Thanks to the continuous trust and loyalty of its customers, Royal Wagenborg has in recent years grown from being a respectable shipping company to a versatile logistics partner for a host of multinationals. In economically challenging times, the parent company directors – CEOs Egbert Vuursteen and Rob Wagenborg – give their views on the performance of their company over the past year and the challenges that Wagenborg will be facing in the coming year.
A volatile oil price, uncertainties about the Chinese economy: the world economy has clearly been keeping us all very busy in 2015. How would the two of you describe the international economic situation?
Egbert says: “The year 2015 shows an economic situation that is very different in several parts of the world. In Europe, the European Central Bank is trying to boost investment not only by keeping interest rates artificially low, it has also started a large-scale programme to buy back government loans in order to stimulate lending again. It has recently been announced that this support programme will at all events continue until March 2017. By then, the European economy should be able to operate under its own steam again.”
Rob adds: “The US is clearly ahead of Europe and will be able to raise interest rates further. The US economy is therefore growing at a considerable rate. On the other hand, Asia is struggling with an economy that is clearly suffering from growing pains. The Chinese government is trying to boost the economy by means of an incentive programme. Although Asia initially was a driver of higher prices, it is now putting a brake on them. This applies not only to iron ore and coal, oil has also fallen from USD 100 per barrel to less than USD 50. All in all, 2015 was a very bad year for commodity producers. This year has started much better.”
What impact did these developments have on Wagenborg Shipping, the most international part of your business?
Egbert says: “Wagenborg Shipping was operating in a challenging market in 2015. Our freight customers who were shipping to the US had experienced a better market. On the other hand, the market conditions in Europe were sluggish. The long duration of the poor freight market left its mark on shipowners. At the request of banks, Wagenborg sought and found a solution for several – external – problems. In a number of cases, it was Wagenborg that bought the tonnage concerned. As a result of the limited number of new ships being built, plus an ageing European fleet, a better balance has to be struck between the supply and demand for ship space between 2,000 and 23,000 tonnes of cargo capacity in our segment.”
“THE ABILITY TO WITHSTAND ECONOMIC PRESSURE OFTEN DEMANDS A LOT OF ADAPTABILITY FROM OUR STAFF AND MANAGEMENT, WHOM WE WOULD LIKE TO THANK FOR THEIR COMMITMENT AND FLEXIBILITY!”
How has this specifically translated into contracts and changes in the fleet?
Egbert continues: “Our freight business has succeeded in further extending our contract coverage for the next few years. The size of the fleet, combined with the variety of tonnage and its low average age, provide a sound basis for the future. For example, our contract with Stora Enso for the Göteborg – Zeebrugge service has been extended by five years. Because fewer cargoes were available, the ‘Spaarneborg’ was sold and Wagenborg bought the ‘Schieborg’ and ‘Slingeborg’. The contract with Smurfit Kappa for the ice-strengthened RO-RO vessels ‘Balticborg’ and ‘Bothniaborg’ was also extended until 2020. In autumn, the ships were fitted with a scrubber system at our yard Royal Niestern Sander. This work was completed within budget in terms of both time and money.”
In addition to the merchant shipping side, Wagenborg is operating in a wider range of marine activities with her tugs and pontoons. Is a similar picture evident in this area?
Rob relates: “Wagenborg Towage has had a busy and prosperous 2015. The capacity utilisation of leased sea-going pontoons was satisfactory. The new ‘Wagenborg Barge 11’ was added to the fleet during the summer. On its arrival in the Netherlands, this pontoon – dimensions 122 x 36 metres – was used to transport the last container cranes from the Ceres terminal in Amsterdam to Tenerife. Eemshaven was kept suitably busy as a result of supporting large vessels and drilling rigs. A number of small salvage operations were also completed.”
Egbert continues: “Wagenborg Stevedoring was able to achieve almost full utilisation of its sheds all year round at both Delfzijl and Eemshaven. In Delfzijl, Wagenborg Bulk Terminal has had a successful year and was also able to welcome new customers, including from the biological animal feed sector.”
It is of course fine to have a good utilisation capacity and stability in a family business like Wagenborg, where continuity is of added importance. Which part of the business is the most stable and least sensitive to economic trends?
Rob states: “Wagenborg Passenger Services has the most stable figures and is least affected by the economic situation. “But it does have a lot of trouble with the navigation channel between Holwerd and Ameland silting up and meandering, which causes a lot of delays. A task force has been set up, which is joining forces with Rijkswaterstaat, as a part of the Ministry of Infrastructure, and the other parties involved to seek a long-term solution that takes account of nature, the navigation channel, ships, the ferry timetable, etc. In addition, we would also like to provide its services at the time of the upgrading of the quay and the additional freight traffic required to reinforce the dykes on Ameland. In other words, it will be a challenging year for Wagenborg Passenger Services.”
As we are talking about challenges, are you “suffering from” the falling oil price?
Rob explains: “Wagenborg Foxdrill has had a difficult year as a result of the low oil price but we will make a concerted effort to try to seize any commercial opportunities. 2015 was a tough year for Wagenborg Nedlift as well. This was partly due to the impact of the low oil price and partly due to problems in the Schoonebeker field and these problems, involving earth tremors, have meant a decline in activities for the oil and gas industry and a decrease in the number of major contracts.”
Robinsists: “In spite of the difficult market, Nedlift has managed to win a major long-term contract for a chemical multinational in the Antwerp region. Incidentally, this was a contract that relied on the flexibility of our staff. The starting phase was difficult as it was in the middle of the summer holidays, but the work is now proceeding smoothly. As a result, the startup of our Belgian company, Wagenborg Nedlift BVBA, is well under way.”
“WE SIMPLY WANT EVERYONE WHO WORKS FOR WAGENBORG TO RETURN HOME SAFELY AFTER EACH JOB!”
Looking at your activities in the oil and gas industry: how did Wagenborg Offshore perform last year?
Rob explains: “In addition to its marine branch, Wagenborg Offshore comprises Foxdrill, Wagenborg Oilfield Services (WOS) and Wagenborg Foxdrill Remerij, a joint venture with Remerij in Emmen, which includes well-testing. The marine branch operated in Kazakhstan last year but also outside it, with five units working on the Suez project in Egypt, which was completed successfully. The work in Kazakhstan is beginning to pick up again after a couple of years of low capacity utilisation. The repair activities to the pipeline of FASE I and the shallow draught services to Van Oord to complete a 61 km long channel to the north east coast of the Caspian keeps the vessels busy. It has also been officially confirmed that Phase II of the large Kashagan Field, an oil and gas field in the northern part of the Caspian Sea, is going ahead! This is quite a positive impulse in the Caspian Region!”.
That is certainly a positive development! It’s just like the good news about the “Kroonborg”. Can you explain that?
Egbert explains: “Together with our shipyard, Royal Niestern Sander, we have successfully translated NAM/Shell’s requirements for a vessel for maintaining platforms in the North Sea into the multifunctional vessel ‘Kroonborg’ with a ten-year contract. We recently received the award for the most innovative vessel of 2015 in Rotterdam! This kind of offshore vessels gives a good dispersion in activities.”
That is certainly worthy of congratulation! Just like the way you manage the organisation. What’s your secret?
Rob smiles: “This year, we again had intensive consultations with the works councils. A number of requests for advice were discussed. By agreement with our Supervisory Board, a number of subjects were discussed, not in relation to shortterm trends but to those elements that are determining factors for the more distant future. The ability to withstand economic pressure often demands a lot of adaptability from our staff and management, whom we would like to thank for their commitment and flexibility.”
So the secret of Wagenborg’s success is its employees? So you have to be careful with them...
Egbert states firmly: “Royal Wagenborg has tightened up its safety objectives and improvement processes even more and placed a strong emphasis on safety in core competences, because we simply want everyone who works for Wagenborg to return home safely after each job.”
Rob concludes: “Actually, Egbert talks about care management. That means that you care about your relationship and try to understand what is best for your client solution-wise. My experience is that we you are able to think multi-disciplinary, the best ideas are created together with your clients. And when that idea can be translated into a logistic concept, which works with assets that function, you can take care of the client. That is also attractive for our people.”