London: Last week it was announced that after more than 120 years of association, E. A. Gibson Shipbrokers will split from its parent company, Hunting, the FTSE 250 international oil services group.
The transition will, subject to conditions, complete on 31 March this year when E. A. Gibson Shipbrokers Ltd will become a fully independent, employee owned company. The ownership of E. A. Gibson Shipbrokers Ltd will transfer to an employee benefit trust, which will be run on behalf of and for the benefit of all the worldwide employees of E.A. Gibson Shipbrokers Ltd.
The Gibson news is the latest shuffle of the deck in what has been a momentous few months in the shipbroking world with the mergers of Maersk Broker and Lightship Chartering, ICAP Shipping and Howe Robinson, Clarkson and RS Platou, and finally Braemar and ACM Shipping.
Managing director Nigel Richardson, who has been with Gibson for more than three decades, is not in a hurry to follow this merger trend.
“Certainly we have seen major changes in the shipbroking environment during 2014,” he concedes. “However, these mergers and acquisitions are unlikely to be as prominent in the year ahead. Realistically the newly merged companies will have to bed down personnel into their new positions and we have also seen a number of brokers seeking new employment.”
Gibson will only consider an acquisition on the basis that it is the right fit for the company, Richardson says. During the past six years the broker has been presented with a number of acquisition opportunities, he reveals. “We are currently not looking at either merger or acquisition opportunities,” the broking veteran stresses.
As a company of about 180 employees, Gibson presently operates out of London, Singapore, Hong Kong and Houston.
While other brokers have morphed to offer a whole range of other shipping services, Richardson is adamant that Gibson’s future will see shipbroking as its core business.
“We are not seeking to turn the company into a goliath of shipping activities and lose our core focus or identity. We will leave that role to others,” Richardson says.
On the tanker markets, Richardson’s favoured sector, he reckons crude tankers are in the ascendant for the next three to six months.
A very limited number of anticipated VLCC deliveries in 2015 should help prop up the markets, he says.
The possibility of floating storage is another factor that can lead to a major spike in crude tanker earnings, particularly for VLCCs. The current spread between the present and future price of Brent is insufficient to justify tanker storage. “However,” Richardson says, “this situation may change depending how quickly we see the build-up of surplus crude in the market and whether it will be easily absorbed by land based storage facilities.” Developments in terms of China’s Strategic Petroleum Reserve should be followed closely, Richardson advises, as strong Chinese demand for crude can potentially alleviate the problem of oversupply.
The main downside risks to this generally more bullish outlook from an owner perspective are a further major decline in oil prices which will force the Middle East OPEC producers to cut their output significantly.
Similarly, once the Yanbu and the Ruwais refineries in the Middle East reach full scale operations, this will have major negative implications on crude tanker demand out of the region, primarily VLCC demand. At the moment, Gibson expects these refineries to reach full scale operation within the same time frame as the Jubail refinery – around six to nine months. On this basis, the impact of this new refining capacity coming onstream in the Middle East will be felt by the tanker market only in the second half of 2015. [13/01/15]
