Long time shipmanagement commentator Edward Ion from Helix Media discusses the potential consequences of the Anglo Eastern – Univan tie up.
Anglo Eastern’s link up with Univan has sparked the usually private and conservative world of shipmanagement to life.
The decision by Peter Cremers’ led Anglo to swallow the 100+ strong fleet of Univan is a bold one but in many ways makes absolute sense.
One has long wondered why there has not been more of this kind of seemingly win-win merger in the industry over the past decade.
Even though the shipping industry itself has been through unprecedented cyclical swings in the past 10 years, the third party management sector has remained strangely immune.
There are reasons for this: it is never easy to force through M&A between companies that are still characterised as private, often family controlled and who guard their independence and relationships with owners with a fierce jealously.
But given the tumult and seismic shifts in the wider shipping sector which continue today, that must surely change?
For all the high profile of the larger managers and their ability to lead the industry, it is sometimes forgotten that independent third party technical ship management is still a relatively new business.
Four decades ago the idea of an owner entrusting his vessels to an outside manager with no connection to himself was unthinkable.
It has taken almost half a century for the idea of independent shipmanagement to become widely accepted.
And even today in some markets, especially among the massive ship owning community in Asia, the idea has been slow to gain acceptance.
It is estimated that out of the entire ocean-going global merchant fleet, less than 30% of vessels are managed by independent professional third party managers.
Admittedly many larger owners now claim their ships are managed by third party entities but the reality is most of these owners set up their own in-house manager and call them independent.
It’s a move which may fool charterers and please accountants (and some sections of the shipping media!), but the vessels are still ‘managed’ by the owning company.
So the relatively small number of vessels genuinely operated by third party independent managers means there is still tremendous scope for growth for professional third party managers.
The Anglo Eastern team and Univan both believe this and that is one of the major reasons behind Friday’s announcement.
No one likes to see the “big is better” argument win out in any industry, but the plain fact is that in ship management at least, the economics of scale really do win and bigger can certainly translate into better more often than not.
As the industry digests this fascinating move, many of the mid-sized private managers will no doubt be accepting this fact.
If shipping is compared to other industries, notably the finance sector, the idea of managing your own assets is rather quaint and old fashioned.
If you own assets, the value of which can always go up and down , then surely the most efficient way of managing those assets is to entrust them to a professional manager with the knowledge ,wider market perspective , purchasing power and expertise to ensure they are “worked” the best way?
The cult of the ‘ship owner’ is a strong one; no matter where in the world, it conjures up images of daring entrepreneurialism on the high seas. Owners remain ‘attached’ to their ships and not always in a hard headed economic kind of way.
But in today’s pragmatic business world where the optimisation of asset value is the key to success, then the time for the global third party ship manager has come.
After all: the promise: “We can make your assets work better for you” is an alluring one for most owners in the perennially tough market conditions they trade in today.
Anglo Eastern and Univan know this and others in the industry will come to realise it too.
So Friday’s M&A announcement in Hong Kong will cause ripples around other shipping centres across the globe.
It will not be the last in the shipmanagement sector.