1) Spot a good opportunity. 2) Identify a specific customer need. 3) Know a thing or two.
By Ryan Skinner (email)
It was the kind of news that made you wonder if you'd misread. Last October, only months after the US Congress had to pump nearly a trillion dollars into the economy to stave off a catastrophe, Lloyd's List announced that someone was starting up a new container shipping company. Wait a minute, I thought, aren't those box lines bleeding, and due for much more blood?
To Franck Kayser, it made perfect sense. He described to me how the opportunity presented itself. "There are two kinds of shipowners: Operators and asset players. The asset players have no access to cargo. Their only relationship is to a bank. So when the market turned, they lost all of their volumes, and all they had left were commitments. Now these German, Japanese and American financiers were feeling pretty lonely."
These shipowners had originally entered a containership market where, Kayser says, it was written in stone that trade volumes would rise. They had done so, non-stop, since 1958. They had never dropped for as long as there were containers to ship. Now, in 2009, they were dropping. Hard.
"These guys were desperate to get their assets off of their books. So we started to look for cheap ships. The 1-4000 TEU segment looked good for three reasons. That segment had a lot of old ships, many of the owners were not operators (only asset players) and many newbuilding orders in this segment were with small, Chinese yards that could not enforce the contract clauses. This was the safest niche," says Kayser.
Therefore, the buying picture looked pretty good. But what about employment? A cheap ship's no good if it sits still. Kayser & Co. looked first into markets outside of the main trunk routes, like Africa and South America. The business case was solid, except for one thing. As The Containership Company quickly grabbed a 10-15% market share, this would surely start a price war - something Kayser was not interested in. "Back to the drawing board."
Talking business with cargo-owners in the main Asia-Europe and Asia-Americas routes, Kayser and his partners discovered that there was a small, but unmet, demand for carriers who could guarantee a fixed rate and capacity. It's as if a shipper wanted to time-charter just 1/100th of a ship. So that's what TCC would offer.
TCC's inaugural service will sail from China for Long Beach in April. The company has amassed 25 million dollars, four small ships on 3-year time charters and a listing on the Oslo Axxess exchange.
And that's how a shipowner is made. Alas, it could not have happened if Kayser and his colleagues had not possessed tremendous experience in the business and a web of contacts. Perhaps before the recession finally sloughs off, others will make a similar move.