Singapore: As Maritime CEO celebrates passing the 300 interview mark we are spending this week looking through who said what and making themes each day. Today, we turn our attention to shipmanagement.
Just last week, oracle-like Bjorn Hojgaard, ceo of Hong Kong’s Univan Ship Management, predicted the sector was due to consolidate. As if on cue yesterday it was announced that US firm Crowley Maritime was buying out Asian firm Accord Ship Management.
As it stands roughly 20% of the 60,000 merchant ships afloat are under full technical third party. “There’s a lot more up for grabs,” said Hojgaard.
Consolidation among shipmanagers is inevitable, he said. Remarkably there are around 600 managers worldwide, but the vast majority are very small. According to Univan data, around a third of all managed ships are managed by the top 20 managers. “It is still too fragmented,” said Hojgaard, noting that there are not many industries where there are 600 players of which the top 20 only control a third of the market.
Fleet Management boss Kishore Rajvanshy is also of the opinion the shipmanagement industry will inevitably merge, and he told Maritime CEO he didn’t rule out pursuing acquisitions himself. He also had a word of warning for fledgling shipmanagers. “Smaller players will find it extremely difficult to compete,” he said.
Another believer of the coming age of shipmanagement consolidation is John Pinkham, managing director of Belgium’s Diamond Ship Management, but he added a caveat to the argument. “There will be further consolidation in the larger fleet segments such as tanker and dry bulk,” he said, “but niche segments, such as reefer or reefer container will always be needing a different quality approach, which only can be provided by specialist teams.”
“The end result needed is to control the cost structure in a service company,” said Vijay Rangroo, head of MTM Ship Management in Singapore last July. He added: “If consolidation is the way ahead then we will see a significant increase. But if companies find other ways to do so, independent shipmanagement companies will survive.”
Growing a managed fleet is vital to remaining in positive territory, argued Thome Ship Management ceo Carsten Brix Ostenfeldt when interviewed in the middle of last year. “Management fees have not developed much in the last three years,” he admitted, “so we have to get more ships.”
“Shipmanagement overall is a very positive story,” Univan’s Hojgaard maintained, something that is very much echoed by Anglo-Eastern’s Peter Cremers.
The rise of private equity in shipping is a boon for shipmanagers, explained the ceo of Anglo-Eastern when interviewed late last year.
Growth in the sector is coming from America, he said.
“Money in shipping is coming from the US,” he said. “Private equity is geared towards using shipmanagers.”
Rajaish Bajpaee, the ceo of Bernhard Schulte Shipmanagement (BSM), was equally bullish when he met up with Maritime CEO last year.
“Just by looking at those repossessed vessels by the banks, old tonnage to be scrapped, etc,” he said, “I already see immense opportunities for shipmanagers like BSM where we offer not only shipmanagement services but also a cradle of value added services.”
Going beyond just shipmanagement is something Hong Kong’s Wallem Group is also keen to highlight.
Group managing director Simon Doughty told Maritime CEO: “Much of the marketplace views us too narrowly as just shipmanagers. We are a maritime solutions company.”
Doughty is seeing plenty more business coming from Europe, a trend he expects to continue. “It’s time for owners in Europe to look at their whole businesses,” he said, “and make efficiencies by outsourcing.”
Wallem is on the right track by offering more services, said one of its rivals when interviewed late last year. Shipmanagers have to diversify to survive, suggested the head of Evangrove Shipping. Captain Rohit Shrivastava is the boss of the Hong Kong- and India-based shipmanagement firm. He said, “Providing just shipmanagement is now an unviable proposition.”
Whenever Maritime CEO gets the chance to interview leading shipmanagers we naturally quiz them on crewing concerns, and many reveal plenty of worries for the future manning of the world’s merchant fleet.
For instance, the supply and demand imbalance for officers remains a major concern for the shipping industry, said the president of InterManager, the association of leading international shipmanagersc last Agust. Gerardo Borromeo, who is the ceo of Philippine Transmarine Carriers, told Maritime CEO, “The inherent disparity between an almost 14-year timeline needed for the development of global maritime professionals – from first year college cadetship to the attainment of a Master’s license, as against the 12- to 15-month time frame to build vessels today, will continue to provide the biggest challenge to managing the supply and demand gap.”
The “biggest issue” facing the industry at the moment is attracting the right talent to a career in shipping, said Chris Stone, coo of Britain’s Bibby Ship Management.
Stone told Maritime CEO: “We all have a duty to ensure that the shipping industry is sufficiently attractive to offer young people looking for the right challenge a long term career.”
The quality of seafarers handling tankers continues to worsen, according to one of the world’s leading tanker managers. Lars Modin is the managing director of International Tanker Management (ITM), part of V.Group, and his views on handling tankers are well worth noting.
Discussing seafarers onboard tankers, Modin toldMaritime CEO: “The quality of the crew is a serious matter and I believe this only can continue the way we have seen the last decade, i.e. downwards.”
There are many explanations for this, he said, but in general the “old-fashioned” seafarers are no longer and cannot train the newer generations.
Tomorrow in the ongoing Maritime CEO 300 series we turn our attention to the offshore sector. [09/04/14]