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Market Report 2015
Return of the dragon City’s owners fight for greater maritime awareness
CONTENTS
3 Editor’s Comment 5 Marine Department 6 Port
We need to reflect on what we lost, why and, fundamentally, whether we want to get what was Hong Kong’s back
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—Kenneth Koo, chairman, TCC Group
8 Survey 11 HKSOA
People, location and policies have to be our strengths
13 Flag 15 Shipowners 21 Shipmanagers 24 Human Resources 27 Travel 28 MarPoll
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— Arthur Bowring, managing director, Hong Kong Shipowners Association
We have built the business from the cargo side. Having access to cargo is paramount in this environment — Angad Banga, executive director, Caravel Group
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Hong Kong www.splash247.com
Market Report 2015
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COMMERCIAL DIRECTOR Grant Rowles grant@asiashippingmedia.com
EDITORIAL DIRECTOR Sam Chambers sam@asiashippingmedia.com
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DESIGN Tigersoft Pte Ltd Printed in Hong Kong COVER Andre Eichman Copyright © Asia Shipping Media Pte Ltd (ASM), 2015. 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 grant@ asiashippingmedia.com.
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UP FRONT
Food for thought
T
he top floor of the prestigious Mandarin Oriental hotel in the centre of Hong Kong island affords magnificent views of the city’s towering skyscrapers and Victoria Harbour. It is also home to some rather tasty Cantonese grub and is our regular destination when we hold our shipowner roundtable lunches in the Special Administrative Region (SAR). These by invitation only gatherings are all off the record and allow owners a chance to speak freely about the markets and their gripes with the local set-up. At the end of our most recent lunch there, this one sponsored by Anglo-Eastern Univan, in the knowledge that we had a Hong Kong magazine to put together soon, I asked each of the assembled shipowners for one thing they’d like to see change in Hong Kong to make the territory a greater shipping hub. Ideas flowed fast. More double taxation agreements was the lead demand. Others included more awareness from the Legislative Council (the territory’s de facto parliament) about maritime, improving people skills, a more responsive Marine Department, better resources for the Hong Kong Shipping Register, and for the government to recognise the benefits from maritime to the SAR’s GDP. These and many more suggestions were echoed in a survey we sent out to 250 top names around the Hong Kong maritime community, comments of which can be found on page eight. What is abundantly clear is that the private sector feels the current administration led by
CY Leung is more pro-shipping than any since reunification with China in 1997 and the clock is ticking to get legislation passed to up maritime’s profile with Leung set to quit in 2017. Hopefully, this magazine serves as a springboard to bounce some of these ideas around to the city’s politicians.
Sam Chambers Editor Splash
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MARINE DEPARTMENT
New director has plenty to handle in her intray Maisie Cheng has taken over at the Marine Department. She will need to get up to speed fast to placate the city’s owners
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here was a collective groan among Hong Kong’s shipowners when it was announced at the end of August there was another change at the Marine Department, a government body that has been somewhat of a revolving door in terms of senior appointments in recent years. “We’ll have to start all over again,” one owner confided to Splash, on efforts by the private sector to get across to government the issues affecting maritime in the territory. Michael Wong stepped down as director of the Marine Department, the government organisation tasked with looking after port affairs and the the territory’s very large shipping register, to be replaced by Maisie Cheng. Wong had been in the position for just 18 months. Aged 54, Cheng has served in various bureaux and departments including being deputy secretary for transport and housing from February 2010 to June 2012. She had been director of government logistics since January 2013. Cheng takes on the role with plenty in her intray, as evidenced in many of the following pages of this magazine. Making the department – and especially the register - more responsive was among the key pleas by the 250 people surveyed for this magazine. “As the director of the Marine Department,” Cheng tells Splash in one of her first interviews in the new job, “I aspire to work closely with my colleagues to promote excellence in marine services, to ensure safe operation of the port and all Hong Kong waters as well as to operate the Hong Kong Shipping Register (HKSR) and safeguard the quality of the Hong Kong registered ships.” The register passed the 100m gross ton mark at the end of September and is the fourth largest in the world. Its fast growth has not necessarily been met with
‘The HKSR will continue to enhance its services and provide shipowners with technical support and advice’ a commensurate increase of people at the Marine Department, local owners have complained (see page 13). Cheng is adamant however that more will be done to improve service levels at the flag. “The HKSR will continue to enhance its services and provide shipowners with
technical support and advice,” Cheng insists. In addition, she says the Marine Department will continue to improve its coordination with relevant mainland authorities to provide better protection for Hong Kong-registered ships when they are in international waters and in foreign ports.
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PORT
Too little, too late? The local government has moved to free up some land near the city’s terminals. The concession comes, however, as volumes slide out of control
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he future of Hong Kong as a leading container port has never looked more precarious. Ten years ago the city could boast being the world’s leading container port, now as we go print it has suffered 15 straight months of throughput decline through to the end of September, likely pushing it into fifth spot in the global rankings. The odds are simply stacked against Hong Kong when it comes to port economics – it is not on the doorstep of the factories, while its terminals are expensive and cramped.
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Nevertheless, belatedly the government looks to be listening to some measures of the port’s needs, just not on the scale demanded. Speaking at a media lunch hosted by the Hong Kong Trade Development Council in October, CC Tung, the chairman of Orient Overseas Container
Line (OOCL), demanded the local government help expand the city’s terminals. Tung said it was vital the local government provided terminal operators more space to develop more berths and container storage areas. The port’s cramped space was constraining growth, he argued.
‘There is a real risk of our falling further in the world ranking among leading ports’
PORT
‘Deutsche Bank predicts the port could lose up to 50% of its box volumes over the next decade’
The Hong Kong Container Terminal Operators’ Association (HKCTOA) has repeatedly called on the local government to free up land around Kwai Tsing Container Terminal. This April, for instance, Jessie Chung, chairman of the HKCTOA, said: “Hong Kong’s container terminal industry is on the verge of a watershed moment as there is a real risk of our falling further in the world ranking among leading ports… To turn the tide of slipping competitiveness, we urgently need the Hong Kong government’s
support in the area of land policy.” The repeated call for government’s support in land policy has come amidst two key trends in the container transport industry — the growing deployment of mega container vessels and increasing reliance on barge-transported transhipment – both of which have greatly undermined the handling capacity of the port. Transhipment volumes handled at the Kwai Tsing terminals, including both vessel-to-vessel and barge-to-vessel
throughput, have increased 66.3% in the past 10 years. In 2014, transhipment volumes accounted for 72.9% of the annual throughput at Kwai Tsing. In terms of barge volume, there was an increase of over 32% in the past 10 years, which has translated into much longer waiting time. The lowest average barge waiting time in 2008 was about two hours; now it can take more than two days for service during peak periods. The barge traffic also has a knock-on effect on waiting time for container vessels, which has gone up from one hour to as many as some 20 hours during congested periods, a remarkable transformation from just over a decade ago when the quays at the port were the most productive in the world. In the first nine months of the year, Hong Kong was hit with an 8.1% box throughput decline to 15.48m teu. Deutsche Bank, in a report from earlier this year, suggested the port could lose up to 50% of its box volumes over the next decade, the port likely sliding out of the top ten league. The bank noted the 30% savings in terminal handling charges neighbouring Shenzhen offers. In October, finally, the government released a number of measures to try and help the port – including handing over 15 hectares of land for new yard space and more barge berths. The port community had, however, been asking for 70 hectares of space. “In recent years, the problem of congestion is becoming increasingly serious … Container users and port terminal operators are concerned that the operational efficiency of Kwai Tsing Container Terminals is being adversely affected. Given that Kwai Tsing handles 80% of all containerised cargo in Hong Kong, there is concern that the overall competitiveness of Hong Kong Port is at stake,” the Transport and Housing Bureau (THB) said.
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Rallying call to government The territory’s shipping community reveal their wishlist to get Hong Kong back up on the maritime map
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n compiling this magazine Splash sent out a survey to 250 of the top names in Hong Kong maritime to gauge the community on key local issues. The responses form quite a checklist for the local government to ponder if it genuinely wants to grow as an international shipping centre. Among the longest replies were those from Kenneth Koo, the chairman of shipowner TCC Group. The loss of traders such as Cargill, Bunge and Glencore to Singapore over the past decade has hurt Hong Kong hard, Koo says. “Shipping being both commodities trading and physical transport needs both in order to truly be a shipping hub,” he says, adding: “The continued migration/relocation of shipowners, charterers, traders, shipbrokers and even shipping desks of banks to Singapore has impacted Hong Kong’s position as an international maritime centre.” Koo, like many respondents, suggested shipping needed its own ministry, something the current CY Leung
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administration is looking into. Shipping currently comes under the Transport & Housing Bureau, a point picked up on by Vikrant Bhatia, the ceo of shipowner KC Maritime, who urges the local government to look at shipping as independent of transportation which clubs together aviation and land transport. “Hong Kong is not identified as ‘Asia’ from a shipping standpoint, Singapore has assumed that mantle,” TCC’s Koo says, adding that Hong Kong has also lost its identity as a dry bulk hub. “Ship finance banks without an Asian presence have automatically looked to Singapore as their Asian regional headquarters while major shipbrokers with a historical Hong Kong presence are also expanding in Singapore,” Koo continues. “These are all very tangible
alarm bells that should make it very easy for the Hong Kong government to reflect on what went wrong from a macro policy standpoint. We need to reflect on what we lost, why and, fundamentally, whether we want to get what was Hong Kong’s back.” Also not short of a strong opinion on Hong Kong’s future as a shipping hub is Tim Huxley, the founder of Mandarin Shipping and ceo of Wah Kwong. “Singapore thrives because of its system of government; Hong Kong thrives in spite of ours,” he says. Huxley, like many other respondents, calls for more double taxation agreements. “We can run our businesses without incentives,” he says, “but make Hong Kong attractive to foreign companies and they will come.” Michael Nagler, who runs Noble Chartering, is following a long line
‘We need to reflect on what we lost, why and, fundamentally, whether we want to get what was Hong Kong’s back’
Survey
of established Hong Kong names in relocating to Singapore. More than 80% of those polled in our survey admitted Singapore would be their place of work if it was not Hong Kong. Nagler is shifting Noble Chartering to the Lion Republic early next year. Rent there, he says, is half of what it is in Hong Kong. “The government in Singapore has done a very good job in attracting foreign companies,” Nagler says. “The government of Hong Kong should be on a road trip around the world to attract foreign companies,” he adds. Hong Kong has always had a predominant position so far as shipping is concerned but other Asian jurisdictions principally Singapore receive substantially more government backing and assistance to promote their own jurisdiction, notes veteran lawyer Chris Howse. “We need Hong Kong government assistance to promote Hong Kong as an arbitration centre; to secure tax advantages particularly double taxation treaties which can be a major
‘Singapore thrives because of its system of government; Hong Kong thrives in spite of ours’ consideration when a shipowner or a charterer or a trader considers whether to set up in business in Hong Kong. In appropriate cases incentives are needed to encourage foreign companies to set up in Hong Kong,” says the founder of law firm, Howse Williams Bowers. Agreeing in part with this sentiment is Martin Rowe, a Hong Kong-based broker with Clarkson Platou. “The Hong Kong government has a laissez faire stance on most legitimate commercial activity in our city which is probably the most important thing and so it would be contradictory to seek government intervention,” Rowe points out, before adding: “However, certain low hanging fruit such as mooted double taxation agreements with other major shipping centres remain unexecuted and would be useful as would a one-stop shop that allows shipping companies looking
to move to HK to negotiate the thicket of different government departments such as Labour & Immigration, Inland Revenue, the Marine Department, Companies Registry and so on.” Tax incentives for companies and people employed within the shipping sector and admission priorities for their children – in particular shipping expats – will help attract better talent and more business, suggests Kishore Rajvanshy, the managing director of shipmanager, Fleet Management. Finally, the thoughts of the territory’s largest shipowner by fleet numbers. Mats Berglund, ceo of Pacific Basin, tells Splash: “The government should listen to and cooperate more with the very proactive Hong Kong Shipowners Association.” Results of the survey are carried on the back page of this magazine.
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Hong Kong. Our home. Our future.
HKSOA
Tick, tock Getting firm maritime policies in place before the current Hong Kong administration passes on power is concentrating minds at the local shipowners’ association
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rthur Bowring, managing director of the Hong Kong Shipowners Association (HKSOA), always comes across as a man with a lot on his plate when splash comes calling. This latest visit, however, it seems he’s also a man in a hurry to get things done – there’s a clock ticking that’s seemingly getting ever louder in the HKSOA’s Wan Chai office. What’s clear is that while he might be very unpopular with the local population at large, CY Leung, the chief executive of Hong Kong, has done – and will do – more for local shipping than any other leader since reunification in 1997. The problem? Leung leaves in 2017 (and so the rumour mill goes, Bowring might retire by then too), hence the tick tocking. Bowring has just got back from this year’s successful London International Shipping Week (LISW) when splash pops by. LISW has clearly impressed. Throughout the week the British government has been bombarded with facts and figures from UK industry-led reports on the importance of maritime to the local economy. Bowring laments that Hong Kong’s major maritime reports this century have all been commissioned by government. “Industry-led reports help persuade government,” he says. Nevertheless, Bowring remains upbeat
by Leung’s clear commitment to shipping. “The chief executive has said he’ll set up a statutory maritime authority,” Bowring says. “There is in government,” he adds, “an intention to reorganise and to have a better consultative system.”
‘People, location and policies have to be our strengths’ With the clock above him sounding ever louder, Bowring then stresses: “We have to get this in concrete by 2017 when CY Leung will leave power.” It is not just the upper echelons of government, Bowring says he can see other parts of the state – Hong Kong Invest, the Hong Kong Trade Development Council among others – showing a greater interest to shipping. At this point, Bowring reverts to a familiar mantra that he has issued time and again over his near-20 year reign at the HKSOA. “Hong Kong is a barren rock in the South China Sea,” he says. “It has no resources. People, location and policies have to be our strengths. Competiveness, not incentives, is key.” Hong Kong
government does not do sectoral support, he points out. Bowring reckons Hong Kong has people and location sorted. “What we need now is policy,” he maintains. With government coming out in support of shipping the key now is to get the city’s Legislative Council – the de facto parliament – to follow suit, Bowring says. Bowring will be more than ably accompanied in his quest to garner support by the new leadership at the association. Sabrina Chao (pictured), the 41-year-old chairman of Wah Kwong, has just been anointed the new chairman of the HKSOA, with China Navigation’s chairman JB Rae-Smith in as deputy chairman, giving the body a very youthful, punchy four years of leadership. “We have so many strengths as a shipping centre, but they are often not properly recognized or promoted,” Chao tells splash, adding: “We need to make sure that Hong Kong is top of the list when companies are looking to expand their presence in the region, so we need to talk up our advantages.” More double taxation agreements with key trading partners are among early priorities for the Wah Kwong boss. The clock is ticking.
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Register
Service upgrade required As the Hong Kong Shipping Register passes the 100m gross tonne mark there’s no time to rest on its laurels
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ong Kong has become only the fourth shipping register in the world to crack 100m gross tonnes on its books. The Hong Kong Shipping Register (HKSR) passed the 100m mark gross at the end of September with a total of 2,449 ships, the territory’s Marine Department said in an October release. The HKSR was set up on December 3, 1990, with a gross tonnage of 6m. It slumped at around the time of the 1997 reunification with China but has steadily built itself up ever since. Local owners, while applauding the landmark, have confided with splash that the Marine Department needs to up its headcount and service quality to remain competitive among the biggest names in ship registry. The department has been crippled by an ongoing court case into the Lamma
IV, a ferry that sank in Hong Kong waters with the loss of 39 lives three years ago. A number of department employees – and key flag personnel - have been embroiled in the case and have not been able to carry on working at the department. The flag’s stunningly fast growth has not necessarily been commensurate with the number of staff running it. Part of this problem is that the funds raised from the register go into a central government fund and are distributed across the Special Administrative Region, rather than being ploughed back into the flag. At a shipowner lunch hosted by our sister title, Maritime CEO, in September there were calls for the Hong Kong flag to be run on a much more commercial basis – to make it basically a separate organisation from the Marine Department. Repeatedly the service quality of International
‘To compete a ship’s register must be competitive with other commercially run registries in terms of service and round-the-clock availability’
Registries, Inc, which runs the Marshall Islands, the world’s third largest flag, was highlighted as something that the Hong Kong register ought to aspire to. “To compete a ship’s register must be competitive with other commercially run registries in terms of service and roundthe-clock availability,” one leading owner commented. “It lacks in commercial awareness and does not engage with industry proactively to develop and progress as we could hope for,” were the thoughts of a top shipmanager. Meanwhile, another senior shipowner discussed his HR concerns at the register. “The loss of seasoned and experience master mariners and marine engineers, which used to represent a robust portion of the personnel is being felt,” he maintained. The local shipowners’ association has held plenty of dialogue with the Marine Department and the government of late on ways to improve the flag and there is hope that these suggestions have been taken onboard as it races beyond the 100m mark.
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Owners
Shelter from the downturn Hong Kong shipping lines have fared better than most during the industry’s depression
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hastened by their perilous skirmishes with extinction repeatedly in the 1970s and 1980s, Hong Kong’s shipowners these days are a very conservative bunch – the territory is in fact one of the best places to ride out a shipping recession such as the current one. A wary outlook on the markets combined with an innate sense of a bargain means the city’s shipping lines often prosper these days while others fall by the wayside. Sabrina Chao, chairman of one of Hong Kong’s most venerable names in shipping, Wah Kwong, has been well schooled in how to navigate shipping’s volatile peaks and troughs from her father, George. She is taking over the chairmanship of the Hong Kong Shipowners Association (HKSOA), one of the most vocal shipping bodies in the world and for Chao her elevation to the post – the first woman to do so – marks another rung on her rapid ascent in shipowning. Chao, 41, is the third generation at the helm of the conservative bulker and tanker owner.
Wah Kwong has navigated the downturn well, a lesson for many others. “We’ve stuck to what we know,” Chao says. “We have ambitions, but we grow when we see the right opportunity, not just when there is cheap money available.” The company has maintained its approach of having period charters with significant charterers, so it has not been caught short with any unfixed newbuildings. “It’s been about having the right assets and the right customers, but most importantly, it’s about having the right people and focusing on the detail at every level of the organization,” Chao says. Chao officially became chairman of Wah Kwong in 2013, though she has technically been leading the company since 2010 when her father, George, was taken ill. The Wah Kwong fleet is made up of 14 bulkers, three crude tankers and 10 LPG carriers.
Despite not having bought any secondhand tonnage since the 1960s, Wah Kwong is in the market for opportunistic buys, its CEO tells Splash. Ex-Clarkson broker Tim Huxley, who also heads up Mandarin Shipping, says prices for dry bulk are now looking attractive. “As I said at the beginning of the downturn, ‘It will be criminal not to take advantage of this recession,’” Huxley says. Sabrina Chao takes the HKSOA chair from Kingsley Koo, a director at another of Hong Kong’s oldest shipping lines, Valles Steamship. Koo and Valles represent all that is traditional in family run shipping, hence his irritation with all the new money washing into the business. “There is too much speculation in shipping,” he tells Splash. There are too many funds with too much money investing in shipping, he says. While Valles typically orders one or two ships at a time, private equity is ordering “by the hundred”, Koo says.
‘It’s been about having the right assets and the right customers’ www.splash247.com 15
Owners
‘If we can see daylight by 2020, we’re very lucky’ Valles’s fleet sees 12 ships on the water plus three product tankers on order, which Koo stresses is replacement tonnage. A cousin of Kingsley, Kenneth Koo, and an active former chairman of the HKSOA as well as chairman of TCC Group, has similar opinions on private equity and by extension the fortunes of the shipping market in the coming few years. “Personally, I feel that if we can see daylight by 2020, we’re very lucky,” Koo says. “We continue and, I feel, will continue for the foreseeable future, to be mired amidst a commoditised shipping market where continued abundance of liquidity — thanks to the multiple QEs that continue to print money like there’s no tomorrow — will mean cheap credit for a long time yet,” Koo explains. This combined with the fact that barriers to entry into the shipping market is now “akin to zero” – thanks to regulatory statutes such as ISM, which only focuses on compliance on managers and not beneficial owners – means private equity and hedge funds alike can continue, says Koo, “to speculate recklessly on ships with no operational accountability”. “Ships are ordered on macro economic and short-term gains sentiment. We will continue to see newbuildings ordered on speculation,” warns Koo, the third generation at the helm of the Hong Kong
shipping line. With this dire market pronouncement since 2007, TCC has embarked upon a strategic roadmap to become, what Koo describes as a “top-of-mind boutique shipowner” building only based upon specific requirements from a short list of utilities such as oil majors and steel mills and major charterers who share TCC’s philosophy of long term strategic partnership and an uncompromising focus on quality and high standards of accountable shipownership. Koo has focused heavily on Japan, a nation that Hong Kong owners had a very strong link with during the 1960s. “We have no plans to expand our fleet beyond what’s always been our optimal size of around 20 vessels,” Koo maintains.
Generational change Hong Kong’s generational change of owners has also seen other names emerge in their own right. While the likes of TCC and Valles and others hand the baton down from father to son or daughter, some entrepreneurial spirits are striding out on their own. For instance, the son of one of the most famous names in Hong Kong shipping appears like a chip off the old block, wheeling and dealing as he starts up his own fleet.
Hong Kong-based Taylor Maritime has bought five handy bulk carriers in the past couple of years in a low profile, but savvy fleet build up. Taylor Maritime’s ceo is Edward Buttery, the son of Chris Buttery, the legendary founder of Pacific Basin and current backer of Epic Gas. Taylor Maritime was founded in January last year. Prior to founding the company, Buttery was at Nordea Bank for two years. “Since the family exited the handysize segment with Pacific Basin, we’ve not had the market to reenter until now,” Buttery says. “However with Taylor Marine we are starting small to lay the foundations for a company we hope will be known for being a reliable long-term partner with high standards and well-run ships.” Another of Hong Kong’s new generation taking a greater place in the limelight is Angad Banga, the younger of Harry Banga’s two sons. This November marks the second anniversary of the Caravel Group, the trading and maritime conglomerate set up by former Noble vice chairman Harry Banga and his two sons. Now boasting 750 employees in 12 countries, the start up of this company has been remarkably fast. Angad Banga serves as executive director, taking up the roles of COO and CFO at the group. The group has a shipmanager in the form of Fleet Management, a shipping division and a trading division. Caravel Shipping has grown exceptionally fast, now operating 80 to 90 vessels at any given time, a mix of supramaxes, panamaxes and capesizes. Banga says the aim is to get to 125 ships in the coming couple of years. In the first eight months the firm has executed 20m tons of cargo. “We have built the business from the cargo side,” says Banga, adding: “Having access to cargo is paramount in this environment.” On shipowning, Caravel has invested in eight boxships as one of a number of blue chip investors in the Tim Huxley-led Mandarin Shipping. Plans are afoot to buy Caravel’s first bulkers. “We have been looking,” Banga admits, “but we have not pulled the trigger. Investment will depend on asset prices. The ship will likely be for grain cargoes so will be either panamax or kamsarmax.”
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An Asia Shipping Media publication
Owners
The biggest names At Hong Kong’s largest shipping line – by fleet size – the current market malaise both frustrates and presents opportunities in equal measure. Mats Berglund took over as ceo at Pacific Basin three years ago. His immediate priority was to strip away non-core businesses and return the line to its core area of expertise – handy bulkers. Out went roros and its towage business, while Pacific Basin embarked on a fleet build up, ordering a slew of bulkers two years ago that are still delivering. The focus is paying off; the latest quarterly results from the Hong Kong-listed firm show its handysizes and handymaxes are outperforming spot market rates by 39% and 15% respectively. “My philosophy especially for a listed company is that investors want to know what they are buying into – it is best to be specialised,” Berglund says. It is also cheaper to focus on one or two sectors rather than many disparate shipping strands, he adds. Admitting Pacific Basin did not have a strong market position in roros and towage, he says it is easier to be focused and much harder for anyone to fool the company when it comes to handies. “We put our money where we do have
an edge,” Berglund says, “We have good market penetration, the only problem is the market.” The plan going forward for Berglund’s company is to redeliver expiring and long-term chartered-in ships and rely more on owned ships, complemented by shorter-term and index-linked chartered ships.
‘Short-term charters are the only thing you can make money on in this market’ “Short-term charters are the only thing you can make money on in this market,” Berglund tells Splash, adding: “With long term charters you are burning cash.” This quick manoeuvring in the markets requires “good footwork”, says the exStena man. Berglund says Pacific Basin has been positioned for an upturn by buying much during the downturn, but it still has to be careful and maintain a strong balance sheet. It will seek out opportunities in the weak market to grow the fleet, but only
very selectively. “Secondhand prices are much more attractive than newbuild prices at the moment,” Berglund comments. The territory’s biggest line by revenue, Orient Overseas Container Line (OOCL), meanwhile, has not been hanging around either. In April OOCL went to its regular Korean yard, Samsung Heavy Industries, for the construction of six 20,000 teu containerships at a total price of $951.6m for delivery in 2017. Container shipping’s rush to order ever-larger ships was likened by OOCL’s chairman, CC Tung, to an arms race at the annual Singapore Maritime Lecture in late April. “You cannot get out of this arm race – it’s a nature of our business,” he said, adding: “Chief executives in shipping, especially in container shipping, all have huge egos.” Tung reckoned overcapacity in the container sector is now a “permanent problem”, as liners pursue ship size upgrades and fight for market share. “Perpetual excess capacity,” Tung said, was brought about by the industry over ordering newbuilds both in good and bad times. Ordering at the right time – that’s what Hong Kong owners profess to do.
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TCC Group extends its support to the continuous development of Hong Kong as an International Maritime Center.
TAI CHONG CHEANG STEAMSHIP CO. (H.K.) LTD. Room 4411, 44/F., Cosco Tower, 183 Queen's Road Central, Hong Kong Tel: (852) 2522 5171 Fax: (852) 2845 9307 Website: www.tccfleet.com
Shipmanagers
Merger news grabs the headlines Anglo-Eastern joining forces with Univan has energised the sector
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ong Kong remains one of the world’s top centres for shipmanagement. The city’s third party managers look after more than 1,500 ships. Hong Kong has also been home to the year’s biggest story in shipmanagement – the merger between Anglo-Eastern and Univan, spawning a company with more than 600 ships on its books. The deal was the largest ever merger of independent, third party shipmanagement companies. Peter Cremers (pictured, left), now chairman of Anglo-Eastern Univan Group, tells Splash in his typically deadpan way: “The impact on the market was more profound that I expected,” adding with a smile, “For us it was a relatively simple deal.” The Univan brand – created by the late Captain Charles Vanderperre, a fellow Belgian – will remain, Cremers
says. Univan will be a Hong Kong tanker manager, he explains. While other shipmanagers go about boosting their other service offerings, Cremers is determined to remain focused on shipmanagement. “I still think shipmanagers should focus on managing ships in the first place,” he says, adding: “We don’t want to be a jack-of-all-trades.”
‘ Anglo-Eastern was the company that Univan aspired to be’ Bjorn Hojgaard (pictured, right), who formerly headed up Univan before becoming the ceo of the merged group, says: “Anglo-Eastern was the company that Univan aspired to be. We adopted the same policies about uncompromising
standards, being in for the long haul and looking after customer needs.” Earlier in the year, Anglo-Eastern had bought out the shareholding of its top shareholder, paying an undisclosed sum to buy back the 29% shareholding held by Bocimar, a firm controlled by Belgium’s CMB Group.
Consolidation at Wallem Meanwhile, over at Hong Kong’s second largest shipmanager, Wallem Group, the aim this year has been all about consolidating all its various businesses and new offices rather than expanding its geographic footprint further, says Simon Doughty, Wallem’s group managing director. In May ex-V.Ships man David Price started in the role of managing director at Wallem Ship Management.
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Shipmanagers
Wallem closed its shipbroking department at its headquarters this September, with Doughty telling Splash: “It is very difficult to be a small shipbroker today.”
Fleet closes in on 400 ships This November will mark the second anniversary of the Caravel Group, the trading and maritime conglomerate set up by former Noble vice chairman Harry Banga and his two sons. Now boasting 750 employees in 12 countries, the start up of this company has been remarkably fast. Angad Banga, Harry’s younger son, serves as executive director, taking up the roles of COO and CFO at the group. The group has a shipmanager in the form of Fleet Management, a shipping division and a trading division. Fleet Management now has 325 vessels under full technical management and is
on track to have 400 ships soon, Banga says. He is adamant that third party management is a sector set to grow. “In this difficult operating environment you have to save money wherever you can and third party managers with their scales of economy are cheaper. We are also starting to see the transition to the third generation of family-run lines who often do not have the same loyalty to traditional ways of shipowning,” he points out.
Half century for BSM Bernhard Schulte Shipmanagement (BSM) might not have its ceo stationed in Hong Kong anymore, but it is still growing fast in the city. This autumn, BSM revealed it had reached the milestone of operating 50 fully managed vessels from its centre in Hong Kong, up from just 10 vessels in early 2011. “This year alone has seen the addition
‘ The city’s third party managers look after more than 1,500 ships ’
of 18 vessels to the Hong Kong fleet,” says Captain Norbert Aschmann, ceo of BSM. Aschmann, based in Cyprus, took over from well-known Hong Kong-based shipmanager Rajaish Bajpaee last year.
Birley’s Langton has owner ambitons Michael Birley, the founder of Langton Shipping Group, has plans to become a shipowner. Langton was established last year as a broker and shipmanager by the ex-Wallem employee. The company now has six ships under technical management and three under commercial management. Birley, 60, tells Splash: “I hope over the next two to three years there could be an opportunity to buy or invest in ships as a separate entity.” Birley says the plan for Langton is to get the number of managed ships up so that the company can attract more conservative owners who would not normally give their ships to independent start-ups. “We want to get to 20 ships,” says the veteran broker.
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Cramped talent pool The maritime sector is stymied by a lack of qualified people
H
uman resources remain a source of huge concern and constant debate for Hong Kong’s shipping community. It is a strange juxtaposition given the crowded nature of the place and its overt links to the sea, but shipping has fallen off the radar for most young job seekers today. Our survey of 250 top names in the local maritime community found 62% of respondents were unable to find sufficient talent in Hong Kong to satisfy their business needs. The tight pool of available talent has been a source of worry for the city’s shipping private sector for
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more than a decade, but efforts to alleviate the problem have not been met wholeheartedly by government. Tertiary education courses are scarce. Apart from the longstanding Hong Kong Polytechnic’s shipping and transport logistics diploma, BSc and Masters program, the only notable effort by Hong Kong’s universities to offer curriculum and degree programs within the maritime
cluster has been at City University and its LL.M in maritime law. “Much effort has been expended by the senior members of the Hong Kong shipowning community to promote a career in the maritime industry but, sadly, the response has been lukewarm at best,” says Kenneth Koo, the chairman of shipowner TCC Group. His firm’s source of recruiting talent in areas such
‘Support from government still stubbornly focuses upon shipping being equated to port services and logistics’
Human Resources
‘Hong Kong employees are hard working and highly productive’
as commercial shipmanagement has been mainly from Shanghai Maritime University while other owners have recruited extensively from Dalian Maritime University as well. “Support from government still stubbornly focuses upon shipping being equated to port services and logistics,” Koo laments. Nowadays, with Hong Kong’s economy switching from manufacturing to a service industry and then towards quick money making careers in the financial sector and real estate sector means the local youth simply do not have the long term view necessary to nurture the qualities and
core values necessary to realise a career in shipping, Koo says. Martin Rowe, a veteran Hong Kong shipbroker with Clarksons Platou, has similar views to Koo, saying: “The local government and universities need to work harder to raise awareness of shipping as a career and to provide suitable courses that don’t include the words ‘and Logistics’ in the title.” Matthew Cornelius, recruitment team leader for recruitment firm Spinnaker Global’s Asian operations, notes that the situation in the former British colony would be a lot worse were it not for the private sector working to make shipping
visible as a career option. “The Hong Kong Shipowners Association has for a long time been pushing hard to promote shipping as a career and should be applauded,” Cornelius says. Michael Nagler, who runs Noble Chartering, says the talent pool in Hong Kong is “very small”. He will be relocating his division of Noble to Singapore next year, where there is, he thinks, a betterequipped workforce. “Hong Kong is no different to any other global locations,” argues Rory McGuire from recruitment firm, Flagship Management. “The talent pool is generally small and is not helped by owners and managers identifying office-based staff as the principal source of cost reduction.” Matt Conway, who heads up recruitment firm Faststream’s Asian business, notes that even in the current downturn HR demands in Hong Kong remain vigorous. “We are still seeing a strong demand for good, experienced professionals in key technical and commercial positions,” Conway says. It is not just owners who are struggling to find the right employees. Keith Mullin, the head of lube supplier Gulf Oil Marine, says it is not easy to find experienced marine supply operations resources in Hong Kong, something Kishore Rajvanshy, the managing director of shipmanager Fleet Management also picks up on. Dismissing the naysayers, Tim Huxley, ceo of shipping line Wah Kwong, insists: “Local talent is abundant.” Huxley is concerned, however, at the declining English standards amongst the Special Administrative Region’s youth. Another proponent of the local workforce is the ceo of the city’s largest shipmanager. “Hong Kong employees are hard working and highly productive,” says Anglo-Eastern Univan’s Bjorn Hojgaard. The debate continues with local shipowners in dialogue with government on how to remedy the situation.
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Travel
The city that never sleeps Sam Chambers takes readers on a whistle-stop tour of the former British colony
I
t does not take long in the Airport Express train for first time visitors to realise that Hong Kong is a city that lives and breathes shipping (some attack it a tad too fiercely on the latter part). As the train belts out of Tsing Yi island headed for Kowloon, a phalanx of skycrapers rears up in the distance – that is Hong Kong island, but in the foreground are the quay cranes of Kwai Tsing, whirring away. Alighting at Hong Kong station you can walk via elevated walkways to our hotel pick, the Mandarin Oriental, home to one of the city’s best shipping haunts, the Captain’s Bar. Once you’ve checked in and you have some to time before meetings kick in take the Peak Tram to the top of Hong Kong island for stunning views of Victoria
Harbour (smog permitting!) and the city. Back in town, head for the Star Ferry pier, and before boarding these iconic green vessels that ply back and forth to Kowloon, do step inside the Maritime Museum, located at the ferry terminus and the purveyor of rather fine, inexpensive shipping-related ties. Over in Kowloon the Peninsula, where James Bond tends to stay, has a very funky bar on its top floor called Felix. This might sound strange, but gentlemen, do go for a pee – the views are insane. Other things we recommend are a trip to Happy Valley racecourse on Wednesday evening, a ferry ride to one of Hong Kong’s 280 islands for a seafood lunch, a bus ride out to Shek O along great winding coastal roads, a stroll – or
‘Our hotel pick, the Mandarin Oriental, is home to one of the city’s best shipping haunts, the Captain’s Bar’
even a run for the exercise conscious – along Bowen Road, and if time is no issue take a one hour ferry for a day trip to the former Portuguese enclave turned Las Vegas on Chinese steroids that is Macau. Hong Kong is rightly famous for its food. For tip top Cantonese fare at very reasonable prices try along Wellington Street in Central, while for those feeling adventurous and in the mood for curry, there’s a host of weird and wonderful outlets at the infamous backpacker’s hangout called Chungking Mansions over in Kowloon. For Thai, you cannot go wrong with the Chilli Club in Wan Chai. To wash all this great food, try and find someone who is a member at the Foreign Correspondents’ Club (such as your humble scribe), as this is another legendary shipping hangout. Other places to head out to include Sevva, a bar on the top floor of a mall in Central nestled amidst the futuristic, famous Hong Kong skyline, or 001, a tricky-to-find basement speakeasy on Graham Street, just about within staggering distance back to your luxurious hotel bed.
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MARPOLL
HK-centric In putting this magazine together, Splash sent a survey to 250 top names in the local maritime community. Results are carried below Do you consider Hong Kong to be the most cost efficient place to base your Asian operations?
How often do you reassess your position in Hong Kong?
Every two years
42%
Every three years
17%
Yes 54%
Every four years
7%
No 46%
Never
34%
Is it necessary for the SAR to have trading companies to grow as a shipping hub?
If Hong Kong was not your preferred option as an Asian base, what would be the preferred option?
Singapore 83% Tokyo
5%
Shenzhen 3% Shanghai 3% Mumbai 2% Yes 63%
Manila
2%
No 37%
Other
2%
Is the Marine Department providing the services you need under the Hong Kong flag?
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Do you think Hong Kong’s proximity to North Asia is as important as its proximity to Southeast Asia?
Yes 40%
Yes 83%
No 60%
No 17%
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