maritime ceo issue two 2015

ISSUE TWO 2015 www.maritime-ceo.com

Fredriksen’s new front man Robert Macleod

and the revival of Frontline

Nor-Shipping SpecialNorwegian owners, offshore, finance and

travel plus our annual Rich List

www.classnk.com

Issue TWO 2015 1

3 At The Prow

Economy5 US6 EU7 China8 India9 Brazil

Markets11 Dry Bulk13 Tankers15 Containers17 Offshore19 Finance

The Rich List20 The most valuable fleets

Executive Debate32 Navigating through ECAs

Profiles36 Cover Story Frontline Management39 Ardmore40 Euronav41 Avance Gas

42 Masterbulk43 Essar Shipping44 Valles Steamship45 Tiger Group Investments47 Atlantic Container Line48 Western Bulk49 dACC Maritime50 Giovanni Visentini 51 Siem Offshore OSV

Recreation52 Wine53 Gadgets54 Books55 Travel56 Golf57 Yachting

Opinion58 Secret Container Lessor 59 The Contrarian 60 MarPoll

Manifest

www.classnk.com

56

C

M

Y

CM

MY

CY

CMY

K

unimarine_printad_01_REV2 (outlined).ai 1 28/4/15 8:22 am

Issue TWO 2015 3

We held one of our regular exclusive shipowner lunches in late April at

the Fullerton Hotel in Singapore. Sponsored by Univan Ship Management, the event drew 12 shipowners who, combined, con-trol more than 100m dwt. The idea behind these gatherings is that they are informal – a chance for owners to speak freely about their gripes without fear that they will be quoted in the media. They won’t be, but, dear reader, it would be remiss of me not to impart some of the nuggets of information from the two-hour session, without mentioning names.

Too much shipbuilding capac-ity and way too much easy money sloshing around continue to make life hard for “irresponsible” owners, one leading bulker player said.

Consolidation in dry bulk was deemed less likely than many other sectors as the cost of entry – how much it’ll set you back to go out and buy ships – is so low. Consolidation might come, however, from private equity pushing owners together as terms for restructuring.

Restructuring formed a fair chunk of the discussion in the end. Why there has not been more bank-ruptcies in this prolonged downturn was deemed down to the high number of restructurings. “Banks are kicking the can down the road because they have so much invested in shipping. In a normal dog-eat-dog world there should be more bankruptcies,” one owner reckoned, adding: “It won’t happen because the banks have such a vested interest.”

The current craze for pooling vessels was also criticised rather memorably as “a chicken’s way out of getting a steady revenue without having to enter the spot market”.

Chinese shipyards came in for heavy criticism about build quality, especially for ships built in the boom

years, when steel prices were high and corners cut. Similarly newbuild supervisors took some stick – one person attending dismissing many of them as “ex-chief engineers looking for a cushy number”.

Much of the debate provided us with the necessary food for thought to come up with this issue’s set of topical questions for our regular MarPoll survey. You, the reader, seem to blame these “irresponsible” shipowners too for the pickle they are in. Results from the survey are on page 60.

This is a decidedly Scandinavian themed issue of the magazine, given its distribution at Nor-Shipping in Oslo this June. For those coming to the show and unsure what to do, head on over to page 55 for our handy travel guide to the Norwegian capital.

As ever, any questions, quibbles or comments, please drop me a line at [email protected]. ●

Sam ChambersEditorMaritime ceo

Shipowner forum

at the prow

An ASM publication

Editorial Director: Sam [email protected]

Associate Editors: Jason [email protected]

Katherine [email protected]

Correspondents:Athens: Ionnis NikolaouBogota: Richard McCollCairo: Camelia EwissCape Town: Joe CunliffeDubai: Yousra ShaikhGenoa: Nicola CapuzzoHong Kong: Alfred RomannLondon: Holly Birkett Mumbai: Shirish Nadkarni New York: Suzanne SmithOslo: Hans ThaulowSan Francisco: Donal ScullyShanghai: Colin QuekSingapore: Grant Rowles Sydney: Ross White-ChinneryTaipei: David GreenTokyo: Masanori Kikuchi

Contributors: Nick Berriff, Andrew Craig-Bennett, Paul French, Chris Garman, Lars Jensen, Jeffrey Landsberg, Dagfinn Lunde, Mike Meade, Peter Sand, Neville Smith, Eytan Uliel

Editorial material should be sent to [email protected] or mailed to Office 701, 9 Renmin Lu, Zhongshan District, Dalian, China 116001

Commercial Director: Grant [email protected]

Sales Director:Helen [email protected]

Maritime ceo advertising agents are also based in Japan, Korea, Scandinavia and Greece — to contact a local agent email [email protected] for details

MEDIA KITS ARE AVAILABLE TO DOWNLOAD AT: www.asiashippingmedia.com

All commercial material should be sent to [email protected] or mailed to 30 Cecil Street, #19-08 Prudential TowerSingapore 049712

Design: Tigersoft DesignPrinters: Allion Printing, Hong Kong

Subscriptions: A $120 subscription is charged for 2015’s four issues of Maritime ceo magazine. Email [email protected] for subscription enquiries.

Copyright © Asia Shipping Media (ASM) 2015www.asiashippingmedia.com

Although every effort has been made to ensure that the information contained in this review is correct, the publishers accept no liability for any inaccuracies or omissions that may occur. All rights reserved. No part of the publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior written permission of the copyright owner. For reprints of specific articles contact [email protected]

Twitter: @Maritime_CEOLinkedIn: Maritime CEO ForumFacebook: Splash Maritime & Offshore News

C

M

Y

CM

MY

CY

CMY

K

unimarine_printad_01_REV2 (outlined).ai 1 28/4/15 8:22 am

Issue TWO 2015 5

reGULar eConoMY Us

A nalysts are now talking about a broader recovery in the US economy. To

highlight this they point to contin-ued job growth in the first quarter, particularly the growth in higher paying positions, as a sign of a broadening labour market recovery. Most of the US economy’s recent job growth has been in the lower waged service and hospitality industries – jobs that do not add swiftly to a rebound in consumption across the board. However, a growth in higher waged employment should lead to a concomitant boost in retail sales over the remainder of 2015 and into 2016, if the pattern continues.

Better employment and wages numbers have jump-started the stagnant construction industry. At first this is for lower income housing – single family housing starts and multifamily building was up 27% in the first quarter, according to the trade group, Associated General Contractors. Office construction is also up sharply as companies consolidate locations and renovate, the association believes. More job security seems to be encouraging more ‘big-ticket item’ expenditure by consumers and SMEs with stronger then expected car and truck sales in the first quarter of 2015 prompting many manufacturers to build or

expand factories. Still the economy needs to create jobs at all levels. The Center for Economic and Policy Research has said that large num-bers of low-paying, part-time jobs in the restaurant and retail sectors are still needed, especially to provide entry-level work experiences for teens.

Certainly the 0.2% rise in GDP in the first quarter (following the so-called ‘winter wipeout’ of the last quarter of 2014) is small and reflects America’s weaker trade perfor-mance, falling business investment and still cautious consumers. But the last quarter of 2014 saw a con-traction of 2.1% and this appears to have been corrected.

The analyst consensus is that low export orders are now the big-gest drag on the American economy. Exporters have been hard hit by the stronger US dollar and the lingering

effects of the labour dispute that slowed activity at West Coast ports. Net exports fell 7.2% in the first quarter, which shaved nearly a full point off the overall growth figure. This led manufacturers to pull back on investment and growth plans. While the lower global oil price has been helpful to manufacturers it has meant that some oil companies have shelved new drilling plans and so reduced production until there is a price correction in their favour. Still gas prices at the pumps have fallen (as the chart to the left shows).

However, many believe that exports will rebound throughout the summer and into the second half of 2015. The Department of Commerce in Washington has predicted an ambitious 3% growth overall for the American economy in 2015. This is based on a belief that several things will happen this year – first, higher employment levels and job security will boost consumer spending and therefore retail sales and employment; secondly, energy related spending will eventually level out and; three, the dollar will fall somewhat in relation to the euro. That places a lot of expectation on the coming six months in America; expectations that require global prices to shift as well as American enterprise to kick-start. ●

US retail petrol pricesDollars per gallon2011 2.6

2012 3.1

2013 3.2

2014 3.1

2015 2.2Source: US Energy Information Agency

A broader recovery?Washington is predicting an ambitious 3% growth this year

maritimeceo6

reGULar

Politically the EU faces a raft of challenges – from trade agreements and relations with

Russia through to the reality that now the UK, following the re-election of David Cameron’s Conservative Party, will have a referendum on EU membership before the end of 2017. That last argument will be for the British people ultimately but will have reverberations throughout the union. Early reports state that both major partners – France and Germany – are concerned both about which way the British decision will go and also what they may spur polit-ically in their own nations among those disenchanted with the union.

However, the EU continues to build bridges – most recently with Turkey and Mexico to expand trade as well as a free trade agreement (FTA) with India. Additionally, the snafu over Greece and debt appears to have been largely resolved ami-cably and has calmed fears of the imminent collapse of the Eurozone. Anti-Russia sanctions remain more fraught with belligerence from Moscow and disagreement within the union on how far to go with the sanctions regime.

Still, arguably, the EU is on the

road to economic recovery. Slight improvements in GDP growth, the implementation of structural reforms and declining unemploy-ment are all positive factors though many EU member states retain high debt to GDP levels. Many in the Eurozone remain bullish believing that a combination of a lower global oil price, weakness in the Euro and greater trade stability internationally will give the zone a boost with an anticipated 0.5% pick up across the area. If this happens then it will be the fastest growth in the Eurozone for four years. This would also out-strip American growth and Britain’s (in the EU; outside the zone). UK GDP growth for the first quarter of the year came in at just 0.3%, after a growth of 0.6% for the last quarter of 2014. The US managed only 0.2%. Among the finance ministers of the zone this rebound is being heralded as the Eurozone’s ‘Bright Spring’.

But there are also reasons why spring may not blossom quite as expected in the Eurozone. China,

and its import demands, remain a major question and, while calm at the moment, the Greek debt situa-tion and the possibility of contagion infecting neighbouring Eurozone partners is not finally decided yet. The European Commission is cautiously welcoming this projected growth though notes that further structural reforms are needed in many countries, that investment needs to be boosted and that ‘fiscal irresponsibility’ still needs to be addressed in many member states. This lack of structural reform and investment applies not just to smaller states and newer members but also – the commission has pointed out – to major payers such as France.

While much of the rest of the year will inevitably be taken up with politics – Britain’s referendum, Greek debt scheduling, Russian sanctions – analysts will look to the export numbers and employment gains to reveal whether or not the EU is out of the woods yet economically. ●

Spring or winter?Analysts cannot make up their minds what season best describes the continent’s economy

The EU’s GDP Annual % growth/decline rateAnnual % growth/decline rate

Jan 2013 -0.7

July 2013 -0.1

Jan 2014 1.0

July 2014 1.2

Jan 2015 1.3Source: Eurostat

eConoMY eUrope

Issue TWO 2015 7

There’s a contradiction regard-ing China’s economy at the moment. A lot of international

pressure, and some internal too, was put on Beijing’s policy makers to ‘cool’ their red-hot economy. By and large China has achieved this – the state sector (though still consider-able by most global standards) has shrunk considerably from what it was 20 years ago while private enterprise now accounts for 80% of total employment. Most prices are set by market apparatus and not central government fiat; investment flows have modified and, as Beijing was urged and promised, domestic consumption has become the driver of the economy and not export out-flows or investment inflows. In short, China has effectively rebalanced its economy.

However, as a consequence of this rebalancing GDP growth has dropped from the heady days of a decade or more ago. It now hovers around 7%, which, for those old enough to remember, was a dip that was supposed to crash the economy. But no crash has come and China seems to be living with 7%.

In part this is due to strong wage growth – and wages are still growing. Income rose by 8.1% year-on-year

during the first quarter of 2015, down slightly from 8.6% during the first quarter of 2014. Crucially income for migrant workers, those who move from the countryside to staff the nation’s factories and construction sites, rose a significant 11.9%, up from 10.1% a year ago, reflecting a tight labour market. Jobs are still being created.

This wage growth has now filtered into the consumption econ-omy and retail sales are growing at almost 11% per annum. People are continuing to buy property and this is reflected in furniture sales outstrip-ping overall retail growth at nearly 21%. The gradual shift in retailing from bricks-and-mortar stores to online is progressing rapidly with online ecommerce business up more than 40% since the start of the year.

Not everyone is enjoying this

strong growth rates though, and some of those affected sectors could impact on shipping and logistics. Mining rose only 1.4% in March and this will have an impact on the volume of commodities being shipped out of China over the rest of the year. However, technical equipment manufacturers still seem to be finding orders – telecommuni-cations equipment shipments rose by 12% in March as did shipments of IT and computers. This means things are not as rosy in the northern portions of the country – home to most commodities extraction and refining businesses as well as older state-owned industries – as the eastern seaboard and south – where most of the hi-tech production is concentrated.

The first quarter numbers don’t look good for exports – China’s exports fell 15% year-on-year in US dollar terms in March. But the huge difference is explained largely by the lunar new year effect and monthly volatility. There is no evidence of collapse in China’s main export markets, nor is there reason to believe that China’s exports suddenly became far less competitive. Most analysts expect export numbers to pick up in the second quarter. ●

eConoMY China

Growth of retail sales in ChinaYear-on-Year % growthMarch 2012 10%

December 2012 10.7%

September 2013 10.8%

June 2014 10.9%

March 2015 11%Source: CEIC

A rebalanced economy marches to a different beat

The contradictions of cooling

maritimeceo8

The Indian economy is expected to grow margin-ally higher at 7.5% during

2015 compared with 7.2% in 2014. Analysts expect interest rate cuts will buttress private sector spending, which will be further boosted by the cut in world oil prices. Moody’s, the International Monetary Fund and the World Bank all seem to concur with this assessment. This means that India has (or will, if it stays on track) surpass China’s growth rate this year and be the world’s fastest emerging economy.

In stark contrast to India’s South American BRIC partner, Brazil, low inflation rates have enabled the Reserve Bank of India to cut inter-est rates by 50 basis points, easing pressure on the private sector. Lower rates as well as the government’s infrastructure and disinvestment programs should provide a boost to domestic-oriented industries. As ever the government says it wants to increase foreign investment – though analysts caution that this is a

sentiment regularly proffered though rarely backed up with necessary pol-icy changes to facilitate it actually happening. The Modi government has vowed to cut the red tape that has prevented so much investment, particularly in sectors such as retail and consumer, but this is still largely to be enacted.

However, the government’s stated plans to divest itself of key holdings in many businesses is progressing, offering encourage-ment. Approximately 5% of the Rural Electrification Corp, a state-owned power company, was sold in early April. Strong investor demand for

the electricity company suggests that the government should have few problems selling its other assets. This means divestment is adding to the treasury in New Delhi and appears popular with the public and investors. Similarly the government has reiterated that it will introduce a goods and sales tax (GST) by April next year, a move that is widely expected to meaningfully increase India’s tax to GDP ratio. While a GST could dampen spending it is felt that the growth of the Indian middle class and low inflation should offset any price rises and allow retail spending to power on while also earning the treasury a new and important source of revenue.

Still, exports could be better. The World Bank has noted recently that the potential for rapid export growth in the near term remains constrained by both supply and demand con-ditions across India. On the supply side, Indian merchandise exports have not been able to keep pace with the growth in world exports. On the demand side, the global export market seems to have peaked. The bank believes that India will need to increase its manufacturing com-petitiveness significantly to carve a space for itself among the world’s large exporters. For this, the country will require an infrastructural boost to bring it at par with the world’s manufacturing hubs, in addition to the competitive supply of labour, land, finance, and skills, as well as a friendly business environment.

The Modi government appears to be largely delivering on what it prom-ised when elected. But, as analysts, rating agencies and international lenders have warned – the pressure to maintain structural change needs to be kept up. ●

Welcome but marginal growthRed tape must be cut as promised

eConoMY india

India’s inflation rate %April 2014 8.59

July 2014 7.96

October 2014 6.46

January 2015 5.19

April 2015 5.17Source: Ministry of Statistics and Programme Implementation

Issue TWO 2015 9

‘The old days of the commodities boom are over’

Brazil continues to disappoint. Central Bank analysts in Sao Paulo expect Brazil’s gross

domestic product (GDP) to contract 1.2% this year, slightly worse than many private analysts have been pre-dicting. Worryingly, but not wholly unexpectedly, the inflation rate was 0.71% in April and came in at 4.6% during the first four months of this year, a figure that was above the gov-ernment’s target for the entire year. The government’s official inflation target is 4.5% for the year, with a 2% band, a band that now looks like it might be exceeded by year-end. Some believe inflation could go as high as 8%, the highest since 2003, when prices surged 9.3%.

The basic problem seems to be that with structural problems such as inflation the economy is struggling to take off. Economists now expect Brazil’s gross domestic product to contract 1.18% this year and to perhaps manage growth of just 1% in 2016. The old days of optimism and growth fuelled by a commodities boom, that saw the economy reach 7.6% GDP growth in

2010, are decidedly over. With global energy prices slumping and major buyers, such as China, reducing their purchasing, the commodities sector is struggling. Add to this that the sector is mired in scandal currently – it is claimed that hundreds of millions of dollars were allegedly skimmed from Brazil’s state-run oil giant, Petrobras by the country’s top construction companies.

Reports are growing that Brazilian industries are increasingly offshoring and moving production now to China, as well as Turkey and Russia. Most of this is low end – tex-tiles, footwear, etc – but these sectors are significant employers and consti-tute a major part of Brazil’s exports when commodities and agricultural products are factored out. The real has dropped more than 13% against the dollar since the beginning of the year.

Looking to the rest of 2015 the Central Bank likes to accentuate the positive. Arguably this is a good time to invest in Brazil and the bank has forecast an increase in foreign investments for the year from $57bn to $57.5bn, and to $60bn in 2016. But notoriously poor infrastructure, cor-ruption and the mass of bureaucratic red tape that still holds Brazil back from attracting investors may mean that despite fiscal conditions this influx of investment doesn’t happen.

Much of the country’s rebound, if it happens, will be down to the decisions taken by president Dilma Rouseff. It appears that she has man-aged to make enough policy changes to protect Brazil’s international credit rating – junk status has been avoided. Yet she still has to tackle both large scale subsidies to unpro-ductive state industries and high tax levels that dampen consumer spending. As ever it seems Brazil’s economy is potentially on the cusp of being unleashed – but, for Rouseff, making the necessary decisions to allow the leash to be loosened is proving hard politically. ●

eConoMY BraziL

Structural problems such as inflation are reining in the country’s chances

Brazil’s GDP % change y-o-y2012 0.8

2013 0.9

2014 -0.2Source: Instituto Brasileiro de Geografia e Statistica

Licensed news, sports, movies, TV, and music, plus training, weather, and charts, delivered to onboard devices

IP-MobileCast – a unique multicasting service that delivers content directly to your vessel

Only one company

delivers one integrated end-to-end

solution.

TracPhone® Vip-series – award-winning SATCOM systems with built-in network management

mini-VSAT Broadband – the No. 1 maritime VSAT network offers global coverage

Rich Content

Content Delivery Connectivity

Hardware

Experience the Power of One

©2015 KVH Industries, Inc. mini-VSAT Broadband is a service mark of KVH Industries, Inc. KVH, TracPhone, IP-MobileCast, and the unique light-colored dome with dark contrasting baseplate are trademarks of KVH Industries, Inc.

kvh.com/powerofoneLearn more about industry-leading VSAT, training, weather, charts, and entertainment at:

Giving you the power to deliver the bandwidth your operations demand, keep your crew happy, and manage your budget... all at the same time.

Connectivity and Content

Issue TWO 2015 11

reGULar

Just a few months ago, FMG was the first of the Big Four iron ore miners (which include Vale, Rio

Tinto, BHP, and FMG) to finally break away from the Big Four’s long-held united front of insisting on keeping robust iron ore production expansion plans intact. FMG finally flinched first in late March when FMG’s chairman, Andrew Forrest, publicly advocated that each of the Big Four miners should cap iron ore production. His position was met by a large amount of push back, but the weeks that have followed have seen two other Big Four miners change their tune as well.

A few weeks after FMG’s announcement, BHP announced that it had decided to defer its plan to debottleneck Port Hedland. This means BHP will achieve its expansion target at a slower place than originally planned. BHP publicly continues to target reaching the 290m annual production level, but deferring plans to expand Port Hedland’s inner harbour means the original target of being able to ship 290m tons of iron ore on an annual basis by the middle of 2017 is no longer in play. A date for when BHP now plans on being capable of shipping that amount has not been yet been announced.

Overall, iron ore prices have continued to become a very nationalist issue in Australia and Commodore Research continues to believe that Australia’s three major iron ore produc-ers could be forced and/or convinced to lower their robust iron ore produc-tion targets by a considerable amount. We remain extremely concerned for global iron ore prices for the second half of this year (as the second half

of every year is when Australian and Brazilian iron ore production rises by very large amounts due to seasonal factors). During the second half of this year another wave of extreme national-ism from Australian politicians could surface, as iron ore prices are likely to again come under heavy pressure then.

What is equally disturbing for global iron ore production prospects, and therefore the capesize market, is that Vale has also recently made a change and has strayed from its own long-held insistence that it will keep its robust iron ore production expansion targets intact. At the end of April, Vale announced it is now open to cutting as much as 30m tons of iron ore produc-tion from its most expensive mines. As of now, though, Vale’s 340m ton production target for 2015 remains intact. However, Vale finally conceding that it could slow its iron ore produc-tion growth is very troubling for an already struggling capesize market. Vale reported a loss of $3.1bn in the fist quarter, which has prompted the com-pany to finally concede that robust iron ore expansion targets must be at least reconsidered.

Overall, the capesize market could awake any morning to find Vale (or one of the other Big Four iron ore miners) having announced lower iron

ore production targets. Long-haul Brazilian iron ore

shipments remain a vital part of the capesize market, and the potential for robust iron ore production (and shipments) from Brazil remains a very positive potential development to look forward to for the capesize market. However, robust Brazilian iron ore production growth is not at all guaran-teed. For now, though, Vale’s iron ore production is expected to increase this year by 13m tons and the huge 450m ton mark still is part of Vale’s current plan. However, this could change. In addition, Anglo American continues to forecast that its new Minas Rio Brazilian mine will produce up to 14m tons of iron ore this year and up to 26m tons by 2016. In comparison, less than 1m tons of iron ore was produced from the Minas Rio mine last year. However, Anglo American’s plans also could ultimately change. ●

Markets drY BULk

Capes more vulnerable as Vale admits weakness The Big Four miners are likely to cut production targets, warns Jeffrey Landsberg from Commodore Research

Vale’s Current Iron Ore Production Forecast (2014-2018)

300mt2014 2015 2016 2017 2018

340mt

380mt

420mt

460mt

Issue TWO 2015 13

reGULarMarkets tankers

The freight market for tankers in general and for VLCCs in particular has been strong so far

this year. Earnings for the year 2015 to date on the benchmark AG-East route are significantly higher than during the same period in previous years and pundits expect rates to remain solid throughout the year and into next, even though there will be seasonal fluctu-ations. What are the key underlying drivers for the strong market and what are the risks?

Despite earlier expectations to the contrary, world oil demand growth has been relatively strong so far this year. This is in part due to unexpected factors, such as a rebound in European product demand as well as increased growth in India and higher demand for transport fuels in the US. Lower oil prices have also supported oil demand. The International Energy Agency recently raised its forecast of global oil demand for 2015 by 90,000 barrels a day to 93.6m barrels a day, a gain of 1.1m barrels a day relative to 2014. Growing oil demand is obviously supportive for the tanker market.

Despite sharply lower prices, global oil supply is showing impressive

annual gains of 3.5m barrels a day, split between OPEC and non-OPEC produc-tion. Since OPEC announced during its November 2014 meeting in Vienna that they would not cut their quotas, pro-duction has been on a tear and shows no sign of letting up. OPEC crude oil output soared by 890,000 barrels a day in March, driven by sharply higher sup-plies from Saudi Arabia, Iraq and Libya, and production exceeded 31m barrels a day. This was the highest monthly increase in OPEC production in nearly four years. Since oil supply growth far exceeds increases in oil demand, crude oil stocks continue to build worldwide, in particular in the United States. There are also signs that the use of Tankers for floating storage is on the rise, despite the fact that the level of oil price contango does not seem to justify storage economics.

Another positive for VLCC owners is that commercial control has been consolidating in fewer hands. At the end of 2013, Euronav agreed to buy the Maersk VLCC fleet. Shortly there-after, General Maritime, which also had their eyes on the Maersk vessels, bought the VLCC orderbook of Scorpio Tankers. This deal was later followed

by the merger of Genmar with Navig8 Crude Tankers in 2014. Earlier in the same year, VLCC Chartering was established, bringing together the VLCC fleets of Frontline and Tankers International. These deals have levelled the playing field somewhat, as it gives owners more information and creates more discipline in the market.

Fleet growth has been fairly subdued so far this year. Six VLCCs have been delivered year to date, with another 28 newbuildings scheduled to enter service during the remainder of the year. However, deliveries will pick up in 2016 and this could pose a risk to tanker rates if ton-mile demand growth slows down. So far, the overall tanker orderbook remains reasonable and expectations are for modest fleet growth through 2017. The risk is, how-ever, that the high rate environment will cause owners to contract too many new vessels, especially since shipyards still have ample capacity available and second tier yards in particular may offer discounted pricing to secure forward cover.

In conclusion, the VLCC market is fairly balanced and if the oil keeps flowing and if the shipowners avoid ordering too many vessels (two big ‘ifs’), the outlook for the large crude tankers remains favourable. ●

Is this run sustainable?Erik Broekhuizen from Poten & Partners assesses the chances for VLCCs going forward. Overall, he gives them a thumbs up

-‐20,000 -‐10,000

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

S/Day Arabian Gulf -‐ Far East VLCC Rates

2012 2013 2014 2015

PSA_Powering_A4_FA.indd 1 20/3/2012 1:14:38 PM

Issue TWO 2015 15

reGULarMarkets Containers

Shippers of spot freight from Asia to Europe have in the past months enjoyed constantly

declining freight rates, while carriers are entering a state of crisis. In the span of 14 weeks, the spot rate from Asia to North Europe declined 73%. And despite the increase on May 1, the rate to the Mediterranean is still down by 53% in the same period. The North Europe rate of $343 per teu as reported by the Shanghai Shipping Exchange is the lowest on record – with the previous low point being in the midst of the global financial crisis, which had caused container demand to collapse.

It must be clear to all involved that these freight rates are untenable for the carriers. Even though the oil price has been essentially cut in half since October 2014, the associated cost savings for the carriers are insufficient to make such low freight rates viable in the long term. When the reported spot rates are ‘cleaned’ from the Bunker Adjustment Factor

(BAF), we find that the current spot rate exclusive of BAF has dropped below $100 per teu. And this is a level including additional surcharges such as the Aden Gulf and Suez surcharges.

This low level is in itself not a guarantee that rates will not drop even further – we have previously seen negative base rates on the Asia-North Europe trade, but it does clearly show that such rates will not last.

The carriers are forced to react to this development, and their reaction is entirely predictable. They will move to reduce capacity in order to restore freight rates to more viable levels. This is typically done through the cancellation of individual sailings – so-called ‘blank’ sailings – which have a disruptive impact on shippers’ supply chains. Additionally, carriers will attempt to cascade surplus tonnage into trades that appear to be more profitable. An example of the latter can be seen in the North Atlantic where freight rates have remained fairly stable despite the decline in oil prices. In the past few weeks several service changes have been announced on the North Atlantic, which will increase capacity in this market by 20%. This will, in all likelihood, result in dest-abilising freight rates in yet another trade lane.

It is easy to blame the carriers for ordering too much tonnage,

hence causing the underlying supply/demand imbalance and associated freight rate instability. However, one might just as well look at the behaviour amongst many, though not all, of the shippers. We find a clear tendency of shopping around for lower rates in search of additional cost savings. However, the logical end-point of this endeavour are the sudden blank sailings and associated supply chain disruptions.

For those shippers who do have a desire to remain loyal to their carriers, and contracts, the problem is that if sufficiently many other shippers act opportunistically, the carriers will still be forced into the blank sailing scenario.

On this background it appears that the instability in both rates and blank sailings are a new normal for the industry. ●

Decline and fallFreight rates are plummeting to record lows on the Asia – Europe trades, writes SeaIntel’s Lars Jensen

Spot rate Asia-North Europe

Slay the opposition at China’s largest maritime event

Ensure your Marintec China marketing is a cut above the restContact Helen Ong-Rajah for details on +65 9690 8785 or [email protected]

Sinoship 2014.indd 1 27/1/14 11:59 pm

Issue TWO 2015 17

reGULar

“Because of the short-term approach

to life that is adopted by the offshore businesses in general, they have allowed the industry to become overpriced”— Neil Carrington, chief

executive, Confiànce Employment Services

I’ll be honest – this column was lucky to see the light of day, given how frantically busy the M3 team

and I have been of late. It is a fact that everyone in offshore these days is having to work harder for our coin. The dollar we earn today is twice as hard as before.

There’s plenty of OSV statistics that make for grim reading in this altered offshore universe. Utilisation rates are, of course, down, with a 40% drop off in Asia and greater still in the North Sea. There’s been a 20% drop in rates across the board, while asset prices have fallen somewhere between 15 to 20%. There is an inter-esting dichotomy in terms of the falling asset prices – older AHTSs are falling faster, where as newer PSVs are falling faster than older

ones. This is down to the fact there are simply too many PSVs being built. By my reckoning there are somewhere between 70 to 80 PSVs being built in China with no place to go to work.

So that’s the bad news out the way. The following is reason to be more cheerful.

We are in a state of change at the moment. Six months ago when oil was at $50 a barrel, people were saying it could go to $40 – the reality is it is in the high $60s now, so you are only 35% off what you were at last year. My take, however, is that we are unlikely to see a return to the $100 a barrel scenario for a long, long time. Why? Because shale oil will flood the market once the price of oil creeps into the $70 territory.

The huge cost savings pro-gram by oil companies is working. Moreover, I am seeing more positive sentiment – more tenders, smiles returning to people’s faces.

The cost containment drive was needed. It will be beneficial to the industry. There is clearly a different offshore world coming where outlays are fit for purpose, cheaper and more realistic.

Nowhere will this drive for lower costs be felt greater than in Norway. The country is the world’s top desti-nation for research and development in offshore support, especially around Møre, the so-called ‘Silicon Valley of offshore shipping’.

Norway has suffered in the oil

shock from having too many ships, the vast majority of which are also just too expensive. There has been and will continue to be a lot of pain in the Norwegian offshore sector, ships being laid up and people being laid off by the thousands. However, the industry will come out of this painful transition as a leaner and smarter entity. ●

Markets offshore

A more rational industry is bound to materialise Mike Meade from brokers M3 Marine suggests the pain offshore is going through is necessary and will make the sector stronger in the long run

Issue TWO 2015 19

reGULar

Nor-Shipping is upon us. My calendar is full of receptions to attend in Oslo and I am

looking forward to the show. Norway has done a fantas-

tic job at developing its maritime cluster – it reminds me of the Dutch model in fact. The NIS registry was a smart move and just about every facet of shipping is covered in this Scandinavian country. You have two very strong banks, two P&I Clubs, lawyers and it’s important to remem-ber also all the marine technology developed in Norway. I’ve been at naming ceremonies for $750m drillships in South Korea where up to 40% of the value of these giants is coming from innovative Norwegian manufacturers.

From a finance point of view, Oslo has a huge amount to offer. There’s a noticeable closeness to the business by the regulatory authorities, which helps smooth transactions. It is also a quicker market for finance. Bear in mind, too, that this is very much an interna-tional ship finance centre – more than half of the over the counter (OTC) deals done in Oslo are with foreign firms.

The OTC market is most

interesting as a stepping stone to bigger IPOs such as the recently announced move by OTC-listed Hafnia Tankers to seek a New York listing.

The other great aspect about raising funds here is that Norwegian capital tends to be more knowledge-able than other markets, there’s a real understanding of shipping and offshore, which is a very big differ-ence compared to other places such as New York.

Moreover, the market is pretty big while the maturities are pretty short, so the money gets invested regularly and rapidly – snowballing as such.

The other nice thing is that, unlike certain other nation’s banks, Norwegians tend to pay you back.

Beyond Norway, a quick look at the markets – and I want to start by stating how sick I am of people overplaying the doom and gloom in the dry bulk sector. People are too overwhelmed by the dry bulk depres-sion. Dry bulk and offshore aside, the markets are actually okay, there are more than 20 other sectors to be looking at – people, including the media, need to stop getting hung up about the misfortunes of dry bulk.

Offshore, I admit, is wildly over-built and overpriced. There will be plenty more pain in this segment. My take is the oil price should be lower. The oil price at $60 is on the high side, in my mind it should be $40 – there is a complete oversupply of oil.

Finally, for those who are new to Nor-Shipping, a couple of bits of use-ful advice – try to snap up as many invites to the myriad receptions. Secondly, hope for good weather. ●

Markets finanCe

“The OTC market is most interesting as a stepping stone to bigger IPOs”

Why Norway works so well as a maritime cluster

As he gets ready to head to Nor-Shipping, Dagfinn Lunde sings the praises of the Scandinavian nation

maritimeceo20

reGULar

Once again Maritime CEO has teamed up with VesselsValue.com to provide a unique look at

the world’s richest fleets. Readers can find out about the leading global fleets with details on value and size, broken down into ships afloat and on order.

Out in first place this year, climb-ing four places from its 2014 ranking, is Japan’s Mitsui OSK Lines (MOL),

having placed orders for 22 ships in the past 12 months. Unsurprisingly, this year’s biggest falls have been in dry bulk fleets, while those in the tanker trades have enjoyed quite an appreciation.

Richard Rivlin, CEO of VesselsValue.com, commented: “The Euronav fleet has doubled in value, with only a few purchases

throughout the year, showing the surge in tanker values.”

Meanwhile, Maritime CEO’s editor, Sam Chambers, noted: “The tough times in the Chinese shipping sphere, being forced to scrap ships, have seen the top lines from the People’s Republic drop back, while canny investors, especially from Greece, have jumped up the list.”●

The Maritime CEO

In association with:

There’s been plenty of movers and shakers in the past volatile 12 months. Over the next 11 pages we detail the world’s 50 most valuable fleets

riCh List

What’s in What’s notContainers OffshoreBulkers Car carriersTankers ReefersLPG Passenger/CruiseLNGCombo

Rich List2015

Issue TWO 2015 21

reGULarriCh List

Issue TWO 2015 23

reGULarriCh List

1 MOL

S#DWT

11.73bn

207

24.42m

ContainersS#DWT

2.28bn

38

0.3m

LPGS#DWT

0.2bn

3

0.2m

BulkerS#DWT

1.69bn

72

9.13m

Fleet Breakdown

LNGS#DWT

5bn

30

4.63m

TankersS#DWT

2.54bn

64

10.15m

ComboS#DWT

14m

1

0.046m

2 A.P. Møller Maersk

11.24bn

316

4.79m

TankersS#DWT

1.2bn

72

3.36m

S#DWT

ContainersS#DWT

10.03bn

244

1.6m

Fleet Breakdown

KeyS#DWT

Total value of owned fleet including afloat and on order

Total number of owned ships including afloat and on order

Total owned tonnage including afloat and on order

Company’s fleet value position this year compared to 2014 ranking

data taken on April 2, 2015

maritimeceo24

riCh List

5

3

4

7

Cosco

NYK Line

China Shipping

Fredriksen Group*

9.64bn

9.76bn

7.49bn

459

337

193

32.29m

23.07m

6 K Line

7.93bn

188

19.27m

25.8m

8 BW Group

2014

2015

Star Bulk

Euronav

Teekay

Eastern Pacific

Evergreen

7.23bn

117

11.49m

* Fredriksen Group includes 11 different companies

S

DWT

10bn

247

24.05m

Biggest Climbers & Losers In Last 12 Months By Fleet Value %

S

DWT

S

DWT

S

DWT

S

DWT

S

DWT

KeyS#DWT





#

#

#

#

#

#

151

100

88

82

72

28

31

33

47

29

Hanjin Shipping

Doun Kisen

Peter Döhle

Oldendorff

Sinotrans&CSC

Issue TWO 2015 25

riCh List

11

10

13

9

Scorpio

Petronas**

MSC

Teekay LNG Partners

6.11bn

6.14bn

5.89bn

6.85bn

178

111

188

14.01m

13.46m

12 Sovcomflot

6.09bn

98

10.17m

1.36m

14Seaspan

5.47bn

106

0.79m

** Petronas includes MISC and AET

Sovcomflot

Scorpio

Gener8 Maritime

Dynacom

NITC

2014

2015

TOP

Tanker Owners By Value S

5S#DWT

S#DWT

S#DWT

S#DWT

S#DWT

S#DWT





Global Tanker Fleet Value Growth

Year-On-Year $

3.4bn

3.2bn

2.84bn

207.28bn

2.73bn

226.87bn

2.98bn

45

6.6m

maritimeceo26

reGULarriCh List

17

19

BP

Economou Group*

Nakilat

Evergreen

4.86bn

4.44bn

4.98bn

77

122

103

7.92m

16.41m

0.65m

18

20

S#DWT

5.14bn

27

6.36m

TOP

Dry Bulk Owners By Value S

5K Line

Star Bulk

Scorpio

Oldendorff

China Shipping

2.49bn

S#DWT

S

S

#

#

DWT

DWT

16

15

Maran Gas Maritime

23

3.82m

S#DWT

Zodiac Maritime

4.15bn

111

8.67m

S#DWT

* Economou Group includes eight companies

KeyS#DWT





Global Dry Bulk Fleet Value Drop Year-On-Year $

2014

2015

275.76bn

180.24bn

4.07bn

2.1bn

2.17bn

2.06bn

1.78bn

Issue TWO 2015 27

reGULarriCh List

23

22

25

24

26

Maersk

MSC

Seasapn

China Shipping

Hapag Lloyd & CSAV

TOP

Containership Owners By Value S

510.03bn

5.84bn

GasLog

3.79bn

22

S#DWT

Hapag Lloyd

3.78bn

85

0.57m

S#DWT

UASC

44

0.49m

S#DWT

21Shoei Kisen

4.15bn

135

8.02m

S#DWT

CMA CGM

3.69bn

90

0.59m

S#DWT

Eastern Pacific

3.68bn

80

3.55m

S#DWT





Global Container Fleet Value Growth

Year-On-Year $

2014

2015

129.08bn

151.67bn

5.47bn

4.98bn

3.78bn

3.55m

3.73bn

maritimeceo28

reGULarriCh List

31

30

32

28

27

Gener8 Maritime

11.06m

S#DWT

Costamare

70

2.9bn

0.46m

S#DWT

SK Shipping

S#DWT

3.34bn

70

10.49m

29

Oman Shipping

2.981bn

45

8.65m

S#DWT

Hamburg Süd

47

2.92bn

0.32m

S#DWT

Claus-Peter Offen

3.55bn

96

S#DWT 1.94m

KeyS#DWT





Teekay

Nakilat

MOL

Maran Gas

GasLog

2014

2015

Global LNG Fleet Value Growth

Year-On-Year $

77.7bn

66.13bn

TOP

LNG Owners By Value S

56.55bn

5.06bn

5bn

3.79bn2.982bn

46

4.2bn

Issue TWO 2015 29

reGULarriCh List

35

34

37

36

38

33Thenamaris

77

2.89bn

7.51m

S#DWT

Dynacom

2.84bn

56

S#DWT9.6m

NITC

2.75bn

56

13.61m

S#DWT

Hanjin Shipping

70

3.33m

S#DWT

APL

2.56bn

47

0.38m

S#DWT

OOCL

2.83bn

57

0.43m

S#DWT





2.68bn2014

2015

32.83bn

39.8bn

Global LPG Fleet Value Growth

Year-On-Year $

TOP

LPG Owners By Value S

5BW LPG

Dorian LPG

Navigator Gas

Petredec

Solvang

2.57bn

1.89bn

1.8bn

1.75bn

1.22bn

International Registries (U.K.) Limitedin affiliation with the Marshall Islands Maritime & Corporate Administrators

tel: +44 20 7638 4748 | [email protected] | www.register-iri.com

THE MARSHALLISLANDS REGISTRY

service and quality are within your reach

We look forward to seeing you at Nor-Shipping 2015Visit us at Booth D01-17

www.splash247.comSplash - for incisive, exclusive maritime news and views 24/7.

Issue TWO 2015 31

reGULar

4539

4640

4741

4842

4943

5044

S

S

S

S

S

S

T

Peter Döhle

Doun Kisen

Star Bulk

Sinotrans&CSC

Formosa Plastics

Yang Ming

2.25bn

2.26bn

2.17bn

2.17bn

2.09bn

84

104

96

154

67

61

0.99m

7.48m

11.06m

7.7m

0.97m

SSinoko

2.46bn

106

10.5m

SNisen Kaiun

2.44bn

97

8.02m

riCh List

SMaran Tankers

2.35bn

42

10.96m

S Euronav

2.42bn

44

10.98m

SOcean Tankers

2.42bn

96

7.76m

Tsakos

2.51bn S60 #

DWT6.35m

#DWT

#DWT

#DWT

#DWT

#DWT

#DWT

#DWT

#DWT

#DWT

#DWT

#DWT

7.63m

2.34bn

maritimeceo32

In profIle

Shipping knows only too well the difficulties of handling fuel and lubes in 2015’s cluttered,

complex seas.“Shipping is so much more

complicated in every aspect than just a few years ago,” comments Caroline Huot, managing director of UniMarine Lubricants, citing as an example how ships today trading worldwide need to carry five different grades of lubes onboard, a far cry from a decade ago.

Managing fuel and lubes has always been and will be about finding the most suitable and cost effective solution in the face of changing regulations.

Regulations form the bench-mark, says Captain Samir Fernandez, global operations and fuel efficiency manager at X-Press Feeders. They must be understood and evaluated both technically and commercially and followed up with early planning by considering the various options for compliance.

Fernandez cites the 0.1% sulphur cap in European waters this year as an example. Vessel operators had a varied choice between marine gas oil (MGO), alternative fuels, scrubbers or LNG.

“To date the alternate fuels do not have an ISO specification and the jury is still out on whether they are fully compatible with residual fuels,” Fernandez says, adding: “The trick for us was to evaluate the cost effective-ness of a heavy fuel oil (HFO)/MGO mix or be adventurous with a new product.”

Kevin Smith, vice president at Masterbulk, says planning is key, having things like the right additives

onboard so owners do not get caught out if the voyage orders change. It is vital too to have good communica-tion with the commercial team and charterers to facilitate the planning, and proper analysis of the fuel.

Sanjeev Samal, a VP at the same firm, has some tricks of the trade including regular energy audits and energy conservation actions. Retrofitting, though capital inten-sive, can reap huge fuel savings too, he says.

Cesare d’Amico, who heads up d’Amico Group, says: “Nowadays, in the present market, first class shipping companies cannot avoid considering the eco-compatibility side of shipping and these issues must be top priorities especially when building new ships.”

Carisbrooke Shipping, which has been trading in the Baltic ECA this year, has managed to perform “without a hitch”, says the firm’s CEO, Robert Wester. The compli-ance process has been expensive, he admits.

Carisbrooke’s fleet techni-cal director, Martin Henry, says: “Knowing what kind of serious fail-ures and problems can occur during the extremely critical period of fuel change-over, if not managed well, we decided that careful preparation was a priority, not least because the regulations were to enter force at the very worst time of year when weather conditions are often at their most severe.”

Carisbrooke seconded two serv-ing senior chief engineers to head office and between them, they visited all of the line’s vessel series, carrying out actual change-overs to and from

MGO in order to draw up suitable detailed procedures.

“The procedures vary,” Henry says, “because onboard some of our older vessels, there is limited tank capacity for distillate fuel, and more time is required for the change-over process. On others, we had to reor-ganise fuel supply pipework where

Maritime CEO interviews top lines on switching fuels and lubes across the seven seas

Entering ECAs

“ It’s too early to say what impact a prolonged consumption of MGO will have on older engines”

eXeCUtiVe deBate

Issue TWO 2015 33

In profIle

this was economically viable.”Delphis, best known as an

intra-European box player, has been one of the companies most affected by this year’s introduction of an ECA in Europe. “From a technical point of view,” says Alex Saverys, the line’s CEO, “it’s too early to say what impact a prolonged consumption of MGO will have on the engines of 10 to 15-year-old ships.”

For Jan Hanses 2015 has been

all about getting used to operating within an ECA. The ceo of ferry firm, Viking Line, has six of his seven vessels sailing in the new Baltic ECA. These ships are now running on MGO, the cost of which will hit the line for an additional EUR10m-15m this year alone, according to Hanses. Viking Line’s 2013-built Viking Grace is the exception to the rest of the fleet. It is the first vessel in the Baltic Sea – and the first large passenger

vessel in the world – to be powered by LNG.

Finally in this operators’ roundup, Clipper has decided to convert one HFO tank on six of its 30,000 dwt Trader-type bulk carriers into MGO tanks.

The conversion reduces unnec-essary costs of frequent bunker operations and delays, the Danish line says. Simultaneously, it makes the vessels compliant with current leg-islation. As an extra benefit, Clipper says the physical separation of piping makes it very unlikely to mix the two fuel grades by mistake. ●

“ Shipping is so much more complicated in every aspect than just a few years ago”

eXeCUtiVe deBate

maritimeceo34

In profIle

In profile this issueMaritime CEO’s 17 correspondents around the world have been in touch with many of the world’s top shipowners. Highlights are carried over the next 17 pages

Paul Stevens

p.44

Giovanni Visentini

p.50

Andrew Abbott

p.47

Paddy Rodgers

p.40

Anthony Gurnee

p.39

Issue TWO 2015 35

In profIle

Nick Fisher

p.42

Julian Proctor

p.45

Kingsley Koo

p.44

Christian Andersen

p.41

Robert Macleod

p.36

Jens Ismar

p.48

Idar Hillersøy

p.51

Anoop Sharma

p.43Paolo Clerici

p.49

maritimeceo36

In profIle

Tankers are famously volatile – few can have observed that more closely than Robert

Macleod over the past seven months. The Norwegian was appointed as CEO of John Fredriksen’s Frontline Management last November at a time when many were writing the com-pany off, suggesting it was close to bankrupt extinction. Now, however, just over half a year into his reign and the company is smelling of roses.

Macleod took over from one of Fredriksen’s key lieutenants, Jens Martin Jensen, just as many were questioning whether the company would be able to pay back its bonds which were coming up for maturity.

Macleod had been with Maersk from 2001 to 2004, then Glencore through to 2011, before running his own company, Highland Tankers, until Fredriksen came knocking, taking on the CEO role at one of Fredriksen’s flagships at the age of just 35.

He took the reins at Frontline with five months to go until its bond was due to mature, and with the company weighed down with $1bn of debt and lease obligations. VLCC and suezmax rates were still low and speculation was rife that restructur-ing was on the cards.

However, as is the often the case with John Fredriksen-related companies, the fat lady did not sing.

Rates rallied, initially with a num-ber of VLCCs including Frontline ones going out as floating storage. The bond is just about paid to the astonishment of many. Commented local newspaper Dagens Næringsliv: “Whoever one or two years ago had said that the owners of the convert-ible bond in the tanker company Frontline at maturity today would come to get back all their money were probably taken away by men with white coats.”

The suddenly firmer footing now looks like Frontline will merge with Frontline 2012, the vehicle Fredriksen spun off four years ago. Fredriksen has been in a merging mood of late – bulker firms Golden Ocean and Knightsbridge Shipping have joined forces while Frontline Management itself tied up with Tankers International last October to create VLCC Chartering.

Tanker owners across the world are in consolidation mode as rates firm. For Macleod, the recent tanker bull run is, he says, the beginning of a recovery.

“The next five years will be a lot better than the previous five,” he

says, outlining how with less capital available the risk of oversupply should be reduced. “We are now seeing a strong spot market, without prices being pushed, which is a healthy sign,” he observes.

The main reason for the uptick in tanker rates is the lengthening ton/mile scenario, Macleod reckons with plenty more long voyages from the Atlantic Basin to Asia. Moreover, he thinks a two-tier market is develop-ing between older and newer vessels.

“Modern vessels are in demand and the market is finally not in over-supply,” Macleod says.

Another factor is port delays, which has taken out capacity. Basra is one example given by the Frontline CEO where delays can last up to 25 days.

The final reason for the uptick is down to owners’ confidence, which is strong after many years with a weak market. “Sentiment is important,” Macleod says.

In terms of making investments in the fleet, Macleod still feels prices will actually decline more and he says he will be patient before buying much more tonnage. Product tankers

“ We are constantly looking for opportunities in the market and we are likely to grow going forward”

Aged just 35, Robert Macleod took the reins at Frontline Management in November last year as many speculated the John Fredriksen tanker vehicle was in jeopardy. He has masterminded a dramatic turnaround

The comeback kid

Issue TWO 2015 37

In profIle

make for the best investment at the moment, Macleod thinks.

Frontline Management cur-rently controls 67 vessels. Two thirds are crude – a mix of VLCCs and suezmaxes, and the rest are product carriers.

“We are constantly looking for

opportunities in the market and we are likely to grow going forward,” Macleod tells Maritime CEO. His take on the tanker markets as a whole is perhaps a sign of things to come from this Fredriksen vehicle. “Consolidation will only increase, which is healthy,” he concludes. ●

“ We are now seeing a strong spot market, without prices being pushed, which is a healthy sign”

Frontline

ManagementJohn Fredriksen-controlled tanker

vehicle. Currently operates 67 vessels, a mix of VLCCs, suezmaxes and

product tankers. Signed with Tankers International last

year to form VLCC Chartering.

Spot on

in profiLe

We introduced the first commercial bunker fuel testing programme for ships in 1981. Today, customers remain at the heart of our business. We operate a global network of technical experts and offices, four specialist and wholly-owned fuel testing laboratories strategically located in Rotterdam, Singapore, Houston and Fujairah, with access to 200 key bunkering ports worldwide for bunker quantity surveys. We are committed to providing services with absolute integrity and professionalism.

Veritas Petroleum Services (VPS), the leader in maritime testing and surveys, delivers solutions that help ship operators achieve measurable improvements to fuel management, fuel cost, operational efficiency and compliance with marine fuel regulatory requirements.

The Leader in Maritime Testing & Surveys

AmericasHouston318 North 16th StreetLa Porte, Texas 77571USAT + 1 281 470 1030E [email protected]

EuropeRotterdamZwolseweg 12994 LB BarendrechtThe NetherlandsT + 31 10 292 2600E [email protected]

Asia, Middle East & AfricaSingapore27 Changi South Street 1Singapore 486071T + 65 6779 2475E [email protected]

www.v-p-s.com

Veritas Petroleum Services Group

Issue TWO 2015 39

After a career spent working for other people, president and CEO Anthony Gurnee

founded Ardmore Shipping in 2010 with his business partner Mark Cameron. Gurnee says founding the chemical/product tanker company with Cameron, his COO, has been “a fantastic experience and the high-light of our careers – so far anyway.” But it was a tough beginning.

“Not only did we face a challeng-ing chartering and finance market, but we were also building a company from scratch and had to establish an operating reputation,” he tells Maritime CEO. “I think our success at that early stage was the result of our constant focus from day one on oper-ational excellence, a service mindset, a transparent organisation, and the backing of a very experienced and well-regarded private equity firm, Greenbriar.”

The chemical tanker segment is a tough nut to crack, being persis-tently overtonnaged, technically complex and stringently regulated – but Ardmore is beginning to see an upside, especially through cross-trading in the product tanker market.

“We are reaping the benefits of a modern, high-quality fleet in a strong product tanker market at the

moment, and are beginning to see a similar upturn begin in the chemical sector. We operate our fleet in both sectors, and we will continue to do so,” he says.

“Our strategy is to focus on the more complex end of the prod-uct market and the simpler end of the chemical market, where there is a lot of overlap. The challenge is to make the most of this strong market and plan for the next stage – what that is going to be, we don’t know yet but I doubt it will be a big departure from our current strategy.”

Gurnee had already had a long career in executive positions before Ardmore, having spent time as CFO of Teekay, president of Nedship International, and president and COO of Singapore’s MTM Group, among other positions.

Both he and Cameron have also spent many years at sea, Gurnee in the US Navy and Cameron as a merchant seaman. Ardmore’s fleet was established with the purchase of a 45,700 dwt product tanker they renamed Ardmore Seafarer, “named after the most important person in our company”, as Gurnee told dele-gates a recent conference.

Today, Ardmore has 18 vessels in operation. Eleven ships are MR tank-ers of between 45,000 to 50,000 dwt; the other seven vessels are 17,000 to 37,000 dwt product and chemical tankers. All Ardmore’s fleet has been built or modified to a fuel-efficient specification, which is a key compo-nent of the company’s strategy.

“When it comes to fuel effi-ciency, we really think of it two ways,” Gurnee explains. “One is from a technical point of view, which really relates to the engine itself, hull coatings and modifications made

to the propeller etcetera. But there’s also an operational component to focus on, and we don’t think that too many people do that. That’s really optimising the voyage itself, making sure the ship is optimally trimmed to reduce fuel consumption, and routing the ship on the voyage in a way that makes the best use of not just the weather conditions but also currents on the way.”

The recent drop in oil price wouldn’t deter Ardmore from going for fuel-efficient newbuildings again in the future, but Gurnee says placing new vessel orders isn’t an option right now. “I think the more interesting opportunities are in ships that have already been ordered or are in fact on the water,” he says. “We’re evaluating acquisition opportunities all the time.” ●

Ardmore Shipping

Founded five years ago in Ireland, the company has grown fast, with the aid of private equity money, and now boasts 18 ships, a mix of chemical and

product tankers.

Spot on

Product and chemical mixThe president and CEO of Ardmore Shipping explains why his company has a different approach to others

in profiLe

“ Our strategy is to focus on the more complex end of the product market and the simpler end of the chemical market”

maritimeceo40

In profIle

Paddy Rodgers, CEO of tanker giant Euronav, is in an under-standably jovial mood when

Maritime CEO comes knocking. A brilliantly timed cheap fleet build up – including snapping up Maersk’s VLCC fleet – was followed by a listing in New York this January as VLCC rates rallied, which has seen Rodgers’ own stock rise. At the start of May Rodgers unveiled Euronav’s best quarterly results since 2008. What’s more, he is adamant that the current uptick in tanker fortunes is just the start of a prolonged rate boom.

“We believe we are in the early stages of a multi-year cycle of stronger freight rates driven by sev-eral supportive factors,” Rodgers says.

Vessel supply is limited over the next two years, he reckons, pointing to Clarksons data that estimates only 31 net VLCCs will be added to the global fleet in the next two years and only 15 suezmaxes equating to less than 2.5% of net additions in each of the next two years.

This comes at a time when oil demand is likely to jump. “With the oil price 50% lower than the summer of 2014 this should transmit over time into strong demand,” Rodgers says, picking up on the IEA’s figures that show 1m barrels per day (bpd) growth for 2015 and 1.2m bpd in 2016. A million extra barrels would

require 45 new VLCCs, Rodgers says. “Given the limited supply of new ships this provides strong support for our outlook,” he adds.

The ton-mile effect is also sup-portive to Rodgers’ sunny outlook. Trade lanes are changing. Asia is increasingly having to source oil from the Atlantic rather than the Middle East.

“To put this into context,” Rodgers says, “Arabian Gulf to China is 5,500 miles versus Latin American to China which is 11,500 miles.”

Rodgers started out at a lawyer in 1982 before joining CMB as its in-house counsel in 1989. He became CFO at Euronav in 1998 and CEO two years later.

Despite all this seemingly good news for the tanker sector, Rodgers is circumspect on adding more ships to his fleet. Indeed at his quarterly results he beseeched fellow owners

not to order new ships as that might upset the delicate supply/demand balance in the VLCC trades.

“We have no firm plans at pres-ent regarding our fleet as we have effectively done our shopping in 2013 and 2014 with the purchase of 19 VLCCs during that period in antici-pation of strong freight rates that we now are experiencing,” Rodgers tells Maritime CEO.

“Our outlook is simple and disci-plined,” says the former lawyer, “if we can add to our fleet by an accre-tive addition then we will closely consider it. However, it will have to mean acquiring assets at NAV or a discount to NAV and for the addi-tional fleet to at least match or more likely reduce the breakeven cost of the enlarged fleet.”

It is this discipline that has seen Euronav become one of the top tanker tips for investors. ●

Euronav

New York-listed tanker giant with 49 suezmaxes and VLCCs on its books. Fleet average of less than eight years. Bought out Maersk’s VLCC fleet in

January last year.

Spot on

Jolly Rodgers Tankers are in the early stages of a multi-year cycle of stronger freight rates, argues the boss of Euronav

“ If we can add to our fleet by an accretive addition then we will closely consider it”

Issue TWO 2015 41

From his Oslo office, Christian Andersen, 54, founder of Avance Gas, seems at ease,

confident that the coming years are destined to be strong ones for VLGCs despite the naysayers who worry about the orderbook and the falling oil price. Indeed, such is his strong belief in the sector he even uses the Maritime CEO platform to seek out potential acquisition targets.

Commenting on the collapse in crude price and its impact on the LPG availability in the US, Andersen sees sufficient refinery capacity and export of natural gas, combined with a continued development of crude oil production, suggesting LPG volumes will be solid.

Andersen, whose CV includes stints at BW Gas as well as founding Amanda LPG Trading, points to Cheniere Energy’s recent green light to expand its $18bn Sabine Pass natu-ral gas liquefaction facility, as another source of optimism. The Sabine Pass is the first facility to ship LNG from the continental US.

The global orderbook of 85 ships with delivery from 2015 to 2017 does not faze him either as the ton/mile scenerio will jump when the US starts exporting to Asia.

Up to 2012 the Middle East was the main exporter of LPG with more

than 35m tons a year. The US started out exporting 3.5m tons, this doubled in 2013, and exports reached close to 11.5m tons in 2014, and are expected to reach close to 20m tons this year and up to 30m tons next year.

“We will continue to have exports from the Middle East at around 32 to 33m tons and the same number of exports coming out of the US,” Andersen reckons.

Avance is a spot player. All the ships are spot focused bar one on time charter, albeit even this one is priced on a spot basis.

“We will continue to work on flexible or floating pricing rather than fixed pricing, as this is better for the shareholder, so it is not likely that we will change strategy in the near future,” Andersen maintains.

Avance is a three-way venture between Norway’s Stolt-Nielsen, Saudi Arabia’s Sungas Holdings and Bermuda-based shipowner Frontline 2012. The company has made clear it wants to grow.

Avance has actively looked for mergers and acquisitions, but has not

found the right candidate to date. “We have not done anything

since we took over two ships from Angelicoussis a couple of years ago and we have a less active approaching policy right now. We are, however, very interested in building up the size of the company, so if anyone wants to talk to us, they are welcome,” says Andersen.

Avance took on its first ship in 2009. In late 2010, it acquired three VLGCs in a share/cash transaction and Sungas became a 50% share-holder in the company. In mid-2012, Avance acquired Maran Gas’s LPG ships in a cash transaction, adding two ships to the fleet, then consisting of six modern VLGCs. In the summer of 2013, Avance did a private place-ment to Frontline 2012, whereby the Fredriksen vehicle became a 33% shareholder alongside Stolt-Nielsen and Sungas. In October of the same year, Avance acquired Frontline 2012’s newbuilding program at Jiangnan Shipyard, building the fleet to 14 units. That same month it listed on the OTC market at the Oslo Stock Exchange and in April last year it became a publicly listed company on the Oslo Stock Exchange.

The ships Avance took on at Jiangnan Shipyard in China have been Andersen’s biggest source of consternation. The VLGC Breeze and VLGC Monsoon are two Chinese newbuilds that have had to go for urgent repairs within weeks of being delivered.

“We do not see that the incidents on Monsoon and Breeze say anything on ships built in China on a general matter. However, we are working to sharpen up the delivery procedures on the five remaining ships in the series of eight ships,” Andersen con-cludes. ●

Avance Gas

VLGC owner listed in Oslo. A joint venture between Frontline 2012, Stolt-

Nielsen and Sungas. Founded in 2009, the company now has 14 ships.

Spot on

Making advancesThe founder of Avance Gas uses Maritime CEO as a platform to seek out potential takeover targets

in profiLe

maritimeceo42

In profIle

Masterbulk’s plans to diver-sify earnings by adding third party management to

shipownership have come to a sudden halt. The 20-year-old Singapore off-shoot of Westfal-Larsen has handed over management of its own fleet of 16 open-hatch supramaxes to Rickmers Shipmanagement.

Masterbulk’s CEO Nick Fisher tells Maritime CEO that the economics of running a standalone shipman-agement business for the number of vessels involved can no longer be justified in the current depressed market.

“For Masterbulk there will be significant financial benefits both in overheads and in opex, the business of shipping is, of course, all about economies of scale,” he says.

Fisher thinks many other ship-owners will follow suit.

On the markets, Fisher warns of plenty more trouble to come.

“There is,” he says, “considerable pain out there now and there will be casualties: consolidation, company closure and sales of distressed assets will continue. Recently published first quarter results from well-known dry bulk players tell the story.” ●

Masterbulk switches tackSingapore offshoot of Westfal-Larsen ditches shipmanagement

Selling your ship scraps?Leave it to us.

We acknowledge that maritime industry is your expertise. But when it comes to ship

scraps recycling, leave the hassles to us. We purchase scrap metals from vessels,

ships, anchor chains, winches, propellers, shipyards or oil rigs by offering:

Competitive priceHassle-free service

Transparent weighing & payment process

Headquarters Office33 Pioneer Road North Singapore 628474Tel: (65) 6861 9833 | Fax: (65) 6862 9833

[email protected]

Yards Location12/ 14 Gul Road s629344 | Tel: (65) 6265 9833 14 Defu Lane 11 s539170 | Tel: (65) 6382 0576

www.unionsteel.com.sg

Where Weight Really MattersOur scrap metal yard @ 14 Gul Road

Contact us today and quote MARITIMEfor a special quotation

A Member of Union Steel Holdings Limited

TRANSPARENCY

GUARANTEED

Issue TWO 2015 43

In profIle

For a little under seven years since August 2008, Captain Anoop Kumar Sharma has

been functioning as CEO of India’s third largest private sector shipowner, Essar Shipping, whose fortunes he has been guiding through one of the most turbulent periods in the history of shipping.

On March 31 this year, the 55-year-old Sharma also took over the functions of managing director from the retiring A R Ramakrishna, with whom he had forged the perfect part-nership designed to keep the company in good financial health. Ramki’s wizardry with numbers was well complemented by Sharma’s practical knowledge of shipping, garnered over three decades in the industry before he joined Essar.

A native of Jhansi, Uttar Pradesh, the 1960-born Sharma came to Mumbai as a teenager and started at Training Ship T.S. Rajendra. It was inevitable that, upon completion of his training in 1978, he would join the fount of Indian shipping talent, Shipping Corporation of India (SCI).

For the next three decades, he remained an SCI man, sailing on the state-owned company’s vessels until late-1992, and then coming ashore on

December 14 1992, the day after the demolition of the Babri Masjid, that resulted in enormous political com-motion and violence in India. Over the subsequent 15 years, Sharma gained rich and varied shore experience at SCI, moving from one department to another.

“When I joined Essar Shipping as CEO in August 2008, the company had just seven vessels,” he reminisces. “Today, we have 15 ocean-going ships – apart from numerous tugs and barges – with an average age of 11.5 years, that is almost half the average age of the Indian merchant fleet.”

The company today owns and operates two VLCCs, three capesize vessels, six mini-cape bulk carriers (all newbuilds from STX Dalian), two supramaxes and two handysize ves-sels; and has four supramax vessels on order at ABG Shipyard’s facility in Dahej, Gujarat.

One of these ships, which are to be acquired on a bareboat charter basis, will join the fleet in the ongoing financial year, while the others will be delivered within six months of one another. Once all of them have been

added to the fleet, the company’s total tonnage will touch 2.2m dwt.

“Our vision for Essar Shipping is to have a young, balanced fleet,” says Sharma. “With so much oversupply of vessels the world over, everyone is looking to charter younger vessels. So, in recent times, we have replaced our entire older tonnage with reasonably young vessels.”

The company has generally adopted a policy of entering into a mix of long-term, medium-term and spot market contracts with reputed global oil and industrial majors, allowing it to have a hedge against spot market volatility and industrial cyclicality.

“But a policy correction has been forced on us due to the state of the bulk freight market,” says Sharma. “Our chartering policy used to be 60% employment on long-term basis, and 40% on short-term.

“However, in the current bad market, all long-term contracts for our bulk carriers have been long com-pleted, and predictably not renewed. Bunker prices are so low at the moment that there is no advantage to slow steaming.

“The BDI is at its lowest point in its history. Rates are now so poor that I advise my chartering wing to avoid locking in our vessels for long periods, because we are bound to get better rates in a few months’ time.”

Starting from October 2015, over the following 15-18 months, Sharma sees the bulk sector improving – even if not drastically, to at least allow the company to recover interest costs. It has therefore become a matter of riding out this prolonged difficult period until shipping sails into a new dawn. ●

Banking on a young fleetEssar Shipping’s vessels are half the average age of the Indian merchant fleet, something that should stand it in good stead

Essar Shipping

India’s third largest private sector shipowner. Has 15 ships as well as

many tugs and barges.

Spot on

maritimeceo44

In profIle

The director of one of Hong Kong’s oldest shipping lines, Valles Steamship, is not

happy with private equity’s inter-vention in the industry, arguing that the downturn is far more harsh as a result of all the new money in shipping.

Kingsley Koo, the current chair-man of the Hong Kong Shipowners Association, tells Maritime CEO: “There is too much speculation in shipping.” He says there are too many funds with too much money investing in the industry. While Valles typically orders one or two ships at a time, private equity is ordering “by the hundred”, Koo says.

Koo urges fellow owners not to build new ships, as the markets are too fragile too absorb more tonnage. Valles’s fleet sees 12 ships on the water plus three product tankers on order, which Koo stresses is replace-ment tonnage.

While he feels tankers are picking up, Koo, whose past career included a lengthy stint at American class society ABS, is concerned

about dry bulk prospects.“I worry for some of the owners

on the dry side,” Koo admits. ●

‘There is too much speculation in shipping,’ says the chairman of the Hong Kong Shipowners Association

A swipe at private equity

With oil prices remaining at low levels, Foss Marine is focusing on new areas to keep busy, princi-pally the Arctic. seattle-based Foss Marine has more than 200 tugs and barges. its latest addition to the fleet is a 360 ft barge built specifically for transporting large modules in shal-low draft regions of the Arctic, while the first of three Arctic-class tugs built at its own shipyard in oregon was christened on April 9.

“When it comes to our harbour service business,” paul stevens, the firm’s ceo says, “what we see immediately before us is a west coast market that has been adversely impacted by a labour disruption, congested terminals and a further

continuation of vessel alliances. This, along with a drop in tanker calls as a result of crude oil deliveries by

railcar to west coast oil refineries, has reduced tanker escorts and put a strain on operating efficiencies.”

As a result the harbour service group remains very focused on cost control.

looking ahead, stevens is opti-mistic that the Us ban on oil exports will be lifted and his tugs will support the various tankers that are required to carry these exports.

As for Foss Marine’s marine project business, activity is on the rise as it positions itself to serve the activities in the Arctic.

“There are maritime opportu-nities in russia, Alaska and canada that match Foss’s capabilities,” stevens says. ●

Foss Marine heads for the Arctic

“In many ways, the shipping industry is

exposed to more levels of corruption than any other industry”— Alexandra Wrage,

president, TRACE

Issue TWO 2015 45

In profIle

Container shipping is set to go through a “great renais-sance”, unlike dry bulk

which will remain an “uncertain” market for years to come, claims Julian Proctor, managing direc-tor at Tiger Group Investments, the firm behind names such as Seaspan, Greathorse Shipping, POSH Terasea and GC Industrial Investments (GCI).

Tiger, via Seaspan and GCI, has links to more than $10bn in containership assets. For Proctor, the sector is primed for strong growth. “Those businesses are entering into a great renaissance as liners report better results,” he says, adding: “The next 12 months will be very favourable for contain-ership lessors.”

The trend to order ever-larger boxships is likely to lead Seaspan back to Korea for some big ships soon. “We think the large ship trend will continue. There’s a lot more liners who will come in for them,” he says from his office overlooking Victoria Harbour in Hong Kong.

Container’s glad tidings are not replicated however in dry bulk, something Tiger is exposed to via holdings Greathorse Shipping and

Tiger Bulk. “Dry bulk is going to have a very

tough time for a few years,” concedes Proctor, “but this will create lots of opportunities.” Proctor admits concern at all the money coming into the sector from New York. “No one knows how they will behave,” he muses, adding, “This will add to an already uncertain market.”

Tiger, by and large, has been very savvy at its market timings in what ever sector it has entered – with the possible exception of tankers, some-thing Proctor admits.

“We sold a bunch of VLCCs to Greek shipowners last year – the timing was off,” he concedes.

Nevertheless, Proctor thinks that boat has now sailed; investment opportunities lie elsewhere.

“We think tankers are very fully

valued, we will not be investing here apart from in stainless steel chemi-cal tankers,” the UK national says.

Greathorse Chemical is the group’s tanker vehicle at present – it boasts a fleet of 12 ships, and Proctor says the company will add to that, but only on a selective basis. ●

Julian Proctor, managing director of Tiger Group Investments, ponders what sectors have the best potential

Tiger Group Investments

Private investment vehicle based in Hong Kong involved in ship-ping names such as Seaspan, Greathorse Shipping, POSH

Terasea and GC Industrial Investments.

Spot on

Opportunities in all trades

“ We think tankers are very fully valued, we will not be investing here”

“This is a generation that sits in front of

a Bloomberg terminal and uses a laptop, and thinks telex is so sweet and antiquated”— Alexander Goulandris,

CEO, EssDocs

The must-attend global maritime event for 2015

Leaders from every sector of the global shipping industry will descend on London in September 2015 to celebrate the second London International Shipping Week (LISW). LISW will be packed with over 100 individual events and top rank meetings, culminating in a highly- focused industry and Government shipping conference and spectacular Gala Dinner.

www.londoninternationalshippingweek.com

Diamond

Golf Day Gala Champagne Reception Gala Dinner

Gold

Associate Sponsor

Platinum

Propelling world trade

Silver

Event App & Silver

LEADING SPONSORS

Organised byin association with

For further information on all sponsors please visit the website

30032015_lisw_2015_A4.indd 1 09/04/2015 10:07:08

Issue TWO 2015 47

In profIle

Container carriers continue to chase market share much to the detriment of their

bottom lines, says the head of one of America’s top boxlines.

“The vast majority of carriers are still obsessed with vessel size and market share instead of profitability,” says Andrew Abbott, the president and CEO of Atlantic Container Line (ACL).

With the alliances becoming bigger and more concentrated, alliance carriers can no longer differentiate themselves on service versus their competitors on the same ships, Abbott, a 35-year veteran in the industry, contends. They can only differentiate themselves on price, which is why many rates are still non-compensatory. “I guess some people like to carry containers for practice,” quips Abbott.

With ships getting larger and larger, and companies automating to cut costs, the big lines can no longer provide the level of customer service that once endeared them to their customers, the American says.

“When you have a weekly

capacity of 25,000-plus teu, it is impossible to babysit everyone’s cargo,” Abott says, adding: “So middlemen like 3PLs and NVOCCs have sprung up to deal with the end customer, but taking a big chunk of the profit margin in the process.”

Another big change in the indus-try that Abbott believes is hurting many is that fewer lines today are being run by businessmen, with bureaucrats taking the top posts.

“It is interesting to note that the lines whose top management have proven track records in business – lines like Maersk, OOCL and a few others – seem to be building a track record of profitability versus those bogged down with political baggage,” Abbott says.

Overcapacity is hitting almost every container tradelane these days, the American national reckons.

“There are too many ships in the world today, and lines are too focused on the headhaul trades around the world,” Abbott says, noting: “The Asian lines have severely damaged the transatlantic, treating it the same as the transpacific or Europe-Far East.”

Historically, the Atlantic rates were always within 20% of each other in both directions because the vol-umes have always being within 20% of each other. But that fact has been ignored, and today the rates mirror the transpacific, with US import rates much higher than export rates.

“Transatlantic profitability is much lower than what it could be, if people would only treat it as a stand alone trade,” Abbott says.

ACL owns 12 conros and PCTCs. The five largest conros in the world are operated by ACL in its core North Atlantic trade. The remaining seven conros and PCTCs are chartered to its parent company, Italy’s Grimaldi Group.

ACL is replacing all of its five conros with vessels that have double the container capacity and 50% more roro capacity. Today ACL has a 4% market share of the North Atlantic container market; the new vessels will enable the company to reach 8% market share, making it one of the top four carriers in that relatively small trade.

ACL’s status as a niche carrier has seen it become the envy of the liner world. It has been one of the five most profitable carriers in the world every year since 1994, according to the line’s boss. ●

‘Carriers obsessed with market share over profits’The veteran boss of Atlantic Container Line has some advice for his peers

ACL

Atlantic Container Line is part of the Grimaldi Group. It owns 12

conros and PCTCs.

Spot on

“ The Asian lines have severely damaged the transatlantic”

The must-attend global maritime event for 2015

Leaders from every sector of the global shipping industry will descend on London in September 2015 to celebrate the second London International Shipping Week (LISW). LISW will be packed with over 100 individual events and top rank meetings, culminating in a highly- focused industry and Government shipping conference and spectacular Gala Dinner.

www.londoninternationalshippingweek.com

Diamond

Golf Day Gala Champagne Reception Gala Dinner

Gold

Associate Sponsor

Platinum

Propelling world trade

Silver

Event App & Silver

LEADING SPONSORS

Organised byin association with

For further information on all sponsors please visit the website

30032015_lisw_2015_A4.indd 1 09/04/2015 10:07:08

maritimeceo48

In profIle

There is something refreshingly humble and frank about Jens Ismar, the CEO of Western

Bulk, a characteristic rather uncom-mon in the world of shipowning. Take, for instance, his most recent annual report, in which he admitted: “We got the market wrong.” Said wrong assumptions resulted in a $57m loss last year, something Ismar is des-perate not to repeat, though he has already gone on record to warn 2015 will likely be another year in the red.

The Oslo-listed dry bulk player is one of the top operators of supra-max-sized vessels in the world.

Ismar acknowledges the grim dry bulk market at present and admits the bad times might last for quite a while yet with plenty of pain to come.

“We are definitely at a low point in the cycle,” he says, musing: “The question is more how much longer we will be at this historical low level? This time, contrary to what happened during the financial crisis, it seems we will not get any help from the demand side. The industry therefore has to take the long road to rebalance the markets by scrap-ping and cancelling tonnage. This is always a painful journey.”

As previous head of shipbro-ker, Lorentzen & Stemoco, as well as a former director of chartering and operation with BW Gas, he

is remaining conservative in fleet growth plans.

“We are an asset light company and will not invest in assets the way we are structured today. This being said asset values are on the way down so it is still too early as of today to invest in tonnage,” Ismar elaborates.

The Oslo outfit is using the cur-rent downturn to strengthen areas where it has the most experience. “The key before the market turns– which is likely to take some time – is to sharpen the organisation and to fight for every dollar to try to make some margin,” he says, adding: “We will focus on the sizes where we have real strength and scale – handies to ultramaxes. In these segments we have proven we can create value.”

As a part of the ongoing ‘sharp-ening’ process, the company recently closed one desk shortly after opening another office.

“The closure of the panamax desk,” Ismar explains, “was due to the fact we were unable to create

synergies and leverage with the other Western Bulk units. The remaining business units work well together and leverage on each other’s strengths.”

To stay on track WB Chartering is looking to capture short-term trends in the market with a new office in Miami targeting business in the US Gulf area.

“Looking beyond 2015, we firmly believe we have the right ships at still attractive rates and optionality,” Ismar concludes. ●

‘We got the market wrong’It’s rare to hear a shipowner admit mistakes – and rather refreshing

Western Bulk

Oslo-listed Western Bulk was established in 1982. It is controlled

by the Kistefos Group and is focused on bulkers ranging in size

from handy to ultramax.

Spot on “Open data and transparency can

eventually contribute positively to the overall competitiveness of the industry”— Demitris Memos,

managing director, MarineTraffic

Issue TWO 2015 49

In profIle

Paolo Clerici is a well-known name in the international shipping market as chairman

of Coeclerici, the Italian group based in Milan focused on coal trading and logistics with an annual turnover of more than EUR600m. In 2002 Clerici decided to sell all his fleet of pana-max and capesize bulk carriers – 20 ships owned by Coeclerici Ceres Bulk Carriers – to the Greek owner Peter Livanos in order to further invest and strengthen his trading and tranship-ment business areas.

From June 2013, however, Clerici is back in the dry bulk business through a newly formed and equally participated joint venture called dACC Maritime, built up with d’Am-ico Group with a mission to invest in supramax bulk carriers.

“The joint venture set up together with d’Amico Group has a hedge approach for Coeclerici in order to balance a future sea freight increase and represents an impor-tant step in the growth strategy of the group, which after 10 years is investing again in the dry bulk shipping sector” says Clerici, dACC Maritime’s chairman. “We are par-ticularly pleased with this operation, in which we are joined by a leading

shipping company and one of Japan’s leading shipyards. The joint venture is proof that building industrial partnerships makes it possible to achieve significant results, thanks to the combination of different types of know-how and managerial experience.”

The first series of two newbuild-ings, with an option for further two ships already exercised, were ordered in Japan to Nagasaki-based Oshima Shipbuilding at a price of less than $30m each, via the trading house Sumitomo Corporation and the brokerage firm Banchero & Costa of Genoa. The first ship, named dACC Tireno (60,000 dwt, 200 m long and 32.26 m wide), has just

been delivered and will enter the new Medi Supra Pool just launched by d’Amico Group. Tirreno is the same name of the first ship bought by Clerici’s grandfather in 1911. The delivery of dACC Maritime’s second sister ship is expected in September, while the third and fourth units will come in the second half of 2016.

“We are certain that this joint venture is destined to grow,” adds Clerici, emphasising that after the first series of four ships, more ships might be ordered if market condi-tions are similar to a couple of years ago.

Coeclerici controls a mine in Russia with an overall annual capac-ity of some 1.2m tons of coal. The aim is to more than double that in the next 10 years. As it stands, Coeclerici charters 90 ships a year to move Russian coal, a figure set to rise soon.

Since 1895, Coeclerici has been sourcing, marketing and transport-ing raw materials – primarily coal – from mines to final end-users, serv-ing the power and steel industries internationally. The logistics division has promoted and patented the use of floating terminals and transfer stations throughout the world. At present the Italian trading and logistics company controls a fleet of seven floating coal transhipment terminals deployed in Indonesia and in Mozambique with a structure spe-cifically conceived to transfer coal coming from the mainland on local barges to panamax and capesize bulkers.

“For the future we have a new M&A project with an Indonesian partner that will create a big coal transhipment company to be listed on the Jakarta and Singapore stock exchanges,” Clerici reveals. ●

Paolo Clerici’s dry bulk return with d’AmicoThe Coeclerici boss has teamed up for a supramax joint venture

“ Building industrial partnerships makes it possible to achieve significant results”

dACC Maritime

A joint venture between d’Am-ico and Coeclerici focusing on

supramaxes. Ordered four ships in Japan with plans for more.

Spot on

maritimeceo50

In profIle

Italian shipowner Giovanni Visentini Trasporti Fluviomarittimi has just taken

delivery of the first of four handymax bulk carrier newbuildings in China, while a further four roro ships will be ordered soon. Visentini Giovanni is a shipping company based in Milan, controlled by the Visentini family who are mainly active in the agribusiness in Italy and in North Carolina in the US. The company is the owner of a dozen ships made up of bulkers and roros.

The 38,000 dwt Korean-designed bulkers being built at China’s AVIC Weihai shipyard cost less than $20m

per unit. “Each of these units can

consume 25 to 30% lower bunker consumptions compared to other bulk carriers of the same class,” Giovanni Visentini tells Maritime CEO. Each of the new bulkers is equipped with four cranes and four grabs.

“At the present moment we are experiencing a terrible dry bulk mar-ket, but a big help to us comes from these new ecoships which burn 18 tons of bunkers a day instead of 25,” Visentini says.

Since his company took the plunge ordering this novel ship type, a further 20 identical units have been ordered at the same yard by European owners.

The technical and commercial

management of the new ships will be carried out by Levantina Bulk, a company based in Genoa, 90% owned by Visentini and headed by Pietro Repetto. The ships are going on a one-year time charter to Hamburg Bulk Carrier.

Next up for Visentini are more roros.

“Three Chinese shipyards are on the short-list for the construction of two – with options for a further two – roro units capable of carrying 150 passengers, with 2,300 lane metres capacity garage and 20 knots speed. The propulsion will be both diesel and LNG. I presume we will sign the newbuilding contract before the end of 2015 with delivery schedule start-ing from 2017 onwards,” the Italian reveals. ●

Roro newbuilds comingItaly’s Giovanni Visentini has a shortlist of yards ready for a sizeable order

Giovanni Visentini

Part of Milan-based agribusiness giant. Fleet is made up of a dozen ships, a mix of bulkers and roros.

Spot on

“How many times do we see abuses

registered, recorded and promulgated by flag states, or a ship arrested for alleged deprivation of liberty of a seafarer”— David Hammond, founder,

Human Rights at Sea

www.splash247.comSplash - for incisive, exclusive maritime news and views 24/7.

Issue TWO 2015 51

In profIle

In a last minute call to reach an offshore owner not occupied with docking vessels, and cutting staff

Maritime CEO reaches Idar Hillersøy. He is willing to stick his neck out, despite the lowest point in offshore history. The friendly CEO of Siem Offshore OSV picks up the phone in an upbeat mood despite the fact that he is in airport in Poland after a long day’s work visiting Remontowa shipyard and haggling over delivery delays.

Siem Offshore OSV is among the largest and most important Norwegian offshore owners. Its diverse fleet today stands at 55 ships.

Hillersøy, only recently installed at the helm as CEO with Siem Offshore OSV, is a man with decades of offshore shipping experience, both as an owner and a broker.

“We are looking further out in the sea and deeper,” he says, on where opportunities lie in today’s depressed market. He highlights Statoil’s success outside Newfoundland and the largest oil discovery in this area in 30 years. Hillersøy knows this area well as he is a former CEO of Secunda Canada. Other firms on Hillersøy’s impressive CV include Simon Møkster Shipping, Norwegian Contractrors and Stolt

Offshore. Siem Offshore OSV in one of

many owners who has lost business in the Kara Sea, north of Siberia, due to sanctions imposed on Russia. Siem Offshore OSV also recently had to send home four AHTSs from Brazil, and the seamen on the ships to the unemployment office .

Providing a fillip, the company recently won a tender from the Norwegian government to send a PSV to help the EU’s migrant-sav-ing Operation Triton in the Mediterranean. The Siem ship was one of 48 vessel offers submitted to the Norwegian government from local owners, a sure sign of a desper-ate market.

Hillersøy fears PSVs will struggle

most in the offshore support arena thanks to a torrent of new vessels that will soon hit the water, launching into an already oversupplied market. How the market is going to absorb all the ships will be difficult for many years to come, he reckons. The subsea seg-ment also looks dire, he warns, noting in particu-lar Subsea 7’s reduced activity and the cutting of thousands of jobs.

While his company is hit by the falling oil price like all OSV players, Hillersøy says one advantage he has is that that the company is backed by Kristian Siem, the founder of Siem Industries, who thinks long-term in everything he does.

Siem Offshore OSV has nine newbuildings on order at Remontowa, nearly half of these (three PSVs and one cableship) will now be delayed. ●

Hillersøy remains sanguine The veteran head of Siem Offshore OSV on today’s depressed market

Siem Offshore

OSVPart of the Kristian Siem empire,

Siem Offshore OSV today oper-ates a diverse fleet of 55 ships

with another nine on order.

Spot on“Ship grounding is the top cause of

loss by value, accounting for 50% of all marine insurance claims in excess of €1m”— Bob Couttie, founder,

Maritime Accident Casebook

maritimeceo52

GadGets

On target

Fonderie 47 has taken one of the world’s most famous, most iconic and most deadly gadgets — the Kalashnikov assault rifle — and transformed it into a beautiful watch.

Available in red or white gold, the Inversion Principle Timepiece is a limited edition of 20 pieces, ten of each type with jumping hours, retrograde minutes, and a three-minute tourbil-lon. Each timepiece bears the serial number of the AK-47 assault rifle from which the steel

in the watch was made and each purchase funds the destruction of a further 1,000 assault rifles in Africa.

$195,000www.fonderie47.com

Hover fun

Compared to the Jag at the top of the page, 95 kmh sounds a bit tame. But it’s quite outrageous in an open-topped hovercraft. Powered by a 60 hp two-

stroke, two-cylinder petrol engine, spinning a 36” pulley-driven prop fan, this two-seater hovercraft will hit 95 kmh eight inches above the ground or water, and can even manage a 20% slope. Lined with US Coast Guard compliant floatation foam, it also floats on water. You’ll need to check your local laws as to what sort of registration is required, but the ride should be well worth the paperwork.

$19,500Hammacher.com

E-type drool

There are two types of Jaguar cars: you can either own ‘a Jag’ or you can own ‘the Jag’. Enzo Ferrari described the

E-type Jaguar as the most beautiful car in the world, and the Eagle recreation of the Low Drag GT is probably the most beautiful E-type there is. Eagle has also a few mod cons, including insulation, air con, a five-speed transmission, and a long range fuel cell. They aim for it to weigh-in at 38kg over a tonne, which apparently gives you the same power to weight ratio as a shiny new 911 Turbo. This is necessarily a guess-timate, as each build is bespoke. But it’s the most gorgeous E-type ever, so whatever you put in it, it will make all but those with a cast-iron will salivate.

$1,071,000+www.eaglegb.com

Issue TWO 2015 53

reGULarwine

As the international con-ference circuit moves inexorably northwards to

Oslo, we must face an eternal ques-tion: what to drink with herring.

Let’s be clear from the outset: wine is not the answer to that ques-tion. Beer and aquavit make much better companions; so instead let’s assume that you will eschew the pickled for the fresh and summery from the smorgasbord.

Do that and you will be on much firmer ground and in the territory of the season’s most suitable tipple: rosé.

There was a time when such a suggestion would have been met with either unconcealed mirth or downright disdain. I know people

who still won’t drink rosé, but for the most part the snobbishness and naff factor have long since been dispelled.

It’s not that I blame the 1970s for everything, but the marketing budget of Mateus rosé, not to men-tion those squat bottles that made such ‘romantic’ candle holders had a devastating effect on our attitude to the pink stuff.

But for those who know, rosé has always had its place in the drinking year, however short and seasonal it may be. They may not age and they may not have the same pedigree that attaches to reds and whites but the pink ‘uns have plenty to offer.

The best examples – from Bordeaux and Provence as well as increasingly from the New World

– are serious wines with structure and considerable style.

The style you go for is a personal choice of course, but don’t be led into thinking that deep colour and quality always go together. Longer time in contact with the skins will impart the former to the juice, but it can also result in some pretty lurid colours.

When accompanied by a fermentation style, which leaves a lot of residual sugar in the wine, the result can be cloying, with a hot finish indicative of too much alcohol. There are plenty of sturdy-looking Bordeaux rosés but they will be normally dry and well balanced. The best looking for my money are the ‘onion skin’ examples of Provence – delicate salmon pinks, though with a touch more alcohol from the warmer growing season.

Very high alcohol is no guaran-tee of anything save a hangover and a wine of 12% ABV is capable of deliv-ering the perfect accompaniment to the smoked salmon, shrimp you will be scarfing down as you graze the buffets and groaning boards of Nor-Shipping. Just avoid the herring if you can. ●

For A clAssic, classy provencal rosé, try chateau la tour de l’evêque 2014 (£10.95, corneyandbarrow.com), certified organic since 2005 and showing plenty of ripe summer fruit.

old plains longhop rosé, Mount lofty ranges, 2014 (bbr.

com, £14.95) from south Australia is a New World take, straight Grenache with an appealing freshness and straw-berry-driven fruit. ●

Two to try

In the pinkNeville Smith gets ready for summer

maritimeceo54

reGULarBooks

The world has changed in the first 15 years of the 21st cen-tury. China has risen; America

has been perceived to have stumbled somewhat. In reality the 20th century was not all American and similarly the 21st won’t be, despite some predictions, all Chinese. Ultimately the two nations will have to learn to live together, facing each other across the Pacific and with a myriad of maritime concerns, regional issues and partners and trade. A num-ber of new books look at this new, sometimes uneasy, sometimes tangen-tial relationship.

Gordon Chang’s Fateful Ties: America’s Preoccupation with China is perhaps a good starting point. Chang, working within various American think tanks, has a somewhat uneasy relationship with China – he famously predicted its Coming Collapse in his book of the same name published in 2003. That didn’t happen. His new book looks at America’s long relationship with China back to first contact and the trading ships of the 19th century. Chang’s right – America has long been fascinated with the Middle Kingdom – as a potentially vast market, a massive enemy, a possible ally in the Cold War and now an economic rival. However, a

similar book could be written arguing that China has long been fascinated by America – republican, economically successful, militarily strong. Chang sees the relationship as uneasy but that those historical ties of mutual fascina-tion could prove to be what binds the two continental economies together this century.

Henry Paulson’s book, Dealing With China: An Insider Unmasks the New Economic Superpower, is more detailed in terms of policy conflicts and so-called ‘hot button’ issues. This is as might be expected from a former head of Goldman Sachs and Treasury Secretary. Paulson’s account is highly anecdotal and, it has to be said, anecdotes are useful when coming from someone who has had the access Paulson has. Part how-to-do business book, part guide to diplomacy in China, part explanation of China’s rise, Dealing with China is highly useful. A criticism might be that Paulson’s intimate dealings with Beijing are somewhat dated now in the era of Xi

Jinping, anti-corruption and the ‘China Dream’, but he still remains one of the highest level interlocutors with Beijing since Kissinger.

Some authors do see problems that could lead to conflict. Ted Galen Carpenter’s America’s Coming War with China posits the scenario that the conflict point will be Taiwan. Galen Carpenter sees Taiwan (backed by the US) and mainland China on a collision course, and unless something dramatic changes, an armed conflict is virtually inevitable within a decade. He offers remedies but many will argue that he overstates the case as Beijing learns to live with a vibrant Taipei and vice versa. From a different perspective Lyle J. Goldstein’s Meeting China Halfway offers points on how Washington and Beijing could diffuse tensions and come to see their reciprocal need for each other in this new century. Goldstein suggests a ‘cooperation spiral’ rather than a down-ward spiral of conflict. As ever with history – time will tell. ●

Learning to live togetherPaul French looks at Sino-US ties

“America has long been fascinated with the Middle Kingdom as a potentially vast market and now an economic rival ”

Issue TWO 2015 55

traVeL

Few cities in Europe have the ability to surprise quite like Oslo. The views, the waterfront

ambience, the rapidly developing res-taurant scene, and a stubborn refusal to let go of its connection to nature all leave an indelible impression on visitors. In summer, waterfront Oslo has a decidedly antipodean feel to it: not too big, relaxed, and fun. For so long the underappreciated, slightly less pretty sister of Bergen, Oslo has found her own sense of style.

Winter is another story. But this is Maritime CEO, and we’re talking about Nor-shipping. So what to do in Oslo if you’ve arrived a day early and you’re steeling yourself for an entire week of meetings, seminars, presentations, and entertainment?

Oslo offers an array of easily accessible parks and gardens. In summer these are popular local escapes for a quick run, brisk walk, or a place to hang out in the summer sun. The dress code can best be described as business casual/athletic/minimalist.

Frogner Park, which is 35

minutes walk from Oslo City Hall, is the largest park in central Oslo and is known locally as the ‘Naked People Park’. Before you get your hopes up, this is due to the statues, which are a feature of these beautiful and popular gardens.

The Royal Palace and park which is just five minutes walk from Oslo City Hall is a perfect place to get away from the urban bustle. Take a sandwich and relax in the gardens. Guided tours of the palace are available.

Next up is Holmenkollen Ski Jump/Ski Museum/Holmenkollen Park Hotel Rica. To get there take train line T1 to Holmenkollen Station, it’s about 25 minutes and a short walk.

At around 10 km from the City Hall, the Holmenkollbakken ski jump sits ominously above the central city. One thousand tons of steel reaching 60 m into the air. It’s a constant reminder of either sporting insanity, or that there are people in this world with far greater powers than the average man. I imagine the Ewoks of

Endor had similar feelings about the Death Star sitting overhead.

Take a short walk down the hill to the Holmenkollen Park Hotel. This hotel is perhaps Norway’s finest example of dragestil (Dragon Style!) architecture. It’s as impressive as anything named after a dragon should be and boasts stunning views and top food. It is a good accommodation option if the centre city isn’t your thing.

Not just herrings

The Oslo food and beverage scene now offers something for every taste – from Italian, Thai-Norwegian fusion food, though to rooftop bars and microbreweries. There is no shortage of good food and drink. It is always wise to take a jacket (it can get on the chilly side), and inform the company finance team of your location.*

Solsiden (Akershusstranda 13) is one of the best seafood restaurants in town...and the Norwegians know how to do seafood. Rustic, popular, and only open in the summer – get in while you can.

Amundsen Bryggeri & Spiseri (Stortingsgaten 20) is situated in the middle of town, opposite the National Theatre. Amundsen offers a very good range of in-house craft beers.

Bølgen & Moi (Løvenskiolds Gate 26 is the perfect ‘wet-lunch’ venue. Great atmosphere, outdoor seating (weather permitting), and potentially a lot of fun.

What better way could there be to celebrate modern Norwegian cuisine… than by grabbing some Thai. But the locals hold the Thai-fusion food and garden setting of Sawan (President Harbitz Gate 4) in high regard.

The Thief/Thief Roof (Landgangen 1) is part of a hotel, but this is one of Oslo’s few roof-top bars. Enjoy great views of the Oslo fjord.*Norway is not a cheap place to visit (Editor’s note: severe understatement), and no prices are quoted in this article. ●

City of surprisesAs Nor-Shipping kicks off Graeme Somerville-Ryan picks out parks, palaces and pubs in the Norwegian capital

maritimeceo56

reGULar

What a question! What a challenge! What a quandary!

My membership of the ‘Happy Hackers’ club is about 10 years now, but still there’s so many great courses to choose from, let alone holes.

At one end of the spectrum, my mind goes back to the Willingdon Golf Club, in the very centre of Mumbai, a par 68 course, where rain stops play every monsoon and there’s a ‘growing’ rock sitting by the ninth hole, par four green - I kid you not, it actually gets bigger year on year.

At the other end my experiences on championship courses such as Amata Springs in Thailand, a floating green on the 17th, par 3, which varies

in length depending on the groundsman’s

mood that day, or the par four,

fourth hole of Sentosa’s

Serapong course

hitting out to what must be the most spectacular setting of any green in Asia with the financial centre and mammoth working containerships as background.

I should be most biased towards Thai courses, the caddies clearly making this a great golfing favour-ite. Yes, hot and sticky weather can be a setback, but compensated by the umbrella caddy and, of course, not forgetting the massage caddy, there are plus points. There are many great and challenging Thai courses too – Black Mountain, Hua Hin, Blue Canyon and Siam Waterside, to name just a few.

So surprisingly in fact, my choice is to go with the fourth at Anahita Golf Course in Mauritius (pictured).

Ernie Els designed the course, volcanic mountains backing, white sun bleached coral sand fronting and a turquoise blue reef ahead. May/June temperatures at a dry 25 degrees means no need for my umbrella or massage caddy,

unfortunately leaving me to manage my own cigar, but at least the buggy coolbox holds up to six silver tum-blers full of G and Ts.

The hole itself? Par four, arrow straight, 425 yards off the blue tees. The tee box nestled back into mature trees takes away any indications of the windage to come. A relatively wide fairway lined with villas on the left and flowering 12 ft high sugar cane on the right, both out of bounds.

My pathetically average drive at 230 yards is a perfect distance to land in bunkers both left and right, so its best I go left and allow for my usual slice.

Second shot to the green, a good 190 yards direct towards the ocean, which, depending on the time of day can be blowing a gale either into your face or your back. Be careful then, a four iron takes you either on the green for two or to Madagascar for the summer. Best go two short of the green with a five iron. Chipping on for three, to putt what is a beautiful green surrounded by coral sea on three sides. Fantastic, except for the howling wind, and three putts later, I’m happy with my double.

The biggest issue with this hole is keeping the cigar lit. Mauritian golf - c’est beau! Happy hacking! ●

“ The buggy coolbox holds up to six silver tumblers full of G and Ts ”

GoLf

Ian Claxton, the head of Thoresen Shipping, takes the Maritime CEO golf challenge, outlining his favourite hole in the world

Chipping onto paradise

Issue TWO 2015 57

reGULarYaChtinG

Peninsular Malaysia’s east coast is close enough for a long weekend escape yet far enough

from any industrial shores to enjoy crystal clear waters and some tran-quil spots to overnight in one’s boat.

On departing Singapore one gets reminded just how busy our shipping approaches are and how diverse the transiting and anchored tonnage really is – from containers, bulk, wet to roros and ferries, let alone offshore’s rigs and supply tenders.

The approximate 120 nautical mile journey to Tioman, the largest inhabited island in the area, takes roughly eight hours including an immigration stopover. Whilst a small destination marina exists most over-night at Pulau Tulai, which boasts a combination of beautiful coral beaches, mangrove swamps (nursing baby sharks) to a deep diving bay for

scuba action.Brilliant sunset evenings allow

for sundowner cocktails – by then a welcome change from the voyage’s Tiger beer – and of course a barbecue sporting the finest cuisine that the local Singapore supermarket can supply.

Being just north of the equator the occasional tropical storm gives rise to some sailing decisions and the sudden accompanying strong winds often test one’s anchoring skills – but what is boating without some variety and survival success?

A return cruise via Pulau Aur

where Napoleon fish chomp at the corals and from where many a dive exhibition is mounted, is a pleasant journey breaker although some rough seas out of season can deter the feint/seasick hearted.

The relatively busy return route, which joins commercial shipping traffic through the straits, was once made more exciting by an accom-panying surfaced submarine, which graciously slid through the slight swells.

In summary, the ability to escape from the hustle of modern commercial Singapore via a short soothing sea passage to some remote peaceful tropical island somehow justifies the financial burden of boat ownership – defying the adage that the best two days of owning a boat are the day you buy it and the day it is sold. ●

“ What is boating without some variety and survival success? ”

Away from the hustle and bustleThe boss of Bengal Tiger Line, Bill Smart, heads out from Singapore to neighbouring Malaysia, highlighting his favourite boating haunts

maritimeceo58

reGULar

Jack of all tradesEvery issue we seek someone brave to reveal all about their sector. This time, we’re talking boxes

the seCret Container

Lessor

Now here is an occupation, which enjoys a certain modernity. Your container

lessor is what modern youth calls a mash up. Part banker, part shipping company operator, accountant, repairer, logistician, credit expert, international trader and even, now and again, swashbuckler. Think Robert Sherwood of Sea Containers, a man who spun $100,000 into a mighty shipping and leasing empire. Or Robert Montague of Tiphook, back in the good old days of the 1990s, the second largest container and trailer lessor in the whole wide world. Or the wily Ian Karan of Clou Container Leasing, Ceylonese, Brit and recently naturalised German, a man who has bought and sold many container leasing companies and made a num-ber of fortunes. A man who suffered many assaults on his dignity by the misinformed.

The high towers of container leasing are in places where the ocean intermingles with more clerkly industries. If you are a big player in

container leasing or a wannabe you go to places like London, San Francisco, Hamburg or Hong Kong. It is in such places that the small pool of indus-try expertise is of largest depth and circumference. In San Francisco there is even a skyscraper dedicated to the industry, the elegant and pointy Trans America building. In the offices of container lessors there will be many dramatic pictures on the wall having a unit load, containerised or maritime theme. This is because there is noth-ing much to see outside the offices. The boxes are scattered all around the world, en route or en depot, they are bland and painted in functional leasing company livery. In the past the quicksilver nature of leasing fleets made the industry attractive to those who would launder money, or ponzi investments in boxes. When historians of East Germany came to chart the organisation of the Stasi, the feared security apparatus, one of the more recondite divisions was based in Switzerland, charged with container maintenance.

For container leasing is a business where attention to detail cannot be too exacting. All those daily charges or boxes off lease in storage, those $15 dent repairs, the daily lease charges from customers. Your con-tainer lessor aims to be a master of the universe when it comes to credit and debt. He has every shipping line listed in his little computer, and the maximum he is prepared to lease on credit to such companies. It can be very volatile, when economies are in great flux, or it can be a rather dull money machine in times of high shipping demand for boxes. For years and years, as long as can be remem-bered the price of a standard 20 footer has been $2,000. And always with the innovation. What computers can do to help the lessor? All those bitty transactions, each container running with dozens of bits of transaction papers evidencing costs for repair, cleaning, storage, repositioning and so forth. When there is a legal or insurance dispute, you should see the banker boxes all piled high on serried ranks of sack barrows.

And world affairs come into it as well. The draw down of forces in Afghanistan has involved the stowing of all manner of outbound kit in around 60,000 teu. A lot of those boxes were leased to Uncle Sam and allies and kind of requisitioned for impro-vised houses and offices. Just think of the winding down — how many days on hire, residual value, drop off locations, quite a list of contentious subjects.

You don’t need a great big staff for offices. But they do need to be com-fortable with spread sheets. What is the sound you will here in the offices of the world’s great container lessors? Murmer murmer. Tap tap. Whirring of solenoids in industrial grade laser printers. ●

Issue TWO 2015 59

reGULar

What is the point of issuing the master of a ship with bits of paper and requir-

ing him to show them to people who turn up onboard and insist on their right to look at them?

The correct answer is, “To enrich corrupt port officials”.

I know a ship, which recently put into a Russian port for bun-kers; the agent came on board and insisted that he needed to take the folder with the trading certificates ashore with him. Soon afterwards two gentlemen from Port State Control turned up and asked for the certificates, and on being told where they were – ashore with the agent – imposed a fine of $500.

There is only one sensible place for a ship’s trading certificates, and that is on the internet. If govern-ments can keep their motor vehicle tax records on the internet, surely the same can be done for merchant ships? If the trading certificates are on the internet, national authorities, port officials, even charterers and underwriters can look them up when they first have to think about the ship rather than waiting until a ship arrives in port.

If the IMO cannot be trusted to keep a website up to date, no doubt IACS can do so, since most of the bits of paper are issued by its members.

This leads me to the most use-less bit of paper yet devised by the IMO; the Nairobi Convention Wreck Removal Certificate, required as of February 14 this year. Like the other ‘evidence of financial responsibility’ certificates, this is issued by the

ship’s flag state, against a fee and a ‘blue card’ (in reality, a PDF) issued by the ship’s P&I Club.

So why do we call a PDF, an electronic document, which is not blue, a ‘blue card’? Nobody knows. Some people trace an analogy with the US permanent residence certif-icate, which was green when it first appeared in 1946, while some people think it was because the paper used by early computer printers was sometimes blue. At all events, this system has been with us since the Civil Liability Convention of 1969, which created a system for paying for oil pollution from tankers which was indeed a wonderful thing in its day, and which created the system.

1969 was 46 years ago. The Vietnam War was at its height, the Beatles were still making records… and the IMO has not come up with a better system, but has just multiplied the old one with Bunker Convention Certificates, Athens Convention

Certificates and now Wreck Removal Certificates.

Talking of certificates, the UK Chief Inspector of Marine Accidents, Captain Steve Clinch, says that it would not be a bad idea if anyone who holds a certificate of competency as officer in charge of a navigational watch should be required to undergo a practical exam in a simulator once every five years, to make sure that they are up to speed with the Collision Regulations. Can anyone think of a good reason why this should not be done?

For the avoidance of doubt, may I say that the reason given for not requiring oral examinations as a part of STCW, namely that, in many nations, the candidate will slip a wad of notes to the examiner, is not a ‘good reason’. Like many things in mer-chant shipping, that is a bad reason.

Bureaucratic inertia, as demon-strated by the IMO sticking with a 46-year-old idea, which was elegant when mainframe computers had less power than your phone has today, is always a bad reason.

Is there intelligent life at the IMO? There is very little evidence for it. ●

Paper, paper, everywhereIn the age of the internet, Andrew Craig-Bennett wonders why ships have to carry so many outdated certificates

the Contrarian

“ If governments can keep their motor vehicle tax records on the internet, surely the same can be done for merchant ships?”

maritimeceo60

reGULar

More than 500 people voted in our latest topical survey. Results and key comments below

Your thoughts

Is overcapacity at shipyards now a permanent feature of shipping?

What is the best bargain in the secondhand market now?

Is India ‘the new China’ for shipping?

Will all these new pools continue to operate once rates pick up?

Should all seafarers have access to broadband internet at sea?

Is the IMO doing enough to protect the lives of seafarers?

“ Shipyards have become very much more productive, and they have political influence which other parts of the industry lack”

“ Shipping is a field of the most unscrupulous, opportunist scoundrels, rogues and pirates. They go where money is. There is no honour, even among thieves”

“ As an industry we need to make more effort to attract, develop and retain”

“ There are many simple initiatives that take too long for the IMO to endorse and implementation of new safety regulations are patchy as some PSC jurisdictions are more vigorous than others”

MarpoLL

“ You can get cheap ships in all segments”

“ Too inefficient and lack of synchronised efforts across the entire value chain to pull off what China has done”

Yes 77%No 23%

Yes 77%No 23%

Handysize bulk carriers 17%Handymax bulk carriers 24%VLCCs 22%Product carriers 13%Containerships up to 3,000 teu 24%

Handysize bulk carriers 17%Handymax bulk carriers 24%VLCCs 22%Product carriers 13%Containerships up to 3,000 teu 24%

Yes 42%No 58%

Yes 42%No 58%

Yes 41%No 59%

Yes 41%No 59%

Yes 71%No 29%

Yes 43%No 57%

Yes 83%No 17%

Yes 43%No 57%

Main Sponsor: Leading Sponsors: Partners:

Organizer:

JOIN THE CONVERSATIONKeep your finger on the pulse of the industry. Attend the Nor-Shipping conferences, where the topics are hot and those on stage are in the know.

OPENINGCONFERENCE

Get a big picture view on the future as top leaders present and debate

the key issues at Nor-Shipping’s signature event.

OCEAN INDUSTRY PODIUM

Pick a session from this fast-paced program on maritime finance, law and insurance or

technology and innovation.

BRAZIL@NOR-SHIPPINGGet a fix on risks and rewards of doing business in Brazil with this

program of activities.

AGENDA OFFSHORE

Gain insight at the conference that brings together the offshore energy

sector and shipping players for some hard talk.

WOMEN@NOR-SHIPPING

Leadership, the environment and the future are in focus at the “Waves of Change” conference –

both genders welcome.

BUY YOUR DELEGATE PASS TODAY AT WWW.NOR-SHIPPING.COM

maritime ceo issue two 2015

Documents