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.