17 Jul Breakbulk consolidations emerge as operators seek to cut costs
Big mergers and acquisitions such as recent ones in container shipping haven’t hit breakbulk and project carriers, but consolidation is starting to happen as operators seek to cut costs, broaden coverage and use their assets more effectively.
Pressure for mergers and acquisitions has increased since mid-2015, as cargo volumes, rates and vessel earnings have plunged.
Hamburg-based Rickmers-Linie took the market by surprise with a deal to acquire Nordana Project & Chartering, the multipurpose tramp operation of Danish shipping group Dannebrog Rederi, effective July 1.
The acquisition will raise Rickmers from 11th to eighth in capacity among multipurpose project carriers, according to Hamburg shipbroker Toepfer Transport. Rickmers’ market share in terms of operated capacity (owned and long-term chartered) rose to 2.8 percent, Toepfer reported in an update to its quarterly multipurpose shipping report.
Nordana and Rickmers-Linie had been cooperating for some time, with the Germans acting as booking agent for Nordana in Japan and China. “Working together with NPC in our ventures in Japan and China has shown that we fit together, both product- and service-wise,” Rickmers-Linie CEO Ulrich Ulrichs said.
Rickmers-Linie had not been expected to be at the forefront of active consolidation, given the stressed financial position of its parent Rickmers Group. The group made a 7.5 million euro net profit in the first quarter despite a loss before interest, taxes, depreciation and amortization of 2.1 million euros from its Rickmers-Linie operation. Even so, its rating was lowered from “B-minus” to “CCC” (“barely sufficient solvency”) by rating firm Creditreform.
Four Nordana chartering offices with a total of 20 staff have moved to Rickmers-Linie. The acquisition complements the Hamburg-based group’s breakbulk and heavy-lift liner network with a tramp shipping division that will continue to trade under a separate brand, NPC.
Following the integration, Rickmers will be able to provide larger and more diverse contracts of affreightment. Ownership of Dannebrog’s remaining multipurpose heavy-lift vessels is not affected by the takeover of the project chartering/operating division, although Rickmers-Linie may continue operating the tonnage on charter.
The Rickmers-Nordana deal isn’t the only recent one for project carriers. Japan-based NYK’s combined project and dry cargo division, NYK Bulk & Projects, has teamed up with Copenhagen-based multipurpose project operator Licvem Shipping & Trading in a joint venture that will operate three to eight ships, primarily on routes between Europe and Africa.
NYK had been trying for a few years to build a footprint in the Europe-West Africa trade, dedicating two or three ships to the trade. Through partnership with Licvem, NYK expects this new business segment to gain more traction.
Singapore’s AAL (formerly Austral Asia Line) and Hamburg’s Peter Döhle are also looking to expand their chartering cooperation for tramp multipurpose tonnage. The companies have implemented joint booking and operating procedures for the Asia-Europe trade lane, and are jointly operating about a half-dozen vessels on this route.
“Volumes have improved for both companies since then,” said Marc Willim, general manager of AAL’s tramp projects division. He said the companies plan to expand their cooperation to trade lanes between Asia and the U.S. Gulf and between the Mediterranean and the North Atlantic.
Fledgling Bremen-based carrier Zeaborn, owned by German real estate entrepreneur Kurt Zech, has expanded its operated fleet to more than 30 multipurpose project ships and small bulkers during the last three months.
The company scaled back its newbuilding program amid performance problems at a Chinese shipyard but took over commercial management of numerous small vessels owned by U.K.-based Carisbrooke Shipping, and bought the fleet and all shipping and chartering operations of German KG house Hanse Capital.