Smooth Sailing

The shipping industry has been hit by the economic recession in different ways. The conventional container shipping sector has taken a large hit during the troubled times. However niche markets such as heavy lifting and project cargo tend to fare better.

“Project cargo in general is a stable and slowly reacting market. However, container shipping has been hit hard since it is largely dependent on consumers’ behaviour. Project cargo can rely on financially safe investments and long-term contracts,” reveals Niels Stolberg, president and CEO of Beluga Shipping.

There has been speculation that the current climate would result in project cargo shipping companies facing an oversupply of tonnage, partly due to the increase in the global fleet over the past few years. Stolberg believes this could be an issue for the sector in general, but one Beluga has covered.

“The global fleet has largely increased in number over the past few years but Beluga provides a young, modern and flexible fleet divided into three types, so we can always offer the client a perfectly suited vessel,” he states.

“According to the Institute of Shipping Economics and Logistics, the super heavy lift market segment in particular – where highest tonnage and crane capacities are necessary – will be stable for the next ten years or even beyond. This reflects Beluga’s core business; we follow the clear direction of super heavy lift, where only a few companies can offer what is required by the customers.”

This oversupply of tonnage, together with the increase in size of the global fleet, has had a major impact on rates within the industry.

“There is a massive slump in the project and heavy lift segment below 200 tonnes single weight modules (general cargo and bulk), with rates dropping even to 50% of their previous level,” explains Stolberg.

“For the sector covering oil and gas cargo, typically above 300 tonnes, rates have become stable and in the super heavy lift sector rates are very attractive and there are great opportunities to be had,” he adds.

Due to the drop in oil prices, shipping companies have benefited from a drop in bunker fuel costs.

“We have saved some costs due to the price reduction, but we have also saved bunker costs due to sailing efficient routes such as the Northern Sea Route and the Northeast-Passage which we did in the summer of 2009 with the MV Beluga Fraternity and the MV Beluga Foresight – these vessels saved about US $100,000 each on bunker costs by transiting the Arctic Ocean instead of taking the long way around through the Suez Canal,” comments Stolberg.

The Suez Canal also poses the much talked about piracy problem when travelling past the Gulf of Aden. This problem has become such a serious issue that it is having a huge impact on insurance rates.

“In certain aspects insurance rates have risen by ten to 50% – in regions with the danger of war, rates rise accordingly; in this respect Somalia has to be regarded as a war zone. Since [the insurance policies] Hull & Machinery or Protection & Indemnity have not sufficiently covered the problem, there is fairly new insurance policy about to be set up: Kidnap & Ransom,” explains Stolberg.

The situation has led to shipping companies taking sometimes drastic measures in order to avoid a catastrophe. Stolberg reveals that his company runs monthly seminars in order to teach seafarers how to behave in an emergency. NATO razor wire is installed on Beluga’s vessels and they move through the Gulf of Aden only in military escorted convoys. However the firm does not use firearms of its own.

“We do not appoint external guards on our vessels and we deny weapons on board. We also do not use long range acoustic devices since they are not efficient enough and can be mistaken for real weapons which could lead to uncontrollable escalation,” affirms Stolberg.

“As a sustainable approach we are strongly supporting a political solution. For example the aid programme ‘Somalia against Piracy’, with UN soldiers bringing freedom to Somalia.”

Oil and gas business is key for the company, according to Stolberg. “Oil and gas is a very strong market with attractive projects and lucrative future perspectives, it is one out of four or five central markets that Beluga is focussing on.”

It would be easy to say Beluga is lucky to be in the niche market it is. However, the firm appears to be so focused and meticulous in its planning, it is clear in this case luck has nothing to do with it. Each challenge has been met and dealt with head on, and with the economic skies clearing – and the heavy lift sector stabilising, it’s all plain sailing from here on in.