Merger of Ship management companies – Analysis

Two major ship management companies merged in Hong Kong on 14th August 2015. What is the objective behind it, is it to benefit both companies or to benefit ship owner, or to benefit seafarers or to benefit shipping industry? We can analyse, we can find who will be benefitted? First we see the history and present situation of both companies;

Anglo-Eastern Group Univan Group
Started in 1974 Established in 1973 by Late Capt C A J Vanderperre
Head office – Hong Kong Head Office – Hong Kong
Other offices in India, Belgium, China, Canada, Germany, Indonesia, Latvia, Japan, Singapore, Philipines, Ukrain, USA, UK Other offices in India, Philipines, Japan, Singapore China, Turkey, Myanmar
20000+ offshaore and 1300 shore staff NA.
Only dry fleet operated from HK office, and around 100 tankers operated from Singapore and other offices. Dry and wet fleet operated from HK office
NA Shipmanager of the year Lloyd’s List Asia Awards 2014
1998 – management buyout NA
2001- merger with Denholm Ship Management, NA
Headed by – Peter Cremers Headed by – Capt Bjorn Hojgaard
The new entity will be led by Peter Cremers as Executive Chairman, Bjorn Hojgaard as Chief Executive, Marcel Liedts as Chief Operating Officer and Mark Stevenson as Chief Financial Officer.

And new entity will have below numbers; 1,700+ shore based staff 24,000+ seafarers 600 ships under full management 100 ships under crew management only

Why did they merge? Merger is when both companies are willing to join together, so it is obvious that both companies are seeing a huge benefit after this merger, both must have evaluated the strength of both organizations’ present competitive position.

The new organization is a new product in the industry and it can be analysed using Porter’s five forces theory to understand whether new organization is potentially profitable.  Analysis of the strength and weakness of the areas where these companies operate;

  1. Supplier power – Docking, Lub oil, paint, spares, stores, services , these are the main purchases or raw materials used by these companies. Spares – There are few OEM suppliers where they (supplier) have driving price power due to uniqueness of the product. Lub oil, paint and chemical supplier would have less driving power as there is a chance of substitute at almost negligible switching cost. All general store supply can be done through annual contracted price, so these general suppliers would have no supplier power to push the price up. Drydocks being a major expenditure, has less driving price power because a number of dockyards, however due to geographical location, some dockyards might have very high bargain power. Own agency and own repair workshop at some locations would be a positive for the new organization as other agency and workshop will have no driving price power.
  2. Buyer power – Who is buyer? In this context ship owners are the buyer of services of management company. There are number of small, individual, big and important ship owners, in the ocean of 600 ships it will be difficult for small and individual ship owners to dictate terms and be a buyer power. Any buyer, here ship owners will have difficulty in driving the prices down or dictate their terms. Only few potential and important buyers with considerable amount of vessels will have buyer power, they can ask for lower daily operating cost, better services and terms. Cost of switching of owner from one management to other is negligible, so they can leave the management at no cost if their terms are not met.
  3. Competitive rivalry. There are few major competitors and a number of small ship management companies in the Hong Kong, Singapore, Dubai, Cyprus and other places. They all are capable of offering undifferentiated services.
  4. Threat of substitution – As a substitute ship owner can have their own Inhouse ship management company as some big owners like Mitsui, Maersk, or MSC have it. However for small ship owners it wouldn’t be cost-effective due to smaller number of ships.
  5. Threat of new entry– There is always a threat of new entrant; nevertheless most of the owners wouldn’t wish to use new entrant services due to established brand value. There is always a threat of new entrant, there are many experts in the field willing to provide this service and cost of entry is low to establish a ship management company.

Once the merger is in place there are some soft and hard elements which needs to be addressed, and this remains a challenge for any new organization after merger.

  • Strategy: What will be the plan to maintain and build competitive advantage over the competitors?
  • Structure: What will be the new final structure and who will report to whom? In the beginning there might be some temporary arrangement, but will it continue or a new sustainable structure has to be devised in the organization?
  • Systems: The daily activities and procedures that staff members engage in to get the job done. Which management system will be followed on board and ashore?
  • Shared Values: This marriage of 2 different shared value has to be made one, the core values of the company that are evidenced in the corporate culture and the general work ethic has to be adapted by both company staff.
  • Style: There will be one style of leadership, and the style of leadership should be adapted by all staff.
  • Staff: The employees and their general capabilities have to be scrutinised and there might be some changes required to suit the employee’s capability.
  • Skills: The actual skills and competencies of the employees working for the company varies, it will be the new management task to develop skill and competencies of staff to meet the requirement of new organization.

In the above elements, hard elements like strategy, structure and system are easier to change. The soft element like skills, style and staff would take longer to change.

Hope that the objective of a bigger and superior ship management company is fulfilled.

Author – MarinerOnBoard, data based on respective company website information.

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About Marineronboard

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2 Responses to Merger of Ship management companies – Analysis

  1. vishal says:

    Great news! Oceanmanager which provide marine software
    applications to both AESM & Univan ship management companies, Wishes them good luck for new venture and hope they will together increase the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace

    Like

  2. Vitaliy Kostenko says:

    Welcome to Anglo Eastern. This Company can hided all Your Marpol ,Solas @ISM violations. Mr. Peter Cremers till now I don’t rcvd any answer about all crew grievance against captain Vig Vipen dated 30.06.2012 and about Marpol,Solas,and ISM violations from m/v “Baltic Jaguar” dated in march 2013 about capt. Ancel Rodolph witch was discharged dirty ballast at CHINA anchorage, proceed all Indian Ocean without any life boy on deck also broken all ISM roles. Pls continue in this style.
    BRGDS

    Liked by 1 person

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