Doubt Over Consolidation In Shipmanagement Sector

Wallem Shipmanagement managing director Jim Nelson has expressed doubt on mergers as a means of consolidation in shipmanagement,and said Wallem would instead focus on organic growth.

“If you buy a shipmanager, what do you actually buy? You buy the desks, you buy the goodwill of the personnel and the goodwill of the clients,” he said.

But if employees or customers decided the new organisation was not good for them, all that remained was an “empty shell”, he said.

Mr Nelson’s comments follow shipmanager V.Ships’ announcement that it is actively looking to merge with an existing player in Asia’s shipmanagement sector by the end of 2011.

The company hinted strongly that potential partners should have well established China credentials.

However, in Mr Nelson’s view, both the act of merging and of operating as a shipmanager in China are fraught with difficulties.

“Trying to merge two cultures, even though the companies are in the same business, is very difficult,” Mr Nelson said.

“As far as I am concerned it would really need to be a buyout or takeover rather than a merger.”

Typically, when companies merge they try to cherry pick the best parts of the two companies’ cultures, merging them into one hybrid culture, he told Lloyd’s List.

Joint ventures, on the other hand, were a different matter as each party usually had common interests or a specific need for co-operation.

Wallem is involved in several joint ventures around the world, including COSCO Wallem Shipmanagement in Qingdao, China, which was established in 2005.

While China represented an opportunity for shipmanagement companies, especially in the form of consulting work to some of the newer Chinese shipowners, it was still not an easy place to do work, he said, citing language and cultural norms.

Some shipmanagers “failed miserably” a few years back when, faced with a global shortage of seafarers , they tried to enter the Chinese market by throwing money around much to the delight of the Chinese, he said.

Wallem plans to grow organically by focusing on providing shipmanagement services to clients engaged in conventional shipping.

Wallem is looking to split the services it provides to shipowners and offer them on an individual basis.

Instead of providing full management services for vessels, Wallem could help shipowners by carrying out specific activities such as claims handling, procurement or onboard audits, he said.

“A lot of people don’t want a manager to manage their ships, for whatever the reason, and I have no problem with that,” said Mr Nelson. “But it does not mean shipowners have to do everything themselves.”

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