Sunday, December 6, 2009

Diversity .... The Way Forward For Global Shipping And Logistics Groups

As the Freight Market Shrinks so Transport Companies Spread the Risk across the Industry
Shipping News Feature

WORLD WIDE – The news that ACM Shipping, one of the world’s leading independent tanker brokers, are considering diversifying into alternative revenue sources, will come as no shock to those who watch the development of the leading lights in the industry. ACM are apparently looking at the rising dry bulk carrier market plus expansion into new geographical areas, a logical step to ensure against the notorious flexibility of the spot market. Continued oversupply of all types of tankers and container shipping vessels mean that risk spread is an essential for any conservative operator.

But diversification of trade is not the only way shipping groups are leaving familiar territory in the effort to defend themselves from troubled markets. Some are abandoning their traditional forms of financing through hard times and exploring new ways to raise cash.

On Friday the CEO of AP Moller Maersk, Nils Smedegaard Andersen, stated that the company saw the bond market as playing a more pivotal role in the financing of the group, an unsurprising comment as the group have issued $1.8 billion worth of bonds in two tranches since October. The group’s bankers had recommended the route as, like many major shipping groups, Maersk deal world wide in numerous different currencies. What is significant is that Maersk, the largest container and supply ship operators in the world, have never turned to the bond market before in their 100 year plus history.

The group also demonstrates perfectly another company determined to invest in various sectors of the industry and thus minimize risk. In addition to their traditional strongholds of freight transport and maritime support (tugboats, salvage etc) they have a tanker fleet, interests in air freight and passenger ferries, shipyards, oil and gas exploration and even own a substantial portion of a Danish Bank.

Last week also saw the resignation of Mr Alvin Cheng, CEO of PST Management Pte, the group who own twelve containerships 10 on lease to Pacific International Lines (PIL) as part of that companies 100 plus box fleet. Rumours abound that PST are about to launch into new territory by investing into vessels within other sectors. PIL themselves have invested in container manufacturing and, like many others, including Maersk with their Damco offshoot, have launched into the trucking, warehousing and customs clearance markets through a subsidiary group PIL Logistics.

The good thing for market observers is that all these companies, although prepared to stray from their industry comfort zones, are still concentrating on freight and transport related sectors. Everyone agrees that the road back is a long slow hill but the signs are that the major players are prepared for the journey.