad belief that the recovery is pretty firm, certainly in terms of the money coming into the market” — John Banaszkiewicz, managing director, Freight Investor Services
34
have been a whirlwind – well timed orders, a bulker spin off, buying and selling VLGC and VLCC slots combined with canny cash raising exercises have propelled Scorpio to shipping’s top table. Alongside the listed bulker and tanker vehicles, Lauro is constantly on the lookout for the next big thing in shipping. However, even he is aware that there is only so much one company can do. Scorpio’s meteoric rise in the past few years is well illustrated on page 22 where the company places eighth in our inaugural Rich List looking at owned tonnage. What particularly stands out is the vast orderbook – more than 100 ships – and the fact that the company is now the world’s largest tanker owner. “What I like to do is try and keep my eyes open and see what opportunities are out there that we can actually take,” Lauro tells Maritime CEO in our exclusive cover story. “We see a lot of opportunities but we do not necessarily have the right time or focus to explore them. We are very busy with the current structure.” The shipping world has passed its lowest point now, Lauro reckons. “It has turned the page, so there are different opportunities to take,” he says. While Scorpio is best known for its public companies it has plenty of other pots in the fire that do not necessarily get the limelight, but are perhaps set for expansion too. Other businesses run by Scorpio include port infrastructure as well as mining investments. Lauro not only notices that shipping cycles have changed by becoming shorter, but also that shipping as a business is now a far cry from the heyday when his grandfather was around.
“The nature of the shipping business has changed,” he says. “Today it is more of an institutionalised business.” Lauro is proud that Scorpio has been leading that change from being a private family owner to then becoming an operator to today where Scorpio is, in Lauro’s words, “a true public company”. Scorpio appears to be ahead of the pack in realising this changed cycle dynamic with its listed subsidiaries operating like asset holdings or trading companies. “Capital requirements in this industry are very meaningful,” he says. “Today, I think the premier league of shipping is identifying itself while small traditional private shipowners will have to operate differently in the future.” With so many regulations coming to the industry, Lauro says it is much harder these days to have just two or three vessels and be a player in the market. Scorpio timed its market offerings ahead of the pack. Since then, just lately, raising cash has come harder to come by with a number of other IPOs and over-the-counter (OTC) deals shelved. “It will all depend on how the markets perform as to whether the IPO window will reopen,” comments Lauro. He has advice too about OTCs, something his company has handled well, while others have floundered recently. “With OTCs,” he says, “everyone thought it was so easy, it isn’t – you need a specific product at a specific time to specific investors and a great management team. At the end it’s all about human capital and I feel so lucky to be working with the Scorpio team.” Timing is, of course, everything in shipping and Scorpio, with former maritime ceo
In profile
OMI boss Robert Bugbee working alongside Lauro, has seemingly timed its acquisitions and listings with cute precision. Already entering shipping folklore are Scorpio’s sale of its VLGC yard slots to Dorian LPG last October and its offloading of VLCC slots to Genmar in March. Timing, however, is something he questions when it comes to private equity’s flirtation with shipping. The majority of private equity
“
funds who thought they could dip in and out of shipping in a couple of years will struggle, he reckons. “You need to plan more long term in shipping, and usually when you do, you get rewarded for it and ironically you find the perfect exit,” he says – wise words, no doubt a nugget of guidance passed down from his grandfather who passed away in 2006. “My grandfather was a great businessman of his time,” Lauro says,
The nature of the shipping business has changed. Today, it is more of an institutionalised business
Issue TWo 2014
”
adding modestly: “I am far from being a great businessman of my time. I still have to prove a lot.” The astonishing fleet statistics would beg to differ. ●
Spot on
Scorpio Group Founded in 1973 by Glauco LolliGhetti. Now run by his grandson Emanuele Lauro. Has listed spin offs Scorpio Tankers and Scorpio Bulkers and has the largest orderbook in the world.
35
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In profile
Burke’s law The boss of Ridgebury Tankers on spotting decent tanker investments
T
here’s a fierce thunderstorm when the line clicks through to Bob Burke. It’s been just over a year since he founded Ridgebury Tankers and he’s been working long, long hours to get this new firm up and running with a rush of financing and a rapid fleet build up. Maritime CEO is interrupting Burke’s well-deserved holiday in the Caribbean with his family, his first break since the founding of the company on April 10 last year. For Burke, a well known American shipping wheeler dealer, Ridgebury represented a comeback into the industry after many years away following a mega deal concluded in 2008. “My wife was pretty tired of having me constantly moping around the house for five years so it was a good time to get back into business,” he quips on the founding of Ridgebury. Burke’s extensive executive shipping experience includes tanker operations, chartering activities for vessels, direct equity investments and financings, and the ownership and operational management of companies across several shipping sectors. In 2000 Burke co-founded Great Circle Capital, a private equity investment group backed by Overseas Private Investment Corporation and institutional investors to invest in ports, terminals, offshore oil support and other logistics and transportation businesses. Leaving Great Circle in 2005, Burke led attempts to acquire several shipping companies, culminating with the purchase of Chembulk, a 20-vessel fleet of stainless steel chemical tankers. Burke served as ceo of Chembulk from the date of acquisition until the brilliantly timed sale of the business in early 2008 to Berlian Laju Tankers of Indonesia. In the space of a year, backed by private equity firm Riverstone Holdings, Ridgebury has built up a fleet of seven suezmaxes and six
Issue TWo 2014
medium range product tankers. The strategy is to invest in modern tonnage either currently on the water or resales of vessels that will enter service shortly. While product tankers are widely seen as a hot sector at the moment, eyebrows were raised at Burke’s dogged pursuit of the much maligned suezmax sector. “The conventional wisdom in the US and much of Europe is that the two million barrels of crude from West Africa to the US Gulf is dying, largely because of shale gas,” says Burke, whose tanker experience dates back to seafaring days at the start of the 1980s. Burke, however, says suezmaxes are like Boeing 737 planes – “big enough for long haul but can do regional too”. It is their flexibility that is allowing them to take work from VLCCs and aframaxes, he says. Still, the real reason for the focus on suezmaxes was on the tiny orderbook for the segment plus noticeable increases in ton/miles. “The biggest thing we look at is the orderbook,” he says, adding: “I’ve never seen an orderbook so low as suezmaxes today.” As for product tankers, Burke says the outlook for the next couple of years looks good. “I can’t understand why people are ordering new product tankers,” he muses. “You want tonnage now.” While 13 ships in the space of 12 months is impressive, Ridgebury is not on a blind charge to build up a giant fleet whatever the cost, Burke stresses. “If prices go up too much we will stop buying,” he says, pointing out that the founders of the company have invested their own cash, more than $6m, which naturally makes for
cautious investment decisions. “Our only driver is ROE,” Burke says, while admitting honestly that the long term return on capital for shipping is “lousy”. On private equity’s massive influence in shipping in the past two years Burke is forthright. “Private equity is only there when they see returns that beat the mean in any industry,” he says, adding: “PE is there for an asset play, once that is gone, they will move on to something else. Any pullback will be done opportunistically.” Burke says he has been impressed with the level of knowledge of PE players in shipping. With that final comment, the rain ceases, the sun returns to the Caribbean, and it’s time to make the most of the precious holiday before returning to the seesawing shipping markets in Connecticut. ●
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Ridgebury Tankers Founded just over a year ago by tanker veteran Bob Burke in the US, backed by private equity firm Riverstone Holdings, the company has amassed 13 ships in its first 12 months, seven suezmaxes and six product tankers.
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In profile
The plane truth about box shipping Seaspan’s Gerry Wang on what liners could learn from their aviation counterparts
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nyone who has ever met Gerry Wang, the boss of Seaspan, cannot fail to have clocked his true enthusiasm for the sector he is in, container shipping. He’s quick to engage, discuss, and even argue points of view on the industry he is so passionate about. As one of the most successful players in the container segment of the last dozen years, Wang’s world view is decidedly optimistic. “The container industry is a global infrastructure industry connecting manufacturers with consumers, the cornerstone of globalisation,” he insists. “Without container shipping there is no globalisation, there is no Walmart. Container ships make up the new Silk Road connecting China with the rest of the world.” Wang is quick to dismiss talk of overcapacity in the industry when we meet up. The total orderbook is some 22% of the extent fleet, he points out, which spread over three years is little more than 7%. “That is not much,” says arguably the world’s best-known container tonnage provider. Wang claims the orderbook today is actually near a historic low. Moreover, when one takes into account effective
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Seaspan
Vancouver-based owner and manager of containerships. Charters vessels on long-term fixed-rate time charters to major liner companies. Fleet of the New York-listed firm stands at 87.
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loading of a typical boxship, a fifth can be knocked off that figure, he maintains. “Certain tradelanes have an imbalance, but overall there is no oversupply,” he stresses. So then, why the lousy freight rates, if there is not overcapacity? Here, Wang is in his element, quick as a flash, with a lengthy reply on the travails of the industry and the solutions at hand. “The industry has structural problems that it must deal with,” he says. Pointing to the creation of the P3 alliance between Maersk, CMA CGM and MSC, Wang says such collaboration is the way ahead. “The industry is going towards a more systematic approach to business,” he says. “Container shipping is not like dry bulk or tankers, it is more like the airlines,” he says, noting how airlines cope with capacity much better and how they work better through alliances. Wang reckons the container industry is now in the process of copying what the airline industry has done and this should address the structural problems it has. “Lines need to work together and learn their lesson from the past,” he says, adding: “They need to become more united to make better economic returns. This industry cannot survive if they continue to lose like money like they have.” Wang was born in China’s Anhui province in 1962. Educated at Shanghai Maritime University and then the London School of Economics, he started out with China Merchants Group in Hong Kong. In 1990 he moved to Vancouver and a few years
later joined Seaspan, owned by the billionaire Ted Washington. It was here that he linked up with China Shipping to get their containerline up and running by taking leases from Seaspan. From there, the leasing model he established snowballed. Seaspan went public in 2005, raising $700m. Seaspan’s fleet now numbers 87 ships with a total capacity of 606,300 teu. The largest ships on its books at the moment at 14,000 teu, and Wang acknowledges even larger ships are a necessity, an “unstoppable trend”. “You have no choice,” he says. “You have to get them as they give you economical means. Whoever has the economical means wins the battle.” This battle for scales of economy is also bringing in an era of consolidation for the sector, something that does not surprise Wang at all. “It is all about per teu costs. It is all about survival, arriving at the lowest teu costs,” he says. “If you can partner with someone to reduce your costs then go ahead.” As for Seaspan itself, don’t expect this Canadian firm to hang around. “We will continue to grow,” Wang says. “This industry is simple – if you don’t grow you will be left behind. My investment theory is whatever works to become stronger, more profitable.” Seaspan has stuck with the same philosophy over the past decade, he says, namely chasing long-term contracts with reliable, financially secure clients and always seeking the latest, modern, fuel efficient ships. “It’s a recipe for success,” says Wang with a knowing chuckle. ● maritime ceo
In profile
Product ordering overkill The head of family-run Laurin Maritime bemoans shipping’s continual overcapacity threat
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s Maritime CEO has regularly been pointing out of late, so called ‘hot’ sectors in shipping rarely last more than two years before overcapacity washes away rates. You, the reader, seem to agree; see our latest MarPoll votes on page 64. Mikael Laurin, the youthful ceo and president of Sweden’s family run Laurin Maritime tanker firm, is also aware of this phenomenon and warns that over ordering in the widely tipped product sector is likely to put a lid on rate rises soon. “We believe that the orderbook of standard MRs is too large compared to the increase in demand over the coming years,” says the tanker boss, adding: “For chemical tankers there has been a lot of orders lately, but the orderbook is not yet as bloated. The large number of MR orders will, however, likely keep rates for easy chemicals down for the coming years.” Laurin Maritime was founded in Sweden in 1980 by Agneta and Hans Laurin. The company is still controlled by the Laurin family. Laurin Maritime took delivery of
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Laurin Maritime Swedish family-run tanker owner founded in 1980. Currently has a fleet of 15 tankers, all MR size and 14 of them are IMO II classified. Looking to add more tonnage.
Issue TWo 2014
its first two stainless steel chemical tankers from Oskarshamn’s Varv in Sweden in 1982. It then moved on to coated tankers with IMO II/III chemical class, before pioneering 46,000 dwt chemical/clean product tankers. Unlike traditional shipping companies, 34-year-old Laurin Maritime delegates the daily management of its vessels to shipboard management teams, consisting of two Masters and two Chief Engineers per vessel. Today, Laurin Maritime has a fleet of 15 tankers, all MR size and 14 of them are IMO II classified. “We are looking at different opportunities to increase the fleet, but there are no firm plans at this time,” says Laurin. While five years ago the company was mainly focused on the Americas and the Atlantic, now it trades worldwide with five offices across the globe. The aim, according to Laurin, is to increase the firm’s presence in Asia, where it has a commercial office opened a couple of years ago in Singapore as well as a crewing office in Manila. In terms of the drivers for the chemical trades at present, Laurin notes there’s a lot of new production coming on line in the Middle East in the coming years, which should increase exports of base chemicals to Asia and Europe. Further there is a lot of optimism about the increase in chemicals production in the US, due to the availability of cheap feedstock. “It is still uncertain though what products will be exported and to where,” he cautions. Laurin Maritime’s strategy is to have a stable basis of contracts of
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The orderbook of standard MRs is too large compared to the increase in demand
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affreightment covering about 60% of earnings. In addition to that it trades ships on spot voyages trying to build up trade patterns with minimal ballast legs. ●
“The bunkering market is set for consolidation and only a few of the big names in the industry with deep pockets will remain in service” — Christoffer Berg Lassen, ceo, Glander International Bunkering
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In profile
Reasons to smile Camilla Grieg is optimistic on long-term prospects for both dry bulk and the open hatch segment
O
ne of the leading players in the open hatch segment, Bergen-based Grieg Star, a part of the Grieg Group, is well positioned in the event of a market recovery. Camilla Grieg, group ceo, has a positive outlook on both dry bulk and the open hatch segment long-term. “The sectors we are doing business in are exciting,” she tells Maritime CEO. “We have done well in bulk for a long time, although in the past we preferred to operate, rather than owning ships. For a player of our size we are definitely entering this market in a big way with six supramaxes and purchase options on some vessels on period charter.” Two supramaxes hit the water last year while Grieg Star will take delivery of four more vessels in 2015. The group is celebrating 130 years in business this year. Camilla, who works with her sister Elisabeth, also fronts Grieg International, a private equity (PE) division within the diverse group. “We are into other segments than our operative business and there’s been massive interest in private equity. Investment companies are seeing no slow down
Spot on
Grieg Group Turning 130 this year, one of the blue chip names in Norway maritime. Grieg is a shipowner plus is involved in shipbroking, maritime services, port operations, seafood, investments and finance.
Issue TWo 2014
among private equity players’ hunger for shipping”, she laughs, while explaining, “It might be stirring some frustration for more long term players, as now everyone wants to go into dry bulk.” As for the open hatch business, a sector Grieg Star is a leading player in, Grieg says this area is very competitive and has been for some time. She says open hatches are a “niche market”, but when Korea’s STX Pan Ocean (now rebranded back to its original name, Pan Ocean) ordered 20 open hatch vessels to carry cargo for Brazil’s Fibria Celulose, this changed the balance in the sector. Fortunately for Grieg Star, and others, the debt ridden Korean company had to restructure and only five of the 57,000 dwt open hatch ships hit the water. Gearbulk is the biggest player in the segment, followed by Grieg Star, Saga and Westfal Larsen – all Northern European firms which dominate the highly competitive South American wood pulp transportation market. The Grieg Group delivered
positive results for 2013, despite continued weak freight rates. In a market darkened by overcapacity and fierce competition, the group was boosted from its seafood division where salmon prices skyrocketed to an all-time high. Grieg Star contributed positively to group results last year too, with a pre-tax profit of $22m. Grieg Star’s fleet is in the middle of its biggest ever newbuilding program, investing a total of $650m. Owning a total fleet of 34 modern ships and operating another 15 to 20 ships on an annual basis, the company is increasingly moving to fix its ships for long-term contracts of affreightment. So far, 12 of 16 newbuildings have delivered. In addition, the group has purchase options on four additional vessels. Grieg Group has a handful of companies under its umbrella including property and marine logistics. In the latter section focus in recent years has been on developing ship services and logistics activities, and expanding operations in the Norwegian port of Narvik. ●
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In profile
50% fleet growth in a year Thoresen Shipping is on a charge
I
n terms of percentage fleet growth few Asian dry bulk owners are growing faster than Thoresen Shipping this year. Thoresen Shipping is the dry bulk shipping arm of Thai-listed investment group Thoresen Thai Agencies (TTA). The business operates under three wholly owned subsidiaries of TTA, Thoresen Shipping Singapore (TSS) and Thoresen & Co (Bangkok) (TCB). Singapore now is where the commercial team is based and all ships are flagged. In January 2013, Thoresen Shipping unveiled Thoresen Shipping Denmark (TSD), its chartering office in Copenhagen to serve the needs of clients with cargoes in the Atlantic and Mediterranean regions. With a heritage of offering shipping related services since 1904 and dry bulk since 1985, the group is now pushing ahead with significant expansion. Managing director Ian Claxton explains this year already Thoresen Shipping has added four ships to its fleet to take its fleet to 23 ships and well in excess of 1m dwt. The stated aim of the company, says Claxton, is to have 30 ships by year-end, a 50% increase from the start of the year. The fleet is made of supramaxes and handymaxes and is a balance of geared and grabbed fitted bulk
Spot on Thoresen Shipping Part of diverse Bangkok conglomerate Thoresen Thai Agencies, the line is on a fast growth curve, set to leap in owned vessel numbers this year by 50%. Focuses on supramaxes and handymaxes. On top of owned fleet has significant chartered in tonnage, typically 25 ships at any one time.
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carriers and open hatch box shaped hold vessels. “We are very active in the acquisition of suitable additional tonnage,” says Claxton. On top of the owned vessels, Thoresen Shipping is a significant charterer having around an additional 25 vessels at any one time. Parent company TTA tends to invest in shipping, energy and infrastructure, with shipping accounting for around 30% of revenues last year. However, Claxton maintains: “With shipping experiencing a downcycle in 2013 and prior years, we would expect that percentage to increase in 2014.” Dry bulk rates are increasing, Claxton says, driven by an increase in utilisation, which, he says, is seen as a restoration of the balance of supply and demand. “Basically we see deliveries at a five-year low, with a growth in global GDP and demand growth outstripping new tonnage supply,” he explains. The current uptick looks sustainable for at least two more years, Claxton reckons. “Fragility is dependent on new orders coming
into play in 2016 and 2017, and geopolitical issues in both emerging and established economies,” he cautions. Improving dry bulk rates also sees a change in Thoresen’s tactics. While for much of the downturn it played a lot of its fleet on the spot market it is now looking to lock in more long term deals as rates pick up. Going forward, the focus, says Claxton, will be on what Thoresen Shipping knows best, namely supramaxes. “We believe there is less volatility in this sector than the larger sizes, and we believe we should concentrate on what we are good at,” Claxton says, before finishing with a classic line of an opportunistic shipowner: “This can always change of course, dependent on whether an exceptional opportunity should arise.” ●
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We believe there is less volatility in supramaxes than the larger sizes
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maritime ceo
In profile
‘We shipowners are normally reckless and destroy our own market’ Michael Bodouroglou on how to handle shipping cycles better
M
ichael Bodouroglou is in a reflective mood when Maritime CEO comes knocking at his door. He’s been mulling the mindset of fellow owners and their herd instinct tendencies, which tend to send shipping into red ink territory all too regularly. Bodouroglou is one of the big names in Greek shipping, in charge of dry bulk outfit Paragon Shipping, shipmanager Allseas Marine as well as container arm, Box Ships – the latter having the clever ticker TEU on the New York Stock Exchange. Our conversation starts with dry bulk, something Bodouroglou is convinced has now bottomed out. “The recovery started 10 months ago,” he insists. However, volatility is here to stay, he warns. Supply and demand are balancing out on the dry bulk front, with the global orderbook now just 20% of the extent fleet. Bodouroglou is not worried about demand, noting the massive ongoing urbanisation in India and China. “I am quite optimistic about dry bulk for the next two years,” he says, before ruminating: “Beyond that, it will depend how reckless shipowners are, and we shipowners are normally reckless and destroy our own market.” Paragon has 14 ships in the water and another five to deliver. Ships are made up of all sizes apart from capes. “Capes are the most volatile and riskiest,” says the Greek national. Bodouroglou is not so optimistic on containers. “There’s more of an uphill road before signs of recovery,
“
although I do believe we have seen bottom of market,” he says. There is still overcapacity in the box sector, he notes, while demand is a problem still as that is driven by the developed economies. “Demand is not solid and supply is big,” he précises. Box Ships has nine ships and none on order. The vessels are all mid-sized and Bodouroglou reveals to Maritime CEO he is tempted to get some smaller ships. The past few years of horrendous shipping rates have taken their toll on the industry, but Bodouroglou wonders if all owners have learnt from this protracted downturn. “It’s been a lesson to all of us to be less speculative,” he comments. A keen reader of shipping cycles, Bodouroglou and his team ordered ships when they were at rock bottom prices. “We are sitting tight in terms of more orders,” he says, adding: “We have exhausted our investment plans and now we are consolidating our position and finances.” Among the newbuilds were a pair of boxships which Bodouroglou took financing from China, something he found to be tricky. “The process is slow, it is not easy and is tedious,” he recounts, suggesting that it will take a long time before Chinese ship financing becomes a true global force. A look at how Bodouroglou and his team have handled the tricky past six years is a great example of a Greek shipowner handling cycles
Greeks understand the importance of being cash rich to survive in the downturn and take advantage of any pick up
Issue TWo 2014
with aplomb. “The Greeks are historically cautious,” he explains. “They understand the cyclicality of the sector well and are reluctant to invest when asset values are at their highest. Because of their experience they make sure they are liquid during a downturn – they understand the importance of liquidity in shipping – the importance of being cash rich to survive in the downturn and take advantage of any pick up.” Prior to founding Paragon, Allseas and Box Ships, Bodouroglou co-founded Eurocarriers in the mid1990s. Before that he was a technical superintendent for Thenamaris. ●
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Paragon Shipping One of three companies founded and run by Greek national Michael Bodouroglou. Paragon has 14 ships afloat and another five set to deliver. Bodouroglou’s container arm, Box Ships, has nine ships.
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In profile
Follow the charter rates Globus Maritime president sees upsides for asset values
W
hile the supply/demand balance in the dry bulk trades has improved the sector has not yet recovered, which will bring more upside for asset values, argues leading Greek shipowner Georgios Karageorgiou. Karageorgiou holds many titles at Globus Maritime – president, ceo and CFO. His curriculum vitae shows he knows all about shipping cycles having worked for Stelmar
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Globus Maritime Nasdaq-listed Greek bulker player, founded in 2006, now with seven ships totalling 453,000 dwt.
Shipping from 1992 to 2004. In 2006 he was one of the original founders of Globus Maritime, which listed on the Nasdaq three years ago. The company currently owns and operates seven modern dry bulk carriers, consisting of one kamsarmax, two panamaxes, and four supramax vessels totalling around 453,000 dwt. On the markets, Karageorgiou notes that asset values tend to follow charter rates, and rates account for the underlying fundamentals of the industry. “While we’re pleased to see the dry bulk industry fundamentals improving, in particular, the supply/ demand balance,” he says, “we’re not yet at a point where the industry has recovered. So there remains upside for asset values, especially if you consider the ten-year averages of these ships in comparison to today.”
Karageorgiou says his firm is always on the look out for more tonnage. “We are always open to looking at acquisitions that we believe are accretive,” he says. Rates will continue to improve from where they stand today, Karageorgiou thinks. “The period market is already higher than spot rates as well as last year’s period levels which is always a good sign,” he notes. ●
Plans to be a product ‘major player’
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stablished in 1998 with headquarters in the UAE, Tristar is an integrated liquid logistics company specialising in petroleum and chemical handling and distribution. The company has grown from a relatively small local transport company to a multifaceted liquid logistics service provider with a global network. What’s more, going forward, shipping will become a far more important generator of revenues for the logistics group, according to ceo Eugene Mayne. While the company has been in shipping and chartering for the past 10 years, currently operating six coastal tankers, last year it inked a contract with Korea’s Hyundai Mipo Dockyard to construct six 50,000 dwt MR product tankers which will
Issue TWo 2014
Maritime CEO. “However, this is expected to increase when earnings from the new fleet commence in 2016. Tristar is looking to build a fully integrated shipping business with a wide mix of vessels to reduce exposure to cyclical movements in any one particular segment of shipping.” ●
Spot on be chartered to oil majors when they deliver in 2016. At the time of the contract signing Mayne said the move was designed to make Tristar “a major player” in the clean product tanker segment. “Currently the shipping division contributes a small percentage of the group’s income,” Mayne tells
Tristar
Integrated liquid logistics company from Dubai with six MR product tankers on order.
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In profile
Riding out the storm Almi Tankers is securing decent charters from oil majors
I
n the CEO’s hotseat for nearly nine months now, Captain Stylianos Dimouleas, who heads up Greece’s Almi Tankers, is riding out the tanker freight rate storm. “In a very volatile market, we try to keep an almost even balance between spot and time charter,” he says. The company, founded in the early stages of shipping’s downturn back in 2009 by Costas Fostiropoulos, has grown quickly and also secured decent charters with oil majors, something Dimouleas is proud about. Prior to taking the top job, he had been with Almi for three years, starting out in HR before becoming chief operating officer. Almi currently operates a fleet of two aframax LR2 vessels and nine suezmaxes. It also took delivery of a VLCC, which has been long-term chartered, and will take the delivery of another VLCC later this year which is also on a 15-year charter with the same oil major, Chevron. The tanker owner is now close to completing its extensive newbuild project, all of which has taken place at Korea’s Daewoo Shipbuilding & Marine Engineering (DSME). The suezmaxes and VLCCs ordered are among the more technically advanced afloat today. “We definitely wanted to take
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Almi Tankers Founded in 2009 by the Fostiropoulos family who also run dry bulk outfit Fairsky Shipping, Almi now has two aframax LR2 vessels, nine suezmaxes, and a VLCC, plus one more VLCC to deliver shortly.
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“
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A halt in new vessel orders would help
advantage of new technologies, as we wanted our vessels to be as ecofriendly as possible,” says Dimouleas. Ballast water treatment systems have been fitted on all vessels, and the VLCCs are the first in the world to be equipped with G-type ultra long stroke engines, which in conjunction with a larger diametre propeller offer significant fuel savings and produce less emissions than engines with the same output. As far as the markets go Dimouleas says the tanker sector looks like it has bottomed out finally. Admitting that times have been “very depressed” and “extremely tough” for everyone in the tanker trades for the past four years, Dimouleas stresses: “We will maintain our very high operating standards to ride this global storm out. I think that is what should be done on an industry-wide level.” He adds: “A halt in new vessel orders would help as well.” Dimouleas will not be drawn on possible other sectors Almi might buy into, but does tell readers, “We
always keep our eyes open for good business opportunities.” This is not surprising since the firm is owned by the Fostiropoulos family, well known Greek shipping players who also run dry bulk outfit Fairsky Shipping. Prior to Almi, Dimouleas was at sea for 16 years with the Onassis Group before coming ashore in 2006 and working with Top Ships for four years. ●
“The Greek-owned ocean-going fleet continues to ride the wave of a dramatic expansion spearheaded by a strategic diversification drive” — Theo Vokos, executive director, Posidonia Exhibitions
maritime ceo
The journey to efficiency starts here Here’s to today’s explorers.
PIL’s S.S. Teo with Iain Wilson, LR’s Regional Marine Manager, Asia
“We wanted to explore our options to reduce our fuel costs. Lloyd’s Register’s technical insight and fluid dynamics modelling gave us the confidence to implement a more efficient bulbous bow, reducing fuel consumption by around 5%. We are now well into a programme on 19 ships and LR are now verifying the actual performance.” S.S. Teo, Pacific International Lines (PIL)
www.lr.org/fuelcosts
Working together for a safer world Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates. Copyright © Lloyd’s Register Group Limited 2014. A member of the Lloyd’s Register group.
Grieg Star is a fully integrated shipping company. We operate one of the largest open hatch fleets in the world, in addition to a substantial bulk operation in the Handymax segment. We service major companies in fields like forest procucts, metals, bulk, energy- and project cargoes.
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In profile
Heavyweight contender The managing director of fast growing Hansa Heavy Lift outlines expansion plans
G
ermany’s Beluga lived up to its name when in the middle of 2011 it went belly up, becoming a whale of a casualty in the dark days of the shipping downturn. Now, however, with cash from the US’s Oaktree Capital Management and rebranded as Hansa Heavy Lift, the carcass has been resurrected and is sailing a course of rapid global expansion. Oaktree, which had a 49.5% share in Beluga, kickstarted Hansa with 16 of the 72 ships Beluga had. Since then it has been adding new tonnage fast. A senior vice president at Oaktree, Roger Iliffe, is the ceo of Hansa, and he is ably supported by Joerg Roehl, who serves as chief commercial officer and managing director of the line. Roehl was also with Oaktree and advised Iliffe on the setting up of Hansa as well as bolstering the company’s Asian footprint. The current f leet is made up of 24 ships, a 50% increase from its founding with 22 owned and two on long term charter. “We are constantly looking for attractive deals in the market,” Roehl tells Maritime CEO. “We currently have a newbuild plan, there’s no confirmed orders yet but we are now talking to shipyards, particularly in China,” he reveals. Hansa’s mid-term goal is to expand the f leet to 30 vessels by the middle of next year, and to about 35 vessels longer term.
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Hansa has offices in Hamburg, Singapore, Houston and, as of this January, in Perth in Western Australia. On top of that the company has 11 exclusive agents worldwide. The focus for cargoes is very much on oil and gas, power generation and wind energy. “Geographically, there are almost no markets we are not serving today, we are active in almost all continents, but we do see Africa and the Middle East as important markets for future growth,” says Roehl. On rates, Roehl is bullish noting how they have been going up since the start of the year, and he expects them to continue to rise. “Vessels are moving faster and trading faster, which is a good sign,” says the German national. Nevertheless, he does recognise that the heavylift sector is
We believe in consolidation, so does our shareholder Oaktree
Issue TWo 2014
suffering from overcapacity, something that could trigger a period of consolidation. “We believe in consolidation, so does our shareholder Oaktree,” he says, adding: “We certainly are looking into consolidation, especially on the ships side.” While other owners are finding financing hard to come by, having Oaktree onboard allows Hansa the ability to move fast in the market. Roehl and his senior management colleagues like to think of Hansa, a relative newcomer to heavylift, as pioneers. With this spirit in mind, it was with some jubilation that Hansa celebrated last December the successful transit by two its vessels through Russia’s Northern Sea Route, something that shaved two weeks sailing time off a normal Europe to Asia sailing. With more than 20 years of experience in the logistics and maritime industries Roehl has held various senior management positions with Kuehne & Nagel, SDV Group and Agility. ●
Spot on
Hansa Heavy Lift Formed in the middle of 2011 with cash from Oaktree Capital Management following the collapse of German heavylift specialist, Beluga, Hansa Heavy Lift has been one of the most active players in the projects segment of the past few years. Fleet today stands at 24, likely order for six ships coming up.
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In profile
Not hanging around Maritime CEO heads to Bremen to meet the founders of Zeaborn, one of the world’s newest shipowners
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remen-based Zeaborn jumped into the news this April confirming an order for 10 multipurpose (MPP) vessels. The 12,500 dwt ships will be built at China’s Taizhou Sanfu Ship Engineering, and will be delivered in three-month intervals as from the fourth quarter 2015. The heavylift vessels have two tower slewing cranes, each having a lifting capacity of 250 tons. Founded in April last year, Zeaborn describes itself as a global integrated shipping company operating in the MPP segment and meeting capital market requirements. Zeaborn covers the entire value chain of a modern shipping company, from financing through to commercial and technical
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management up to the freighting of its own or chartered vessels. Founders Jan-Hendrik Többe (pictured, left) and Ove Meyer (pictured, right) tell Maritime CEO they are “open” to strategic partnerships and acquisitions. “At Zeaborn,” Többe says, “our focus is on the attractive niche market of the heavy cargo segment within the shipping industry. Our aim is to establish a market relevant fleet, reaching critical mass in terms of size via our newbuild programs, suitable existing vessels as well as chartered MPP vessels.” The first series of vessels is built on what Meyer describes as a “conservative” debt financing with German banks and an institutional investor. The relevant
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Our aim is to establish a market relevant fleet
equity is provided from Zeaborn’s cornerstone investor and majority shareholder, Kurt Zech. Zech runs a large construction, real estate and hotel group also headquartered in Bremen. Prior to co-founding Zeaborn, Meyer guided the expansion of BBC Chartering for nine years as part of its management team while Többe was a partner at Roland Berger Strategy Consultants and PricewaterhouseCoopers. ●
Spot on
Zeaborn Founded in April last year in Bremen, Zeaborn has just ordered 10 multipurpose vessels. Has significant chartering plans too.
maritime ceo
In profile
World’s largest car carriers set to deliver Ingar Skiaker, ceo of Norway’s Höegh Autoliners, on a growing fleet and a new app
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ates for car carriers are looking stable this year and are likely to remain firm in the near future, says Ingar Skiaker, ceo of Norway’s Höegh Autoliners. “The long-term prospects of the pure car/truck carrier (PCTC) industry look promising with continued demand for ocean transportation due to strong globalisation of the auto industry,” he says. Today, Höegh Autoliners’ customers have a truly global production and sales operation and can quickly change production sites between countries as macro-economic drivers change. “This requires us as PCTC operators,” says Skiaker, “to be quick to adjust our network and find new solutions that are cost-efficient both for us and our customers.” Höegh Autoliners currently operates roughly 60 vessels, a mix between owned vessels and longterm charters. Just recently, it took delivery of a new panamax vessel with a carrying capacity of 6,500 car equivalent units (ceu). Another panamax vessel will be delivered later this year. These vessels will be on long-term bareboat charter to Höegh Autoliners from their owner
“A lack of profile simply adds to the invisibility of shipping” — Jean Winfield, managing director, Jeanius Consulting
Issue TWo 2014
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The orderbook for the global PCTC fleet is moderate
Ocean Yield. In addition, Höegh Autoliners has placed an order with Xiamen Shipbuilding in China for six post-panamax vessels which will be the world’s largest PCTCs when they deliver in 2015 and 2016 with a carrying capacity of 8,500 cars. Casting an eye over the global orderbook for his sector, Skiaker is not too concerned. “The orderbook for the global PCTC fleet is moderate and well linked to estimated current and future demand in the market so we believe the supply/demand situation will remain balanced over the next years,” he says. Earlier this year, Höegh Autoliners launched an app giving users quick access to its network, sailing schedules and contact details to local offices. The app also has a separate section especially
developed for truck drivers, to make the delivery of cargo at its terminals more efficient. Customers also have access to simple track and trace through the app, something many have requested for a long time, says Skiaker. The app is a “pre-taste”, the ceo says, to a new website that will launch this summer. ●
Spot on
Höegh Autoliners Norwegian car carrier giant with 60 vessels on its books plus seven ships on order including six of the largest car carriers ever built.
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In profile
Fleet rebalance
Swire Pacific Offshore is switching tack towards more PSVs
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ast developing Swire Pacific Offshore (SPO) will celebrate having 100 ships by the end of next year. The Singapore-based offshore support vessel operator has a diverse fleet of 85 vessels afloat at the moment, and another 17 on order. Managing director Neil Glenn tells Maritime CEO how the fleet has
Spot on
Swire Pacific Offshore Founded in 1975, Swire Pacific Offshore (SPO) is closing in on 100 ships. Headquartered in Singapore, SPO is part of the Swire Group whose other shipping interests include China Navigation and Swire Shipping.
changed in recent years to reflect the new demands of energy companies around the world. SPO’s offshore supply vessel fleet has traditionally been very heavily weighted towards anchor handling tug supply (AHTSs) vessels. However, with the recent developments in the oil and gas industry, such as the trend towards deeper water exploration and the increase in dynamically positioned rigs and drillships, SPO has seen an increase in demand for PSV vessels from its clients. “To ensure we are aligned with industry developments and are able to meet the needs of our existing clients,” Glenn says, “we have rebalanced our fleet mix to include a greater number of PSVs.” The orderbook reflects this shift with 14 PSVs and just three AHTSs to deliver. While some OSV sectors are
risking overcapacity, Glenn is adamant his fleet is well placed. “The orderbook particularly for PSVs remains very finely balanced,” he maintains. SPO has progressively expanded the range of services and provides its clients with a broad product offering. The businesses within the SPO group are able to provide seismic survey support, marine salvage, oil spill preparedness and emergency response, offshore windfarm installation and decommissioning, subsea and ROV services, as well as integrated logistics solutions. Altus Logistics is the latest addition to the group, providing supply base and supply chain management, marine and other oilfield support services and logistical support to the oil and gas industry. ●
The rise of Pacific Radiance
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ingapore offshore operator Pacific Radiance has come a long way in a short time. Tracing its roots back to 2002 when it started off as Strato Maritime Services, involved in chartering and technical management, the group bought its first ship in 2004, and rebranded as Pacific Radiance in 2006. Nowadays, including joint ventures, Pacific Radiance owns and operates a total of 138 vessels, a mixture of tugs, barges, AHTSs, PSVs and saturation dive support vessels. Besides its internationally trading vessels, the company controls around 60 Indonesian flagged vessels through joint ventures and associate companies. There’s 14 new vessels set to join the Pacific Radiance fleet this year,
Issue TWo 2014
open next year in Singapore with two dry docks. In terms of spreading its geographical reach, Pang tells Maritime CEO he is “very excited” by prospects in Mexico,and West Africa, specifically Nigeria, Congo and Angola have good potential. Pacific Radiance has been operating in East Africa for the past three years. ● another seven penned in for 2015, and according to managing director James Pang more are set to be signed soon. The group is involved in plenty more besides vessel ownership including project logistics and the design and fabrication of winches, cranes and other equipment used in the offshore industry. Furthermore, a new 30,000 sq m repair yard is set to
Spot on
Pacific Radiance Founded 12 years ago, now one of Southeast Asia’s largest offshore operators with 138 vessels afloat and another 21 to deliver.
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In profile
Beyond India Dynamic Drilling is preparing to move outside its home waters
D
ynamic Drilling is all set to move beyond Indian waters as it expands its fleet of jack-ups. Founded three years ago, Dynamic Group has three jack-ups and a drillship on charter to India’s Oil and Natural Gas Corporation (ONGC). On top of that, there’s a rig plus three options on order at Cosco Dalian Shipyard in northern China. The options are likely to be declared soon, says Manav Kumar, a director at Dynamic, and all the orders may well go on charter to parties beyond India. Dynamic was founded, says Kumar, because it was clear that oil companies needed quality rigs and drilling services with oil prices remaining comfortably high. Its joint venture partners include Singapore’s Keppel and Seacor from the US. Management takes place out of Singapore, where rigs are also flagged. Dynamic is not alone in clocking that perceived rig shortage and a vast amount of orders have flooded the sector, something Kumar acknowledges, but without too much concern. “A short term drop in rates is likely next year,” he says, “as a lot of newbuilds come onstream, but the long term forecast remains good for serious drilling contractors.” The quality of assets that are
Spot on
Dynamic Drilling An Indian concern with three jack-ups and a drillship on charter to India’s Oil and Natural Gas Corporation. There’s also a rig plus three options on order at Cosco Dalian Shipyard. The options are likely to be declared soon.
Issue TWo 2014
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There are too many new owners and yards
coming out is the real concern, argues Kumar. Dynamic’s rig heritage stretches back to the 1980s, but in the last four years there have been a vast number of new entrants into the offshore sector, not least from the depressed shipping side. “There are too many new owners and yards,” Kumar says, warning: “This industry is very technology and process centred, assets have to built to the highest quality with proven equipment and experienced shipyards.” Having said that, Kumar is happy enough with his chosen yard, Cosco Dalian in China, a nation that last year surpassed Singapore in the amount of rig construction contracts sealed. Speaking recently at a breakfast organised in Singapore by Maritime CEO parent Asia Shipping Media and Standard Chartered Bank, Kumar observed owners must be diligent when building in the People’s Republic. Quality, timing and price
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“Natural gas is coming like an express train to Asia” — Denis Welch, founder of Sherpa Offshore
are attractive in China, although he recommended to build in very selective yards with strong quality supervision and to add in an extra couple of months for any construction project to iron out certain building wrinkles. As well as the options to be exercised, Kumar tells Maritime CEO the company, which includes this title’s finance columnist, Dagfinn Lunde among its board of directors, that other drilling investments are being eyed. ●
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gadgets
A holiday that promises to be out of this world
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o what do you get the person who has everything other than Vancomycin? It would have to be something out of this world, like a maybe a holiday in space. You can book a trip into space with Virgin Galactic, but nothing you can plan ahead for just yet. In the meantime, however, according to Virgin, you get access to a variety of events run by the company. Previous events have included visiting Necker Island with Sir Richard Branson, completing G-force training and celebrating Virgin Galactic powered test flights in the Mojave. The timing of the actual flight however is somewhat up in the air, but SpaceShipTwo broke the sound barrier during its first rocket powered flight in 2013, the Spaceport is built, so it’s not exactly a pipe dream, either.
$250,000 www.virgingalactic.com
A Helicycle built for two
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o you remember how you first felt when James Bond got to fly around in his autogyro Little Nellie in You Only Live Twice? Well, now you have the chance to be just like him, with a two-seat 230 hp four-cylinder motor-trike that transforms into a helicopter in approximately 10 minutes, by adding a propeller, rotor and rudders. You’ll need a bit of a run-up to take off — 165 m in fact, but you only need 30 m to land. It’s designed to cruise under 4,000 ft or 1,200 m, and with a 102 litre tank, you get a range of 354 km flying or 1,200 km on the road. Top speed is 180 kph or 97 knots on the road or in the air. You’ll need a motorbike and pilot’s license to drive it, but it’s a small price to pay to be Bond for a while. You’ll have to add your own machine guns and rockets though.
$395,000 www.helicycle.com
Black-hat-Berry
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hilst it was recently announced that the Boeing Black secure smartphone is on offer, it seems a bit naive to assume that a major US defence contractor would try to make it secure from their biggest client, so we plumped instead for the Blackphone, made by Silent Circle and Geeksphone, who are actively trying to avoid NSA snooping as well as anyone else. The phone is not locked to any carrier, and works on GSM, HSPA+/WCDMA and LTE. It runs on a 2GHz quad-core SoC with 2GB DDR3 RAM, 16 GB of storage, a microSD slot, a 4.7” IPS HD capacitive multi-touch sensitive screen, an 8 MP main camera, 1.3 MP front camera, Bluetooth 4.0, 802.11n wifi and GPS. It runs on PrivatOS, which is Android with the security heavily beefed up and extra apps to give you encrypted texting, voice and video communications; private search and browsing; VPN access; secure cloud storage; and remote locate, wipe and kill, for when you lose it somewhere. You’re signed up to two years of Silent Circle apps, which provide the secure text/phone/contacts; Disconnect which gives you secure wifi; and SpiderOak which provides secure cloud storage. They also bundle three one-year subscriptions for family and friends. One caveat: there’s a bit of a wait involved, as the first batch was sold out, and the next batch begins shipping in June.
$629 www.blackphone.ch
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maritime ceo
REGULAR WINE
wines made by serious producers in boutique wineries, have changed the profile of Greek wine forever. By the 1980s, the country’s foreign-trained oenologists were flocking back to the country, keen to unlock the country’s advantages and take advantage of its unique indigenous grapes. These returning winemakers brought with them modern techniques and sought out cooler climates to produce wines that blended the best of old world and new. As a result, Greek wine today ranges from ripe but fresh reds to finely boned, balanced whites and
luscious sweet dessert wines. And there is plenty of evidence that the world is taking note. Greek wines have been consistent winners in the Decanter World Wine Awards, picking up the Regional Trophy and Gold Award in the 2013 competition. Where the industry goes from here is perhaps the more intriguing question. What strikes the visitor to the Athens Airport duty free shop is how many wines are made solely from international varieties or feature them in dominant proportions. This is as much a reflection of the tastes of international travellers as it is a commentary on Greek wine, but it does illustrate the trend of planting the ubiquitous Cabernet, Merlot, Sauvignon Blanc and Chardonnay grapes or blending them to make them more appealing to international palates. In some ways this seems sensible; many of Greece’s grapes are hard enough to pronounce, let alone sell to casual drinkers. But it would be a terrible shame if the only Greek wine sold and drunk in any quantity outside Greece was that made from grapes available everywhere else. Improved marketing and a concerted focus that champions the unusual and the traditional has the potential to create a sustainable future for Greek wine. So as you drift from party to party at Posidonia, pay more attention to that bottomless glass and if you don’t like the contents, ask your friendly barman for something less pro-nounceable. ●
combines native varietals Kotsifali and Mandilari with Syrah to create a red that legendary London wine merchant Berry Brothers and Rudd says is “reminiscent of the Northern Rhone but with greater roundness and flesh”. More a food wine than a party glugger this is great value in a smart package with a tin top for freshness. For only very little more money, why
not try one of this year’s Decanter Gold Award winners, the 2012 Gaia Thalassitis, Santorini. A classically proportioned Greek white, with a zesty lemon fruit base, the Decanter judges found this “superbly layered with gooseberry, lime and a slight saltiness”, with “the flavour profile of a margarita and perfect with chips and salsa”, which certainly sounds like a party wine to me. ●
Don’t beware of Greeks bearing wine Neville Smith uncorks a new regular column
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t’s fair to say that Greece’s wine industry sometimes makes it hard for itself to be appreciated. Forever tarnished by memories of Retsina and oxidised holiday plonk, few people think Greek when they want to share a smart glass or two or sit down to dine. But as with so much else of this enchanting, infuriating country, Greek wine has plenty to offer. The country’s vinous heritage is as old as its history and just as tangled. A reduction of area under vine since the 1960s, a move away from cooperatives churning out the merely drinkable towards quality
Two to try Despite the strides made in recent years, buying Greek wine can still be a challenge outside of the country. There are a number of internet-based specialist importers and retailers who should be able to meet most requirements so the best advice is to focus on one or two varieties or regions and dig around to see what’s available. Wines of note include the 2010 Domaine Lyrarakis, Okto Red. This
Issue TWO 2014
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REGULAR Books
Our fascination with maritime tragedies Paul French selects some of his favourite titles associated with shipping disasters
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he tragic sinking of the South Korean ferry off the southern coast of Korea in April (pictured) highlighted once again the dangers faced by mariners, passengers and shipping. These days advanced safety procedures, improved maritime law and codes of conduct mean disastrous shipping tragedies are as rare and as shocking as plane crashes. But as long as men have taken to the water there have been catastrophes. The term ‘The Cruel Sea’ was coined by the author Nicholas Monserrat, who’s 1951 bestseller of the same name was a novel, based on the author’s own experiences, following the lives of a group of British sailors fighting the Battle of the Atlantic during World War II. It remains a classic of seafaring literature and focuses on the merchant seamen providing escort services to the Allied convoys in all kinds of weather and with the constant threat of being sunk by German U-Boats. If I had to pick one other great
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novel highlighting the hazards of seafaring it’d be Joseph Conrad’s Typhoon, published in 1902, also based on the author’s own experiences as a merchant seaman. Conrad thrillingly describes how the steamer Nan-Shan sailed into a typhoon in the northwestern part of the Pacific Ocean.
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As long as men have taken to the water there have been catastrophes
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Of course, it’s impossible to talk about maritime disasters without mentioning the Titanic and its infamous collision with an iceberg in 1912. It seems we never lose our fascination with the Titanic - Elizabeth Kaye’s Lifeboat No.8 is a short, but powerful, e-book recently published. Kaye focuses on one of the first lifeboats to launch and those who managed to escape, including the Countess of Rothes, the wealthiest woman aboard the ship. Interestingly the book also
tells the story of the Titanic’s valiant wireless operator, Jack Phillips – the man who sent out the world’s first ever SOS signal. More than a century later, we’re still captivated by the Titanic and its passengers, but of course there have been other tragedies involving passenger ships. In Doomed Ships naval historian William Miller recounts the dramatic stories behind a host of illfated passenger ships starting with the torpedoing of the Lusitania in 1915, the capsize of the Oriana during a Chinese typhoon, and others that have become maritime disaster legends such as the Morro Castle, Normandie, Andrea Doria, Europa, and many other ships whose maritime lives ended in catastrophe. Individual tragedies are also well covered. In The Caliban Shore Stephen Taylor tells the tale of the The Grosvenor, one of the finest East Indiamen of her day. She ran aground on the treacherous coast of southeast Africa in 1782. An astonishing number of her crew and passengers, including women and children, reached the shore safely, but many castaways drifted hundreds of miles away to the wild coast of Pondoland. Slightly later Jonathan Miles’s Medusa The Shipwreck, The Scandal, The Masterpiece is a riveting account of the Medusa, the flagship of a French expedition to Senegal in 1816 that ran aground off the desolate West African coast. The evacuation of the frigate was chaotic - 146 men and one woman were herded aboard a makeshift raft that was then abandoned in mid-ocean, cut loose by the convoy of lifeboats which had pledged to tow it to safety. Both shipwrecks also inspired great works of art. George Carter’s The Wreck of The Grosvenor was a well-known work from an artist best known for his painting depicting the death of Captain Cook. The Medusa tragedy was captured in The Raft of the Medusa, a famous oil painting by Théodore Géricault, that is now part of the Louvre’s collection in Paris. Maritime tragedies continue to alarm us, and to capture our imagination. The world’s oceans remain cruel. ●
maritime ceo
Travel
Unwind on a Greek isle Eytan Uliel picks out some of the best islands in the Mediterranean
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or those coming to Posidonia, take a few days off pre- or post-show to see some of the Mediterranean’s greatest sights. For those with just a couple of days to spare, navigate your way to the Saronic Islands in the Aegean Sea (37 nautical miles from Athens so a comfortable day’s sail; under three hours if you choose to go by daily ferry or hydrofoil). First stop: Hydra Island, which as the name suggests was famous in ancient times for its springs. Today it has only one small town – Hydra Port - which boasts white-washed buildings cascadeing down the hill towards the harbour, connected by steep stone streets and staircases, all lined with plenty of shops, restaurants, and art galleries. A compact gem that is absolutely perfect for walking and exploring. As an added bonus, all cars and motorcycles are banned on Hydra. So unless you fancy a donkey ride (the main form of local transport – bring your chafing cream!) a boat really is the best way to explore the island. Something well worth doing, as there
Issue two 2014
are many otherwise inaccessible bays and natural harbours, all very beautiful, and all largely untouched. Continue on to Spetses Island, a gorgeous pine-covered isle to the west of Hydra. The teeny port of Dapia is postcard perfect with a very impressive town piazza. This is a place where the thing to do is nothing. Just sit back, relax, and soak up the unhurried atmosphere. Linger over a strong coffee frappe in a café, while watching wizened old men play backgammon. Or go for a leisurely stroll or bicycle ride along the seafront, enjoying the balmy weather. Or rent a horse-drawn carriage if you’re after something a bit more romantic (like in Hydra, motor traffic is banned in the town). And if you’ve got a boat, make sure to use it to visit some of the more secluded beaches and coves dotted all around the coast. But the best thing about the Saronics is that despite being easily accessible, they remain authentically real. Sure, these islands are popular with wealthy Athenians, but the mass-market European tourists have thankfully kept away.
Most people with more time to spend head for the Cyclades, with world-renowned islands like Mykonos and Santorini on offer. Not surprisingly then, these have become touristy, crowded and expensive. If you hanker for something different though, make your way to the Sporades instead, an often-overlooked archipelago in the Aegean Sea along the northeastern coast of Greece. Here the islands are covered in lush forests, and you’ll find jaw-dropping scenery, ancient ruins and picturesque villages, set in waters that are probably the cleanest you’ll find anywhere in Greece. Not for nothing are the Sporades known as ‘the Emeralds of the Aegean’. Skiathos Island is the best known of the Sporades, so it can get pretty busy in the summer months, although with 65 beaches to choose from, you probably won’t even notice. Koukounaries Beach is widely regarded as Greece’s best, and was recently included in a list of the world’s top three beaches. Just as good is Big Banana Beach – a glorious crescent of golden sand, as the name suggests. Skopelos Island is a laid back, pine-covered isle every bit as beautiful, but far less visited than Skiathos. Until a few years ago, this isle was known mainly for its local cheese pie and its sublime nature walks. Then the film version of Mamma Mia was shot here - the producers felt Skopelos best encapsulated the spirit of the Greek islands, and who could argue? Make sure to visit the stunning Ioannis Chapel, built high on the rocks and reached via a series of steep stone steps. Skiros Island is the largest and least visited of the inhabited Sporades. If you want quiet uncrowded beaches, and somewhere to experience Greek island life untouched by mass-market tourism, then this is the place for you. But that’s just the beginning though. Only four of the 24 Sporades islands are inhabited. More often than not you’ll have them all to yourself. You’ll leave wishing you had an extra two weeks to spare. ●
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REGULAR GOLF
Mixed opinions about tricky fourth at Rye
Every issue of Maritime CEO we ask someone to describe their alltime favourite hole in golf. This issue, Simon de Courcy Hughes from Rodskog Shipbrokers describes his fears on the south coast of England
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have been asked to give an example of the one and only best ever golf hole that I have played. I don’t see the point in telling the readers my best hole as it would be very boring for everyone as I would be taking
you through my best shots, which in any case are few and far between. What I do want to do is tell you about is the famous cricketer, Ted Dexter’s favorite golf hole. I was playing at Sunningdale and arrived at the halfway house, enjoying a sausage roll and a beer with my playing partners, when Ted Dexter arrived with his group. We were on the old course and he was on the new course and the halfway house looks after both courses. I recognised the former England cricket captain and said, “Hi, I have seen you at Rye. Are you a member there as well?” He replied that in fact he was not a member of Rye, my then home course in the south of England.
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However, Dexter said that he played there often (including the President’s Putter – a regular golfing duel between Oxford and Cambridge universities) and his favourite golf hole in the whole world was the fourth at Rye. He continued saying that if he was told he could only play one hole before he died it would be that one. The intimidating fourth at Rye is a 411-yard, par 4 with a very narrow fairway and thick grassy sand dunes sloping on both sides and a small raised green. When the wind blows – which is most of the time – it’s a killer. My reply to the England cricketing legend: “If there was one hole in whole world that I was able to never have to play again it would be the fourth at Rye.” ●
When the wind blows – which is most of the time – it’s a killer
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maritime ceo
Yachting REGULAR
The secret archipelago Anglo-Eastern’s Peter Cremers is in two minds about revealing his ultimate sailing destination
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know I should not do this, it’s self defeating: writing about an archipelago easily in reach from Phuket, with hundreds of beaches, bays with absolutely no tourists, a few fishermen, and the odd little settlement of people trying to make a living out of what nature brings them to their doorstep. The Mergui archipelago in Myanmar was a destination we longed to visit for many years, and finally we made it there last Christmas. It took a bit of preparation though. Whilst Myanmar is opening up, permits and the fees they command (cash in unused US dollar bills, please) are an indication that the country is not there yet. The port of entry is Kaw Thaung, (Victoria Point during British rule) a charming little trading post across the river of the Thai border town of Ranong. It’s there that we met ZoZo, our mandatory local guide, who stays with us onboard for the whole journey, just to make sure we do not go somewhere we should not. This comes just after we have surrendered our passports to the local authorities for the whole voyage. ZoZo came onboard with a small laptop sized bag, dressed in a perfect mega yacht outfit, a present no doubt from one of his earlier more glamorous assignments.
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We will never find out how he intended to live out of this spartan luggage for a whole week as unfortunately tooth pain on the second day out led to a forced repatriation. On our way out we met him again with some measure of relief, as we had already fantasies about him being jailed or worse for leaving us intruders uncovered . So there we went: seven days, 12 islands, 18 or so bays, one resort where we landed our guide, two villages, flat water and 15 to 20 knots of breeze day after day. This is the place where one has every day the exclusive use of a bay for lunch and another one for dinner and overnight, with the occasional other yacht somewhere in the distance or asking to be forgiven for sharing the same scenic spot. Day anchorages sometimes had to be shared with fishermen In the long wet season the place gets a fair amount of rain resulting in a thick green rainforest dropping right from the hills up to the beach. Behind one of the beaches we discovered traces of recent human activity with heaps of empty shells tucked around what must have been a fire pit. On sailing out we crossed a Moken family on their wooden boat coming in. There’s just a couple of thousand of these nomadic sea
Seven days, 12 islands, 18 or so bays, one resort, two villages, flat water and 15 to 20 knots of breeze day after day
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Issue TWO 2014
gypsies left in this archipelago these days. We were not impressed by what we saw underwater, it looked as if most of the coral was damaged by either dynamite fishing or the tsunami or both. But then, remember, we no longer had our guide onboard. On balance a good thing, as the kayaking, beach walking, bird watching or simply mangrove explorations were second to none. Charts were remarkably wrong which did add to the adventure, at least that’s how we look at it now, not so at the time when we painstakingly slowly tried to find our way in between shallows and reefs. Considering there are 800 islands in total and it’s 200 miles from south to north, we just rushed through the most southern part of the archipelago. For those who would like to track our itinerary we covered Hastings – MacLeod – Loughborough (don’t worry, we’re still in Myanmar) – Pila – Lampi and back to Hastings. After eight days with fresh food completely depleted we reluctantly sailed back into the busy lanes of Kaw Thaung for clearing out and, more importantly, the recovery of our passports. We saw ZoZo passing by on a fast dinghy on his way to a 76 m, twomast sailing yacht going through the clearing in routine – with a big smile on his face, obviously happy, either with his tooth repaired, or, who knows, expecting a dentist on a yacht of that size. ●
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The Secret REGULAR BROKER
‘Back stabbing, jealousy and intrigue’ Every issue we seek someone brave to describe the realities of a sector within shipping. This time, a shipbroker reveals all
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xotic travel. Big deals. No real qualifications required. A wonderfully unregulated business. Shipbroking just seems to have it all for the aspiring wheeler dealer, especially if academically you don’t pass muster with the investment banks and their (supposed) fast track to boundless riches. Like anything in life, it’s not always what it seems to be. It’s Posidonia again, a particularly stressful time for brokers who seem to make up an increasingly vocal part of the attendees at the biannual shipping jamboree. Were you on your company’s list to attend in the first place? If not, should you be nervous that your colleagues are going to be pinching all your clients down there, or relieved that you can get on with some real business whilst everyone else is partying? Got your easyjet tickets and your room at the Astir Palace? Great, but how is your party invite list shaping up? Plenty of yacht trips and private dinners with the big dealmakers or lonely days
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by the pool before meeting up with the other brokers in the Arion bar at midnight? Or perhaps you will return and make the ultimate broker admission of Posidonia failure: “Well, I did visit the exhibition a couple of times.” Posidonia – just like everything else in the wild world of shipbroking – is insanely competitive. There are a few truly accomplished brokers who feel they don’t need to attend, but in reality, anyone with a connection to the Greek market or the newbuilding business probably needs to be there. Great store is always placed on the social aspect of shipbroking and there are plenty of colourful characters in the trade who have kept many a restaurant, bar and nightclub in business, but in reality, that’s a sideshow. Quality, reliable information, the ability to execute a transaction and simple hard graft outweigh the court jester image brokers are forced to bear through the antics of a noisy minority. There’s plenty more to the shipbroking game than just that of course, and the fact that more and more business is now being concentrated amongst a limited number of bigger shops surely suggests that the days of the two-man ‘boutique’ and the long lunch are
disappearing. Clients now justifiably expect a lot more from a broker than the ability to mass circulate a cargo or ship to a load of other brokers. Modern communications have been both a blessing and a curse – communication costs have been slashed from the days of telex and having to prebook international phone calls, but now everyone talks to everyone. One result of this is that transaction costs for the parties in any deal have been reduced – you simply don’t get the daisy chain of brokers and resultant high commission charges that were part of the old days, but it makes life as a small player all the more difficult. There is nothing quite like the buzz of a cohesive, successful shipbroking shop. Thursday mornings would see elation from the guy who had finally managed to get a deal over the line late the previous night and commiserations for the one who had failed on charterparty details at 3.00 am, whilst there would be plenty of tales from those who had hit the town for a mid-week frenzy. Caffeine and bacon sandwiches would fuel another day of hard work, banter and camaraderie of working for a common cause. Likewise, the bear pit that is the trading desk of a shipbroking company when team spirit breaks down can be a desperate place to be. Back stabbing, jealousy and political intrigue are on a par with the worst tales from Wall Street. An ‘eat what you kill’ mentality, driven by the Holy Grail of the year-end bonus pool can see what looked like a great team disintegrate amidst acrimony and ruined friendships. So if you do see a broker lying by the pool during Posidonia, give him a break – he probably deserves a rest. ●
maritime ceo
The REGULAR Contrarian
‘Ask yourself: do you feel lucky?’ In the wake of April’s Korean ferry tragedy Andrew Craig-Bennett riffs Clint Eastwood as he takes shipping’s poor crew competency checks to task
T
he sinking of the ferry Sewol has shocked South Koreans. I hope it shocks everybody else. I particularly hope that it shocks shore staff – from superintendents to chief executives – in our industry. Captain Lee Joon-seok of the Sewol, who has now joined Captain Francesco Schettino of the Costa Concordia in the ranks of infamy, was the star of a promotional video for his employers, made in 2010, in which he expounds on the safety of ferries. There is an attitude of mind – a very common one – amongst people working ashore in shipowning and shipmanagement, which maintains that, “Our people are the best!” and, at the same time, refuses to examine whether that statement is true, for fear that it might not be. There are people – and you, dear reader, may be one of them – who would not dream of operating a ship for 20 years without a docking or a survey, in the hope that everything holds together, but who say that they don’t want to examine the actual competence of their officers and ratings, for fear of finding that they are incompetent, and thus that their ships are unseaworthy in the eyes of the law. Planned maintenance for machinery is a requirement; planned maintenance for the human element is, it seems, unthinkable. Any lawyers reading this have already muttered the words, the Hong Kong Fir. The Hong Kong Fir was a 26-year-old ship, bought by Hong Kong owners during the boom brought on by the Suez Canal closure of 1956 and immediately chartered on the Baltime form to K Line for two years. Her engine room staff were incompetent and she constantly
Issue TWO 2014
broke down; in 1962 the Court of Appeal decided that she was unseaworthy (but not unseaworthy enough for K Line to terminate the charter – they had to claim damages). This is one of those cases, like the Lady Gwendolen – the Guinness tanker in the fog – that anyone who works in shipping, from office boy upwards, needs to know about. So far as we can tell, the officers of the Sewol look to have been blitheringly incompetent. Evidently, their employers did not know this, and had not troubled themselves to find out. Ferry operators and their staff across the world are notorious for complacency. They do the same things every day and they ‘switch off’. It does not matter what country you are in – New Zealand, Norway, Britain, Greece, the Philippines, Egypt – in fact, anywhere where citizens have bodies of water to cross, you will, sooner or later, have a ferry disaster, because complacency knows no national boundaries. From the point at which he left his inexperienced third officer alone on the bridge to undertake a demanding passage for the first time, through his successive failures either to grasp the situation (when was the MAYDAY message sent?) or to deal with it (why were the liferafts not deployed?) Lee, his employer’s paragon of safety, showed himself to be lethally incompetent. The point that I am driving at is that his employers did not know this. They thought he was wonderful. Would you choose to fly onboard an aircraft whose captain had not
been inside a simulator or seen a check pilot for many years, but whom the airline held out, on the basis of their own opinion, as a Sky God? As every accountant in the world knows, and as our industry chooses to forget, you cannot manage that which you do not measure. So how do we measure competence? To be able to carry out a given job function, we need to have the knowledge, the skills and the behavioural attributes essential for that function. These are defined in units of competency. One or more units of competency may be required to be able to perform a job function safely to the required standard. To manage performance, we need to carry out regular assessments in the workplace, measured against those performance standards. This will identify any gaps and blind spots. These can be closed by a programme of learning events targeted precisely at the gaps that have been found, followed by further assessment to confirm that the gaps have been closed. This is competence assurance. Planned maintenance: good for machinery, good for people. Now ask yourself two questions: 1. Have I ever boasted about how good my company’s sea staff are? 2. Do I feel lucky? ●
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MARPOLL REGULAR
Your thoughts Every couple of weeks we pose a topical question on Maritime CEO’s LinkedIn page. With the votes tallied we show the results as well as some strident comments from voters Does the rise of social media mean shipping has to change its attitude about its public image?
Are quality and safety likely to drop in the offshore sector with too many new operators and yards?
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“
The benefits of social media are as tools used internally in bringing together a diffuse company Yes 79
Yes, specifically in remote areas such as West Africa where many regulators are corrupt Yes 68 or incompetent No 32 allowing room for cowboys in the offshore industry to rise
”
No 21
Yes 79
Yes 68
No 21
No 32
When will private equity’s interest in shipping wane?
Can women plug the crewing gap?
“ 2014
13
2015
26
2016
21
2017
13
2018
27
Private equity is a razor sharp 2014 breed 13 who move 2015 26 their money either across 2016 21 2017 13 or markets organisations 2018 27 driven by the highest yield at a mitigated risk
”
“
As an industry we need to make more effort to attract, develop and retain No 39
Yes 61
Is LNG the ship fuel of the future?
“ No 26
64
”
Yes 61
No 39
Shipping is no longer a clear long-term investment as overcapacity hits any ‘hot’ sector within two years
Yes 74
”
It is said that a good salesman doesn’t sell the goods, but creates the market. Yes 74 a phony tiger balms Many No 26 have disappeared with this short-term mantra
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There will be oddities, but in a future without heavy fuel oil, gas is the Yes 61 screamingly obvious No 39 choice Yes 61 No 39
”
maritime ceo
smm-hamburg.com
53°
33
ham‘ 47“ N, 9° 58 ‘ bur g 3 3“ E
keeping the course 9 – 12 september 2014 hamburg the leading international maritime trade fair new in 2014: the SMM theme days
scan the QR code and view the trailer or visit smm-hamburg.com/trailer
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