Singapore: Maritime CEO is written with the shipowner in mind. The readership of the magazine is more than 90% c-suite shipowners, and all writers for the title are trained to write with the owner in mind. On the site, every Friday is a guaranteed shipowner profile. In our first 300 interviews we have interviewed some of the biggest names in every sector. Below we provide a snapshot of where rates are heading in each sector.
Starting with our most recent cover stars, the chairman and ceo of Singapore’s Epic Gas. Chris Buttery, the chairman of the fast expanding line, noted similarities of the gas market now and the bulk markets of the early 2000s when he led Pacific Basin in Hong Kong. The significant driving factor back then was bulk and the China story. For Epic, there’s now the gas and shale story. Both are “game changing” events, Buttery said. His thoughts echo the feelings of Siemens president and CEO, Joe Kaeser, who last month described shale gas as “the biggest shift of balance in the global economy since China joined the WTO”.
Epic’s ceo Lars Vang Christensen said: “The growth in gas is in many respects because owners like us are seeking replacement tonnage and there is all this talk about shale gas and predicted need for LPG carriers – it is a combination of fleet renewal, a slow recovery of the world’s economy and hence the positive implications for Pressurised LPG Carriers”.
Giles Fearn, chief executive of Petredec, a giant in the LPG scene, said: “The LPG market is in a state of revolution. New supply is constantly being discovered most notably in the US with its huge shale gas finds. The fundamentals would appear to be positive, but as with every shipping sector it is cyclical. Margins are high currently and therefore outside investors are entering the newbuild market. This will lead to a fall in margins further down the road.”
The picture for LNG is not quite so positive, however. China LNG Shipping (International) Co (CLSICO) general manager Paul Oliver reckoned: “With a lot of new capacity being delivered, rates for voyage charters look like being lower this year than they have been for some time, but how long that will last is not clear.,” he says.
Quite so, agreed Nakilat managing director Abdullah Fadhalah Al Sulaiti. “Some volatility in the rates could be seen in the next few years before returning to stability,” he said.
The age old problem of too many new ships coming on to the market had Andreas Sohmen-Pao worried when we met up with him last year. “Gas, particularly LNG today is very strong, but people have ordered a lot of ships, so it will probably moderate somewhat over the years. But gas is doing better than oil,” he stressed.
It certainly is, his father, Helmut Sohmen, BW’s chairman, said when interviewed last August, describing the VLCC markets as “terrible”.
“There’s more and more owners hoping against hope,” Sohmen lamented, suggesting the current doldrums would stretch for another “two to three years”. Overcapacity was his main worry.
Saleh Al-Jasser, ceo of Saudi Arabia’s Bahri, was more optimistic when we met up earlier this year. For VLCCs he noted that the orderbook has declined sharply to less than 10% and the number of new deliveries is declining. “As demand picks up, rates will react positively,” he maintained.
Abdul Rahim Abdul Rahman, global director of shipmanagement at Malaysian tanker giant AET said that after “an extraordinarily tough few years with rates languishing at levels not seen for a generation”, AET is “cautiously optimistic” about rates in 2014.
Erik Hånell, president and ceo of Stena Bulk, commenting on the hot chemical tanker segment told Maritime CEO: “We have a strong belief in this sector and would look at more tonnage. This is the sector where we will probably grow most in the years ahead in percentage terms.”
We have interviewed more dry bulk owners since we started than any other segment and the views in this volatile sector are divergent. Thoresen Shipping managing director Ian Claxton as the most recent shipowner to appear on our site is in the optimists’ camp.
“Basically we see deliveries at a five year low, with a growth in global GDP and demand growth outstripping new tonnage supply,” he explained.
The current uptick looks sustainable for at least two more years, Claxton reckoned. “Fragility is dependent on new orders coming into play in 2016 and 2017, and geopolitical issues in both emerging and established economies,” he cautions.
Oslo’s Belships’ managing director Ulrich Müller was confident of a further improvement in market fundamentals this year, while Hong Kong’s KC Maritime boss Vikrant Bhatia noted: “A declining rate of newbuildings coming into the market combined with a robust growth in seaborne dry bulk trade should result in a further improvement of average capacity utilisation in 2014. We anticipate stronger rates to prevail from second half of 2014 with Chinese iron ore imports increasing significantly.”
Greece’s Star Bulk Carriers Corp head Spyros Capralos was also convinced the worst was over for dry bulk.
“Oversupply is over and demand continues to be healthy. The fundamentals are there for a healthy market but there is a risk owners will start ordering,” he said.
Precious Shipping’s managing director Khalid Hashim, however, warned the good times are still a few months away. Oversupply created during 2009 to 2012 will finally be absorbed by the end of 2014, he said, though any uptick is unlikely to last more than two years.
Over our first 300 interviews we have interviewed many of the top names in the heavy lift and project shipping industry, and the overarching theme we have observed here is a need for consolidation.
Justin Archard, managing director for Asia and Oceania for SAL Heavy Lift, said: “We’ve seen a lot of new ships arriving in the world’s fleet in the past two years and that means all this extra tonnage needs to be used up before we see any changes in the supply and demand scenario.”
Joerg Roehl, who serves as chief commercial officer and managing director of Hansa Heavy Lift, was bullish noting how rates have been going up since the start of the year, and he expected them to continue to rise. “Vessels are moving faster and trading faster, which is a good sign,” said the German national.
Nevertheless, he did recognise that the heavylift sector is suffering from overcapacity, something that could trigger a period of consolidation.
“We believe in consolidation, so does our shareholder Oaktree,” he said, adding: “We certainly are looking into consolidation, especially on the ships side.”
BBC Chartering’s ceo Svend Andersen is also a believer in consolidation and is confident the sector is set to rise.
“We can look confidently into the future again as demand development for shipping capacity and supply of tonnage slowly comes back to a more balanced ratio,” the shipping boss predicted.
Talking of consolidation, Soren Skou, the ceo of Denmark’s Maersk Line, was adamant that the liner sector needs further mergers when we met up last year.
In an exclusive interview with Maritime CEO, Skou said, “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.”
Meanwhile, Sam Woodward, president and ceo of American containerline Horizon, spoke to us about the lessons learnt from the past tough few years.
“The downturn has taught us lessons about the competitiveness of the international trades and to be mindful of those lessons as we explore new growth opportunities beyond the US domestic markets,” he said.
Norwegian Car Carriers (NOCC) is hunting down tonnage, its ceo Engebret Dahm told us as unlike other shipping sectors Dahm reckoned the car carrier segment was “fairly balanced”.
“Important drivers in the car carrier market ahead in time are amongst others the development in the European economy and European car imports and secondly the effect of the weaker Yen on Japanese car exports,” he said.
Thomas Wilhelmsen, the ceo of Wilh. Wilhelmsen Holding ASA, was equally hopeful.
“Looking in to the future, the underlying growth potential for transportation of cars and high and heavy cargo is positive,” said the young ceo.
Continuing Shipowner Focus
Maritime CEO promises to make a very big splash at this year’s Posidonia in Athens.
Maritime CEO is the ideal vehicle for this most famous of global shipowner gatherings. As official media at the show, Maritime CEO has joined forces with VesselsValue.com to produce our first annual Top 50 Richest Shipowners list.
Explained Maritime CEO editor, Sam Chambers: “The maritime media is awash with subjective lists of who is more powerful than others, what we have set out do is to publish an annual objective list that lays out owners by fleet value and shows readers what each company owns.”
For more details contact email@example.com.