Maritime CEO 100: Owners

Singapore: Launched in late January by shipping media veterans at Asia Shipping Media, Maritime CEO this week celebrates its 100th interview.

 

Every day we catch up with a top name in shipping to gauge their thoughts on the industry, with every Friday guaranteed to be a shipowner interview. Our aim is to cover every facet of the industry, but only from the viewpoint of the top echelon of management. In our first 100 reports we have met up with the heads of:

 

·     the world’s largest containerline

·     the world’s largest breakbulk operator

·     the world’s largest dry bulk operator

·     the world’s largest LPG operator

·     the world’s largest car carrier operator

·     the world’s largest shipowning grouping

 

Every day this week we have been bringing you highlights from our first 100 interviews, split into segments. Friday sees the Maritime CEO team – with 17 correspondents across the globe – focus on shipowners.

 

At the top of the food chain in our sector, bombarded by all and sundry, are shipowners, a rarefied bunch that the team at Maritime CEO targets like no one else. Every day, the Maritime CEO makes contact with the heads of 30 shipping lines, their names and details added to our database for our forthcoming shipowner-centric Maritime CEO global print edition. The results of our perseverance are contained below.

 

Soren Skou, the ceo of Denmark’s Maersk Line, was adamant that the liner sector needed further consolidation when we caught up with him in California in March.

 

Skou told us, “The industry needs to consolidate. The only way is through mergers as no one will be putting huge sums of money to acquire new companies.”

 

It’s not necessarily a matter of consolidation, argued the boss of Hong Kong’s OOCL, more a need for fellow liners to retain discipline.

 

“It is critical,” Andy Tung said, “that apart from the need for effective cost controlling measures on the individual carrier level, discipline in capacity deployment and the ability to hold on to sustainable freight rates will also be essential on the industry-wide level to help rebuild a more stable and healthier business environment for all.”

 

Meanwhile, when we were back at Maersk we were able to catch the insights of Hanne B. Sørensen, the head of Maersk Tankers. She warned that overcapacity in the crude sector is here to stay.

 

“The crude segment is the most challenged segment, with historically low rates, and an overcapacity that is not going to disappear in the near future,” Sørensen maintained.

 

Maritime CEO prides itself on being the first to the interviewing table, as evidenced by our fleet footed manoeuvres from our Hong Kong correspondent who bagged the first interview with Sabrina Chao, a couple of days after she had assumed the role of chairman of Wah Kwong.

 

“2013 will be the defining year,” Chao, 38, told Maritime CEO in our debut shipowner profile. “A lot of people won’t make it,” she added.

 

The trick in a downturn is to feel which way the wind is blowing. For the BW Group, headed by Andreas Sohmen-Pao, this has seen a remarkable transformation, ditching the group’s former bulk reliance for a far greater exposure to gas.

 

“We have shifted more emphasis into gas,” he said, adding that more than 50% of BW’s portfolio is now gas-related, the fastest growing area of business for the fleet.

 

In April, one of Taiwan’s richest men, Douglas Hsu, spoke to Maritime CEO about snatching opportunities to bag cheap ships in the downturn.

 

Now in his 70s, Hsu chairs the Far Eastern Group, which controls more than 200 businesses involved in everything from cement to banking. Among his diverse holdings Hsu is chairman of U-Ming Marine Transport Corp, one of the island’s most prestigious bulker names, and definitely one of Hsu’s favoured subsidiaries.

 

Ordering ships in this cyclical industry is like trying to catch a ball just before it hits the ground. When the Taiwanese tend to order, that’s a good marker traditionally that newbuild prices are approaching rock bottom.

 

“Is the market at the bottom, this is a difficult question to answer,” Hsu mused. “We are taking this period to make replacements. The market is so low – we are just making a strategic move – but this doesn’t show that it’s at the lowest level,” he said cautiously.

 

“Everyone is talking about whose costs are lower, which is why I’m engaging in this exercise,” he explained.

 

Not everyone is seeing this as an ideal time to expand. In May we met up with Li Xiaoming, the ceo of controversial Grand China Logistics.

 

Prior to autumn 2008 Grand China Logistics was one of the most exciting companies in the shipping industry, coming from nowhere to be a major owner, charterer and shipbuilder in no time, comparable to Kang Duk-soo’s STX Group in Korea in many ways. Like Kang, come the downturn Grand China’s initial look as an emperor of shipping was found to be bare of substance. Court cases rapidly piled up against the company, a subsidiary of the HNA Group, a vast Chinese conglomerate that counts among its many holdings, Hainan Airlines, the nation’s largest private airline.

 

Still, Li says the experience has changed the company’s modus operandi profoundly.

 

The fleet for one thing is a shadow of its former self, down from 100 at its peak to 38 ships today. Moreover, the aim these days is to wean Grand China from its spot chartering past to a far greater focus on contracts of affreightment. Li says there are no plans to expand the fleet at the moment, or to launch new routes. The company is working on scrapping older ships.

 

“We know that the second hand and newbuilding prices are both low at present, however, we will not order the ships at the bottom of the market,” Li says.

 

Still, while one part of the HNA Group has struggled there was another division primed for growth, namely HNA Tourism.

 

The 47,700 gt Pacific Sun was bought by the HNA Group from P&O Cruises last year. Built in 1986, the ship was Carnival’s Jubilee before repositioning to Australia where she made her maiden cruise from Sydney in 2004. 

 

Zhang Hao, president of the cruise venture, told us: “We are committed to building an outstanding Chinese cruise brand and promoting the development of China’ s cruise industry, this is our ambition.”

 

In a poll carried out by our sister publication SinoShip last year 78.3% of respondents said international cruiselines have so far failed to properly cater for Chinese holidaymakers’ tastes and needs. 

 

In the world of cruise shipping few people have made a greater splash in the last year than Clive Palmer, the Australian resources tycoon who is fronting the ambitious Titanic II project, a replica of the most famous cruiseship in the world now under construction in China.

 

“We thought a great way for the Chinese to break into the luxury shipbuilding market and give the Europeans some healthy competition would be to build a 21st century version of the Titanic,” Palmer said, declining to reveal the cost of the project. 

 

Maritime CEO's mission is to always get as close as possible to the thoughts and decisions of shipowners. Stay tuned for more! [14/06/13]

 

 

 

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