TCC Group: ‘If we can see daylight by 2020, we’re very lucky’

TCC Group: ‘If we can see daylight by 2020, we’re very lucky’

Hong Kong: Kenneth Koo is not optimistic about the markets when Maritime CEO comes calling, not for the first time the chairman of the venerable TCC Group lashes out at private equity.

“Personally, I feel that if we can see daylight by 2020, we’re very lucky,” he says.

“We continue and, I feel, will continue for the foreseeable future, to be mired amidst a commoditised shipping market where continued abundance of liquidity — thanks to the multiple QE’s that continue to print money like there’s no tomorrow — will mean cheap credit for a long time yet,” Koo explains. This combined with the fact that barriers to entry into the shipping market is now “akin to zero” – thanks to regulatory statutes such as ISM, which only focuses on compliance on managers and not beneficial owners – means private equity and hedge funds alike can continue, says Koo, “to speculate recklessly on ships with no operational accountability”.

“Ships are ordered on macro economic and short-term gains sentiment. We will continue to see newbuildings ordered on speculation,” warns Koo, the third generation at the helm of the Hong Kong shipping line.

With this dire market pronouncement since 2007, TCC has embarked upon a strategic roadmap to become, what Koo describes as a “top-of-mind boutique shipowner” building only based upon specific requirements from a short list of utilities such as oil majors and steel mills and major charterers who share TCC’s philosophy of long term strategic partnership and an uncompromising focus on quality and high standards of accountable shipownership. Koo has focused heavily on Japan, a nation that Hong Kong owners had a very strong link with during the 1960s.

Recently, TCC has taken delivery of two 77,000 dwt panamax bulkers from Imabari Marugame. It presently has three newcastlemax bulkers on order, two at Imabari Saijo for 2017/18 delivery with both on long term charter to NS United and one at Namura for delivery 2018 with long term charter to NYK. It also has one 182,000 dwt bulker ordered at Imabari Saijo in a joint venture with K Line for delivery in 2017.

On the tanker side, TCC has two 115,000 dwt crude aframax tankers on order at Namura for delivery second half 2016 and one aframax on order at Sasebo for 2017. All three are earmarked for long-term employment with regular TCC oil major clients.

“We have no plans to expand our fleet beyond what’s always been our optimal size of around 20 vessels,” Koo maintains.

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1 Comment

  1. Avatar
    Anil Singh | Performance Counts
    June 26, 2015 at 4:32 pm

    Fairplay demands no barriers to entry and it is nothing but fair if the barrier to entry into shipping market is almost nil.

    Further the problem of oversupply is because of poor investment decision of owners ( Short Term Gain Sentiment in my view should never be one of the influencing factors at all for ordering a ship) than availability of cheap funds , for which they rightly suffer in due course, which in turn perhaps also acts as a barrier to entry, for other potential entrants or barrier to continuance for reckless investors. This sort of barrier is fair and provides level playing field to all (including the ones who want to be in shipping).

    Since there will always be possibility of reckless ordering of ships, the sensible owners may perhaps shield themselves (to some extent) from its negative impact by trying to have a business model (other than usual one), to extract more value from transport chain as stated by Mr. Martin Stopford at Nor Conference 2015.

    The point about Beneficial owners not being accountable for operational matters was interesting – need to do some research, for my better understanding.

    Best Regards
    Anil Singh | Performance Counts

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