Rarely if ever have Italian shipowners had so much introspection about their future. They describe their plight to Splash.
In putting our Italy Market Report together, Splash has been in touch with many of Italy’s best-known names in shipowning. They discuss the markets, their plans and how to make the most out of these trying times for shipping. Many of those interviewed ponder what the future is for family run shipping lines in a nation where bank-led restructuring has become the new normal.
There are three main factors for the present crisis in some shipping segments according to Premuda’s president, Alcide Ezio Rosina: the emerging role of China in the shipbuilding industry, excess of credit from banks until 2008 and private equity’s liquidity hitting the market in the last few years.
“From financial investors too much money flowed into shipping in a moment when profit margins and returns on investment were already low,” says Rosina, adding: “The huge amount of money available for shipowners obviously played a large part in the present tonnage oversupply situation.”
Premuda is a very old Italian firm whose origins date back to 1907. The company is very close now to sealing an agreement with the fund Pillarstone Italy (participated by KKR, Unicredit and Intesa SanPaolo) interested at buying banks’ loan exposure worth almost €400m ($443m). Once the deal is closed the company’s business will be relaunched with an injection of fresh new capital.
Looking ahead Rosina wondfers whether there will be still space for family model shipping companies in the future.
“I have been in the business for 62 years now,” he says, “and I have lived through several downturns in my career but this time something different from the past is taking place.”
While 62 years is indeed a long time, Rosina is pipped when it comes to longevity by Aldo Grimaldi, the doyen of Italian shipowners, Now 93, he’s still firmly at the helm of Genoa-based Grimaldi Holding, which currently owns four ropaxes.
Grimaldi says the most noteworthy change in the industry in his lifetime has been the extremely advanced technology applied to ships during the design stage. “This means we can see how the ship will perform even before we build it,” he says.
The march towards autonomous ships is also something that amazes the Italian. “Thanks to evolution in the field of electronics and computerisation, with a small number of crewmembers, we can manage and monitor the entire ship – even automatically – from the bridge and engine room control station,” he notes.
Messina chases niches
Market and geographic specialisation is helping Gruppo Messina to defend its market share on the trades between Europe, Africa and Middle East in the roro and container trades.
The Genoa-based shipping company Ignazio Messina & C. is headed by different members of the Messina and Gais families.
In all of its 70-plus year history, Messina has rarely had to deal with so much growing competition, financial hurdles, low freight rates and political instability as now.
Stefano Messina, chairman of Gruppo Messina, tells Splash: “The current market situation in shipping requires changes in assets, in governance and in commercial strategies. At the same time, thanks to the specialisation of our fleet in relation to the markets we serve, we maintain a competitive position.”
D’Amico’s dip in the pool
Italy’s d’Amico Group is has upped its Asia-oriented business strategy with the launch of a pool of supramax bulk carriers.
Cesare d’Amico, main shareholder of the company together with his cousin Paolo, the past president of the Italian shipowner association, Confitarma, is at the helm of one of the Italy’s leading maritime transport groups active in the management and operation of dry cargo vessels and tankers.
The new pool, called Medi Supra Pool Management, is dedicated to supramax bulk carriers from 53,000 to 64,000 dwt and is headed by Thor Andersen, based in Singapore in cooperation with Lucio Bonaso, the ceo of d’Amico’s dry cargo unit in Monaco and Ben Wilkes, the coo of d’Amico dry cargo in Singapore.
With a strong and diversified international presence with offices in Monaco, Singapore, Stanford and Vancouver, d’Amico’s technical and commercial structure may be functional also to financial institutions, banks and institutional investors who have to manage their marine assets. “We are obviously interested even to consider partnerships with funds that want to invest and enter in our pool,” emphasises Cesare d’Amico.
Dry bulk debate
Angelo D’Amato, ceo of Perseveranza di Navigazione of Italy, takes issue with all the ultra pessimists when it comes to dry bulk.
“I do not agree with the provisions I have heard recently by many analysts saying that the industry seems structurally compromised. Dry bulk is a cyclical business and good freights will return,” emphasises the head of the Naples-based shipping company. “What I note these days is that finally the industry has started to use massively the only tools available to rebalance the supply and the demand: accelerate scrapping even for less than 20 years tonnage and layup vessels.”
Perseverenza di Navigazione is today more a tanker company rather than a dry bulk one, as the company’s fleet is made up by one LR1, three handysize tankers and three bulk carriers (one handysize, one panamax and one post-panamax).
D’Amato’s glass half full view on dry bulk is one shared by Nicola Coccia, chairman of Ravenna-based Gestioni Armatoriali.
“Dry bulk is not dead,” Coccia says, adding: “This shipping segment is progressively rebalancing thanks to demolitions and newbuilding conversions. It will take some time to experience a significant upturn in bulk carriers rates, nobody can say when it will happen, but sooner or later the market will rebound.”
Gestioni Armatoriali owns a fleet of 12 ships: 9 post-panamaxes and supramax bulk carriers and three handysize tankers built from 2006 to 2012.
Tanker plays
Rome-based Augusta Due is a shipping company founded in 1994 by the Brullo family and active in the liquid bulk market with a focus on Italian cabotage and short sea routes in the Mediterranean.
Raffaele Brullo, ceo of the company controlled by Mednav Group, admits despite the tanker upturn caution is the company’s watchword these days, chastened by tricky restructuring exercises.
“Like many other firms also Augusta Due was obliged to restructure its financial exposure and, as a consequence, our current strategy is now to hold and consolidate the business respecting all the convents inked with the lenders,” he says, stressing no newbuilds are on the cards anytime soon.
Another tanker player in Italy is less cash constrained and may make moves in the market soon. Following the sale of four modern gas carriers to the Rotterdam-based shipping company Anthony Veder last year, LGR di Navigazione intends to strategically refocus on medium range product tankers. Carlo Pontecorvo, the Italian shipowner at the helm of LGR, says product tankers offer more interesting returns in the near term. “In case of interesting opportunities, LGR will be obviously prepared to undertake new investments in ships,” Pontecorvo adds.
Family headaches
Elbana di Navigazione is a small shipping company based in Piombino. It is thinking about investing in new ships for a fleet renewal supposing that Italian banks decide to come back to support the business. Fabrizio Freschi, ceo of the company, says: “It’s vital for the shipping industry in Italy to witness a return of the traditional national lenders to the business”.
Elbana di Navigazione owns four modern oil-chemical tankers ageing from 2001 to 2009 and between 5,000 and 7,000 dwt size plus the flagship Letizie Effe, built in 2008 and with 20,000 dwt capacity. The company is keen to add new ships to the fleet, Freschi tells Splash.
Michele Bottiglieri is a seasoned shipowner based in Naples, part of a family with a long tradition in the shipping business. Like Freschi, he is desperate to see Italian banks come back to shipping.
After many years working with his sister at RBD Armatori, he founded his own shipping company named Michele Bottiglieri Armatore in 2008 and today controls a fleet of five modern bulk carriers: three kamsarmax and two post-panamax units aged between four to six years.
How a small operator might survive in the near future is something uppermost in Bottiglieri’s mind when Splash calls by.
“The work of the shipowner is still the same,” he says. “Nothing has changed in the way of operating ships. However, some major changes occurred in the ship finance market with the funds entering the market and the banks moving away, especially the Italian lenders.”
Bottiglieri wonders how a small shipping company might obtain financial support for further investments in the coming years. “Since we are too small for listing, we can only ask money from the banks which have disappeared from the shipping market. That’s why my view for the future is quite pessimistic: I can’t see a way to get money to invest and increase my fleet.”
This lack of easily available capital is something that is frustrating expansion plans at Bottiglieri’s old company, RBD Armatori, too.
Opportunities often emerge for canny shipowners in times of crisis but with a lack of financial support it’s hard to snatch them. That’s exactly the feeling expressed by Giuseppe Mauro Rizzo, ceo of RBD Armatori, which controls a fleet of 17 ships made up of six aframax tankers (including 4 LR2) and 11 bulk carriers (four capesizes, four post-panamaxes and three panamaxes).
Looking at the present shipping market trends, Rizzo can see a structural crisis.
“I’m wondering,” says, “what will be the future of family-business companies in a fast changing framework where financial systems and traditional lending entities are not working as they should.”
Another Bottiglieri is also having to grapple with the strictures of being a family run line in Italy.
Mariella Bottiglieri, managing director of Giuseppe Bottiglieri Shipping Company, founded more than 150 years ago by Captain Giovanni Bottiglieri, thinks that some important changes are taking place in the shipping industry, mainly due to the entry of the private equity and hedge funds in the sector.
“We see that some private equity investors are trying to exit the market now,” says Bottiglieri, adding that financial investors and traditional shipowners have different business approaches. “The latter looks at long-time investment returns with an industrial vision and the final aim is to hand over the firm in good health to the following generations. On the contrary, private equity funds aim at short-term financial gains and don’t care about the company’s long-term strategies. That’s why I cannot imagine a happy marriage between financial investors and traditional shipowners.”
Anyway there might be some exceptions since the family-business model might need some sort of renovation, according to Bottiglieri’s thinking. “Times are changing also in shipping and companies like ours must modernise. In my opinion a partnership between a shipping company, as a major shareholder, with a financial investor, as a minority shareholder, might fit for the future. Selling more than 50% of Giuseppe Bottiglieri Shipping Company’s shares is definitely something not of interest for us but, in the next two to three years there might be the possibility that our company will consider a partnership also with a financial investor as a minority shareholder.”
Giuseppe Bottiglieri Shipping Company today controls a fleet of 15 ships: four chemical tankers (40,000 dwt), 10 post-panamax bulk carriers (95,000 dwt) and one capesize (186,000 dwt).
Avoiding private equity
Following the abandonment of the dry bulk market with the sale of some assets last year, Dalmare’s future strategy is to focus on the liquid bulk business mainly in the Mediterranean. Gaetano D’Alesio, managing director of the company, together with his cousins Mauro, Francesco and Antonio, explains why the company wants to quit the deepsea trades to intensively focus on port bunkering services in Leghorn-based tank farms and on cabotage services in Italy and the Mediterranean.
“Since Dalmare is a family owned company and cannot compete with the new shipping giants backed by private equity investors, we decided to follow a new business strategy oriented to the niche market rather than operating on the main international deepsea routes,” says Gaetano D’Alesio, pointing out that the two 40,000 dwt MR tankers, Aquaviva and Caletta, are still operating on the spot market. “We are interested at exploring new business opportunities in the Mediterranean as we did in Algeria where we have chartered out one of our bunker vessels for a long time contract with the national oil company.”
This article was first published in Splash’s Italian Market Report 2016, which launched last week. Readers can access the full magazine online for free by clicking here.
