Oak Maritime: “Ultimately it all boils down to the math”

 

Hong Kong: Jack Hsu, managing director of Oak Maritime (Hong Kong), is typical of many of the third generation of Asia’s family run shipping lines, a man schooled in economics with a very firm grasp on the dollars and cents that make the difference between boom and bust in the volatile world of shipping.
 
The Oak Maritime Group is one of Asia’s best-known names in shipping with 21 ships in its fleet – a mix of bulkers and tankers – and four on order. The group is represented through its affiliated offices. The principal office, Sincere Navigation Corporation, is a publicly-owned company based in Taiwan. General management is coordinated through Oak Maritime's office in Hong Kong where Hsu is based.
 
Despite a recent rise on the Baltic Dry Index Hsu is cautious on prospects. Looking at the forward FFA market, Hsu questions the sustainability of any dry bulk run.
 
“Owners are coming into the market and putting their orders in at this pricing,” he notes. “Yes, there is an argument that pricing has bottomed and that is obviously the cause for owners to come in but from an economic cash flow sustainability perspective I don't think it has hit the right numbers yet.”
 
On the likelihood of obsolescence hitting the market, Hsu is forthright, saying it is less about technology, but more about economics.
 
“It is all about pulling out a pencil and paper with a ruler and just calculating what makes sense economically,” he says.
 
With the older ships,” he continues, “the key is that there is no debt and so from a no debt and all liquidity perspective the owner is basically looking at operating costs and so from a competitive advantage point he can, if the ship has 5 – 10 years left, for him he would actually pray for a variable market that would wipe out all the weakest economically unviable ships leading to the scrapyard, and when that market does rise he can then enjoy the benefits… Ultimately it all boils down to the math.”
 
While many around him have been busy ordering this year, Hsu says he is holding back from bringing out the chequebook. “There are no real plans for more orders,” he tells Maritime CEO, adding that most yards are full for the coming couple of years.  [25/10/13]
 
 
 
NEED TO KNOW:  Oak Maritime 
 
The Oak Maritime Group is one of Asia’s best-known names in shipping with 21 ships in its fleet – a mix of bulkers and tankers – and four on order. The group is represented through its affiliated offices. The principal office, Sincere Navigation Corporation, is a publicly-owned company based in Taiwan. General management is coordinated through Oak Maritime's office in Hong Kong.

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