Niels Stolberg, President & CEO Beluga Shipping GmbH: “Part of our commercial strategy is regular use of Northern Sea Route”
- Мr. Stolberg, how the company managed to survive the crisis, does company feel its effect?
- Hard work, innovative approaches, creativity in flexibly combining project cargo and general bulk cargo when appropriate plus a powerful fleet which in combination with the committed transport experts of Beluga was and is able to fulfill the customers’ requirements maneuvered us safely through the world economic crisis. We also got affected yet not as much as other shipping companies. A major boost and a huge recognition of what we are doing and of what Beluga Shipping stands for respectively was the investment of Oaktree Capital Management taking place in 2010. The alliance forms a partnership between two innovative, strong and successful parties sharing the same strategy and philosophy which both will benefit from. The financial injection is beneficial to carry out the strategic investments and to continue on our long-term growth path. We shall be able to extend our world market leadership in the project and heavy lift segment and efficiently realize our successful strategic entry into the booming offshore sector. In return Oaktree Capital Management receives a share in the economical success of an identified number of units of the modern Beluga-fleet.
Regarding business these days, the first half of 2011 clearly shows that the super heavy lift segment with cargo single weights exceeding 700 tons seems to be the only one, where lucrative rates and margins can be generated. It can be observed that the stability of rates increases with the weight of the cargo. Generally speaking for the upcoming years, we expect the project & heavy lift market to have a positive outlook. However, business today is still quite tense and challenging with regard to the market prospects for general project cargo and lighter heavy lift cargo. Moreover the market in general currently is strongly influenced by two major effects. First, piracy acts cause higher costs for transports on the high seas (security measures, detours, etc.). Secondly, the Australian market has come to a certain breakdown due to the floods and storm having destroyed valuable infrastructure. Hopefully we will see better market prospects in the second half of 2011 since its first half will still be rather intermingled and marked by only few ups and various downs. Only carriers disposing of a functioning broad network on an international scale and only carriers showing best performance will be successful.
- Please tell us about the company results in 2010?
- In 2010, Beluga produced a turnover of about 500 million Euros which is about 100 million Euros above the crisis-affected 2009 result and back in 2008 when the turnover was about 420 million Euros. Reflecting the Beluga core business the type of transported cargoes has always been project and heavy lift cargo.
- What is the company's shipbuilding program - its terms, shipyards description, kinds of vessels?
- Having the powerful Beluga P1-/P2-series successfully crossing the world’s oceans to the utter satisfaction of renowned clients, our in-house experts are planning yet another new series: The multipurpose heavy lift project carriers of the Beluga P3-series will be the perfect units to meet the growing market demands in the super heavy lift segment. This vessel class now appears on the drawing board: xxl-holds and combined crane capacities of 2,000 tons. In fact, the market conditions for these carriers have significantly improved over the last 18 months allowing Beluga Shipping to further extend its position as global market leader in the project and heavy lift niche segment.
We also tackle new segments like offshore. We have founded a joint venture with German construction specialist HOCHTIEF Construction AG called “BELUGA HOCHTIEF Offshore GmbH” which will provide for special jack-up crane vessels for the loading, transporting and installing of giant wind plant equipment offshore, windmills and fundaments. The vessels will be 135 meters long and 40 meters wide providing for a load capacity of 8,000 tons deadweight and powerful crane gear with lifting capacities of up to 1,500 tons. The initial idea to bundle competencies in project and heavy lift cargo shipping (Beluga Shipping) and water construction as well as hydraulic engineering (HOCHTIEF Construction) has resulted in a common company. By means of the expertise both partners bring into this joint venture we do not have any doubt of the successful progressing and the positioning of the new hard ware as well as the logistics service into the market, especially since we consider the offshore market to be of immense potential on a global scale. The first BELUGA HOCHTIEF Offshore jack-up vessel is currently under construction at the Crist shipyard in Gdansk, Poland. The delivery of the first unit is scheduled for mid 2012.
In addition, we are planning to extend the Beluga fleet by even more units for the offshore wind farm sector. In the Lloyd shipyard in Bremerhaven, Germany, it is not long until the steel will be cut for the new Beluga cable laying vessel. In a joint venture with Deutsche Offshore Consult (DOC) the 110 meters long CLV Beluga Connection will be built until the summer of 2012. Moving sidelong the energy cables are installed deep into the ocean’s ground in up to 50 meters operational deepness, thereby affecting that the renewable energy caught with the wind power plants offshore is efficiently transported to the main land and fed into the public grid.
- What do you think about the prospects of traffic by the Northern Sea Route, its profitability?
- It is our intention and indeed part of our commercial strategy to make use of the temporarily accessible Northern Sea Route during the summer navigation time as regular as possible over the years to come. Subject to the official approval by the Northern Sea Route Administration we will then probably deliver project cargo to Siberia again as in 2010 and 2009. From a commercial perspective and not least taking into account that using the Arctic Shortcut saves CO2 emissions by reducing the bunker consumption compared to the Suez Canal route, we do of course hope that the economically most attractive Northern Sea Route becomes an area of growing traffic opportunities. This would be important for a specialized carrier such as Beluga Shipping since particularly the rising project and heavy lift market in Siberia offers a lot of business chances both for shipping companies and the local economy.
- What kinds of cargoes are you going to transport by Northern Sea Route, its volumes and directions?
- The oil and gas producing industry as well as infrastructure extensions in particular are well developing in Siberia. Hence, most certainly it will be project and (super) heavy lift cargo modules related to these industries that are to be delivered to Novyy Port / Yamburg for their adjacent transport into the according destinations or even any other river accessible. Within those projects cargo units with single weights of about 1,000 tons may be expected and with Siberia being the destination market they may well cast off in Europe or Asia depending on the individual project and the customer behind.
- Recently, your company's vessel was seized by pirates, sailors were miss and dead. What measures do you plan to reduce the danger of vessels seizures? What is the main reason of low efficiency of antipiracy measures, in your opinion?
- We already are applying several defensive measures. All vessels are providing for a citadel in which the crew entrenches in case of an immediate pirate attack. In addition, we use NATO razor wire which is affixed around the reeling, we also use a water-chemical-spray-out-solution, we block the way to the vessel’s superstructure, we do take part in convoy voyages wherever available and not least we do teach our seafarers in regular seminars and workshops how to behave in the case of a pirate attack.
The tragic case of the MV “Beluga Nomination” has sadly proven that if no military support is available these measures are not enough. We will contract safety personnel to still better protect our vessels. Some vessels originally due to pass the high risk area have been rerouted round the Cape of Good Hope. The investments in these additional security measures create extra costs in the two-figure-million range only until April 2011, yet they are nothing but accepted as part of our responsibility for the lives of seafarers. Furthermore, quite a while ago already we have presented our idea of a new concept to the Federal Government of Germany in Berlin in line with the German Shipowners’ Association. According to this concept it is planned that three onshore bases manned with qualified security personnel are set up. From these posts the armed security forces could be sent to an offshore destination in a kind of “shuttle service” where they meet a merchant vessel, embark this vulnerable unit and escort on board before disembarking at the other end of the risk area. The German Shipowners’ Association does support this recommendation which is modeled on the pilot relocation system and is now under consideration by the Federal Ministry of Defense. Generally, for a procedure of such kind forces of the federal police or marine soldiers would be considered. If a vessel is sailing under non-German flag a similar solution should be applied in cooperation with other states as well. As ship owner we are more than ready to contribute financially to such a systematic approach which promotes the security of civil merchant shipping. Hence, we do require swift decisions by the Federal Government. Since this is a question of saving human lives and undoubtedly the pirates are more professional, more organized and not least more aggressive and violence-prone than ever before.
- In recent years, requirements for emissions from ships become tighter. What kinds of fuels you consider most promising for navigation in the future, what do you think about using of scrubbers?
- In general, the significant reduction of produced emissions and simultaneously the development of the efficiency of the operation of the vessel are high up on our agenda. A scrubber washing sulphur off the exhaust gas is an effective measure to fulfill the restrictions of the future, however until today this is still complicated. Regarding the tighter requirements for emissions we do not have opportunities to change the modification of the machine for the four-stroke engines which we use but instead need to find workable solutions with modified scrubbers or, for instance, the usage of liquefied natural gas. This, in turn, requires much larger tanks and furthermore the lacking infrastructure of ports allowing for LNG bunkering does not comply with our worldwide operating fleet. Until today, LNG is a worthwhile alternative for ferries or also perhaps for our cable laying vessel CLV “Beluga Connection” or the heavy lift jack up vessel of BELUGA HOCHTIEF Offshore which both are scheduled for delivery in 2012 since such vessels operate in a defined and limited area where LNG ports could be set up. Though, for worldwide operation with a flexible multipurpose heavy lift project carrier fleet in tramp shipping this does not work today.
Nevertheless, the global usage of LNG becomes more and more likely in the long run. Our in-house department Research & Innovation is involved in a corresponding project with various partners to identify and clarify the questions of operational safety, fuel-filling possibilities and the likes. In addition, at the Maritime Centre of Research which Beluga Shipping is running and supporting as leading partner in the public private partnership project on the Maritime Campus Elsfleth further projects are planned related to setting up a professional and internationally feasible LNG infrastructure. Of course, we are aware that Russia provides for large LNG fields. Hence, it is a vision of the future yet well within the range of long-term possibilities and opportunities that one day we may transit the Northern Sea Route with a vessel using clean and efficient Liquefied Natural Gas.
Interviewed by Vitaly Chernov.