U-Ming: Buy cheap, sell high

Taipei: One of Taiwan’s richest men, Douglas Hsu, talks to Maritime CEO about snatching opportunities to bag cheap ships in the downturn.

Now in his 70s, Hsu chairs the Far Eastern Group, which controls more than 200 businesses involved in everything from cement to banking. Among his diverse holdings Hsu is chairman of U-Ming Marine Transport Corp, one of the island’s most prestigious bulker names, and definitely one of Hsu’s favoured subsidiaries.

Forbes estimates Hsu’s wealth at $1.4bn. Much of that money has been made from good timing, and his moves with U-Ming in the past months are testament to that.

Ordering ships in this cyclical industry is like trying to catch a ball just before it hits the ground. When the Taiwanese tend to order, that’s a good marker traditionally that newbuild prices are approaching rock bottom.

“Is the market at the bottom, this is a difficult question to answer,” Hsu muses. “We are taking this period to make replacements. The market is so low – we are just making a strategic move – but this doesn’t show that it’s at the lowest level,” he says cautiously.

He reveals that U-Ming is selling all its ships that are aged 15 years or over, with an eye on then acquiring more “efficient” bulkers. This has seen U-Ming snap up bargains in China and Japan in the past year.

“This will increase our overall efficiency,” Hsu says.

“Everyone is talking about whose costs are lower, which is why I’m engaging in this exercise,” he explains. “From another perspective, you could ask, ‘Margins are so low, why would you buy new vessels?’ But this is related to an entirely different question because if you want to remain economically viable, you need to accept that margins are low – so you can only think about how to reduce your own costs. To reduce costs, the rate is low, but whether the market is good, bad, etc is another issue.”

Hsu’s comments often tend to raise eyebrows in shipping circles because he is not afraid to speak his mind.

In remarks given ahead of a shipping event in April Hsu called for a radical overhaul of the shipping industry.

“Overcapacity, rising fuel costs, the onslaught of technology and environmental awareness are among the forces that are driving the shipping industry to reinvent itself," Hsu said, adding: "This tsunami of challenges demand an urgent need to transform the way the shipping business is done. Only by making radical changes can the industry survive and thrive in the new and increasingly volatile global economy.”

 

NEED TO KNOW:  U-Ming Marine Transport

Taiwan’s U-Ming Marine Transport Corporation (U-Ming), formerly named as Yue Ming Transportation Co, was established in 1984 to provide marine transportation of cement, dry commodities and industrial raw materials. It listed in Taipei in 1990. U-Ming owns and operates a total of 45 vessels with a total of 5.18m dwt including 11 bulk carriers under construction. The company has made a foray into VLCCs too.

 

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