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Sohmen on China ‘A number of non-Chinese owners will be shut out of the game,’ warns the boss of BW Group
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or all the bullishness shipping executives have extolled on prospects regarding China over the past decade, the odd dissenting voice is valuable in today’s hardpressed environment. While many still believe China can dig the shipping industry out of its current malaise the advice in Hong Kong from one of the world’s largest and most respected shipowners is very much not to put all your eggs in the basket of China. Dr Helmut Sohmen, chairman of BW Group, and his right hand man over the past 30 years, Stephen Pan, chairman of World-Wide Shipping Agencies, warn SinoShip readers that opportunities for foreign owners in China going forward are likely to be fewer and fewer as China, Inc takes greater control of its supply chain. “A number of non-Chinese owners will be shut out of the game,” says Sohmen, 72, adding: “This will remove opportunities.”
Sohmen explains that with the rapid growth of Chinese shipbuilders excess vessel capacity was inevitable at which point state-owned lines went to Beijing to ask for protection, which they duly received. “The more they build, the more GDP grows,” says Sohmen, “GDP growth always comes first. “Niche opportunities will increasingly disappear as the Chinese learn to do things themselves.” Pan tells SinoShip that the world puts too much emphasis on China helping out the health of the global economy. Quite so, says Sohmen, pointing out from a shipping perspective that demand growth out of China won’t “go away” but “you shouldn’t rely solely on China”. He notes how even volumes of oil imports into China are slowing at the moment. Pan observes that even the incredible march of Chinese shipping lines has slowed of late. “Look at the expansion of state-owned or quasi-state-owned shipowners, it’s been phenomenal, but it is now slowing,” says Pan, who goes on to look at Grand China Logistics, which started out with suitably grand ambitions of operating 100 ships by 2014, but is now struggling to pay its charter bills. “The Chinese won’t help the oversupply situation,” says Sohmen, an Austrian national, who started working for WorldWide Shipping in 1970, became chairman in 1986 and was the man behind the audacious takeover of Norway’s Bergesen in 2003. Another area, which many have touted as a slice of salvation for the industry, is in China offshore. Here, once again, Sohmen is on hand to pierce that bubble of optimism. “So far [the Chinese] have been spectacularly unsuccessful in offshore, so the expectations for offshore are limited. I wouldn’t hold my breath for China offshore,” Sohmen says. BW currently has 16 offshore facilities, primarily FPSOs. So then, pessimism aside, what are the opportunities in China? LNG is one area that excites Sohmen. “We would
like to get involved, although we could not before 2015,” he says, adding that LNG import bases will increase across China. State authorities announced earlier this year that LNG imports increased 45% last year and are set to grow by a similar number in 2012. Another sector to keep an eye on in the future is China’s build up of oil refineries, which could see product exports take off. For Pan, there’s plenty of upside for China coal imports and subsequently all the constituent infrastructure build-up necessary to accommodate more and more coal, such as more terminals.
NEED TO KNOW NEED TO KNOW
BW Operates a fleet of 116 owned, partowned or controlled vessels including tankers, LNG and LPG carriers, and FPSOs. World-Wide, founded in 1955 in Hong Kong by Sir Y.K. Pao, became the world’s largest shipowner by 1979. Helmut Sohmen, 72, became chairman in 1986 and took over Norway’s Bergesen in 2003 and rebranded firm as BW. Heir apparent: Andreas Sohmen-Pao.
Sinoship SPRING 2012
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