Markets Odfjell Predicts Chemical Tanker Market
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Friday February 16, 2018 Daily Briefing Leading maritime commerce since 1734 LEAD STORY: Jeremy Nixon sets out vision for ONE Jeremy Nixon sets out NEWS: vision for ONE Time to make the case for oceangoing shipping OPINION: Cryptocurrency blockchain plans should sound warning bells Racing to the bottom MARKets: Odfjell predicts chemical tanker market recovery in 2019 IN OTHER NEWS: Foresight confirms VLCC deal with Fredriksen Avance Gas expects better VLGC IN AN EXCLUSIVE interview with Lloyd’s List, the Ocean Network markets in 2018 Express chief executive explains why the carrier that will launch services on April 1 is a brand new business rather than the more Korea Line’s earnings more than traditional product of a merger, and how a new hybrid class of lines can double but Heung-A reports a loss deliver services for customers that are different to those offered by the South Korean journalist jailed for mega carriers or niche players. taking bribes from DSME The container shipping industry is about to witness something that has NYK grabs a methanol-fuelled never happened before, the arrival of a new line that will rank among chemical tanker the biggest in the world from day one. Essar Shipping narrows loss as finance costs halve Six weeks from now, Ocean Network Express will inaugurate services, and immediately join the industry heavyweights at number six in Safe Bulkers beats expectations with terms of fleet capacity. profitable fourth quarter What distinguishes the new Japanese-owned carrier from its competitors is the fact that this really will be a new business in every sense, rather than the product of a merger or acquisition that seeks to maintain existing brands, or absorb one line into another. From the very start, “the vision was to set up a completely new company”, says ONE chief executive Jeremy Nixon as he counts down the days to the April 1 launch. The decision by the big three Japanese shipping groups NYK, MOL and K Line to merge their container shipping activities into a new line reflected recognition that they were individually losing scale as the top four lines pulled away from the rest. The collapse of Hanjin Shipping in August 2016 hastened the decision to combine forces, with the new joint venture announced in October that same year. That has given former NYK executive Jeremy Nixon, who was involved in the original decision to form a new line and who was named chief Lloyd’s List | Daily Briefing Friday 16th February Page 1 executive last July, plenty of time to prepare. Hybrids In terms of competition, Mr Nixon sees the dozen Meticulous planning largest container lines evolving into three distinct The planning has been meticulous, with a weekly categories. checklist, and no slippage from the original timetable as staff ramp up for launch day. At the top are four mega carriers — Maersk, Mediterranean Shipping Co, CMA CGM, and China “To put something like this together, you have to Cosco. At the other end are the niche or regional have a very disciplined, clear business plan, and very lines such as PIL, Zim, Hyundai Merchant Marine, clear project plan, and you continuously monitor and Wan Hai. them in terms of progress against those milestones,” he says. In the middle are lines that Mr Nixon describes as hybrid, and where ONE fits along with Hapag-Lloyd, That is because ONE is far more than just a new and Yang Ming, its two vessel-sharing partners brand name, or eye-catching magenta and grey within The Alliance. The fourth line in this class is containers and ships. Evergreen, once number one on the world. A new state-of-the-art headquarters has been set up Mr Nixon, who worked for the former P&O Nedlloyd in Singapore, while new offices have been opened and then Maersk Line before joining NYK in 2008, elsewhere in order to distance ONE from its says he is not interested in mega carrier status for shareholders. The name has been registered in ONE. countries around the world. Instead, he sees a clear gap in the market for the At the core of the business is a brand new IT system hybrids, with enough scale to offer global reach but and data centre, with the very latest technology, with a very clear focus on service delivery. hardware, and cyber security. All staff have been supplied with new laptops, and every office will be One example he cites is the decision to concentrate equipped with new desktop computers, printers, and on end-to-end services, rather than transhipping other equipment. cargo via hub and spoke ports, something he thinks will be popular with customers. Shippers, too, will benefit from a global IT platform rather than regional systems. ONE will operate a fleet of around 250 ships of 1.43m teu capacity, including six 20,000 teu class “So whether you are a customer in Chile, China, or vessels that were ordered by MOL before the merger. the Czech Republic, the process will be the same,” But Mr Nixon is no fan of ultra large boxships which, says Mr Nixon. he says, cannot be handled as efficiently as smaller vessels. The name ONE is very apt in other ways, too. “Port productivity in comparable terms is not Single brand keeping up with the size of the ship,” says Mr Nixon. Speaking exclusively to Lloyd’s List during a brief London visit, Mr Nixon makes it clear he wants a Big ships also create bottlenecks on the landside. unified organisation. “We want the hosepipe to be very even in terms of “We do not want to be a multi-brand company with the flow”, so that cargo is transferred seamlessly different systems and management. We want to be a from ship to truck or train. single brand with a single value proposition,” he insists. As the launch day approaches, Mr Nixon says 2018 will be about “walking rather than running”, and But in an industry as commoditised as container ensuring “we have a smooth and stable transition”. shipping, how will ONE differentiate itself? No hassle Mr Nixon believes one of ONE’s greatest strengths For customers, the goal is to offer a “hassle-free” will be its balance sheet. In a business where many booking process and minimise any disruption to carriers are weighed down by debt, ONE will have service delivery. $3bn of assets and cash on its balance sheet, with no liabilities. Lloyd’s List | Daily Briefing Friday 16th February Page 2 And that is where ONE will be able to reassure Nedlloyd by Maersk Line in 2005, neither of which clients with some familiar faces. were exactly textbook transactions. For although there will be job losses as the three “The customer is king.” shareholders amalgamate their container operations and aim to generate annual savings of $950m within And a few weeks from now, Mr Nixon and his team three years, most staff working at the customer level will learn whether shippers and forwarders will be will be retained. prepared to trust their cargo to a completely new market entrant which, nevertheless, is backed by That is one of the key lessons Mr Nixon says he decades of experience from both its three owners, learned from the merger of P&O Containers and and its staff. Nedlloyd Lines, and the subsequent takeover of P&O NEWS Time to make the case for oceangoing shipping OCEANGOING cargo shipping must engage better He said that a priority for Ecsa was to bring to the with legislative circles that are setting the agenda for fore of discussion the importance of shipowning and the industry for decades to come, leading of ships. shipowners have warned in Greece. According to Mr Laskaridis, blue-water shipping “We need to step forward more and influence was “the largest part” — about 70% by most metrics decision centres,” said Panos Laskaridis, the new — of the shipping industry. chairman of the European Communities’ Shipowners’ Associations. “Only this fleet is in danger of being lost to the Far East, that is offering more beneficial conditions for He said that the industry “lagged behind” in shipping,” Mr Laskaridis said. “If one day Europe engaging with politicians and regulators, loses this transparent and capable transport fleet particularly in Europe, and there was even now a and has to conduct its trade and have its property tendency to believe that “keeping below the radar is controlled by fleets manned and operated by probably the best thing to do”. industrial competitors in the Far East, that would be disaster.” But this had contributed to relative ignorance about the importance of oceangoing tanker, dry bulk and Separately, it emerged this month that the Union of container shipping. Greek Shipowners has just opened an office in Brussels to represent owners’ interests. “There are other types of shipping that are more in the public eye and think that they should be heard At the same Capital Link conference, owners more,” he said. identified environmental legislation as one of the major concerns of the industry as well as of Speaking at the Capital Link Greek Shipping Forum European Union lawmakers. in Athens, Mr Laskaridis said that in Europe the shipping policy agenda “for the next 10, 20, 30 “Shipping broadly speaking has a unified approach years” was being drawn up and “a lot of those — we want to contribute but we will not go for discussions are taking place behind closed doors”. daydreams — we do not promise miracles that won’t happen,” Mr Laskaridis said. He added: “Shipping must engage with all these people before the train leaves the station.” He urged stakeholders to examine “quite radical solutions”, one being speed reduction for ships.