Shipping "Dynasties" Discuss Flag States
This month, our parent company Marine Money will release Dynasties of the Sea: The Shipowners and Financiers Who Expanded the Era of Free Trade. Written by CNBC senior producer and Thriving in the New Economy author Lori Ann LaRocco, the book profiles such legends as Jacob Stolt-Nielsen, John Fredriksen and James Tisch, and is already receiving enthusiastic praise from high-profile readers as Donald Trump, Jon Huntsman and Governor Rick Scott.
Highlighting the important role flag states play in the industry, Dynasties includes several mentions of registries, following in these exclusive excerpts:
A proud Frenchman, he wanted to take this opportunity to “beef up” the French flag in shipping. One-third of his fleet is under the French flag and he has doubled its size from 2002-2012. Louis-Dreyfus explained that the French and Israeli flags are the two most expensive flags to fly under, but said he had an important reason for expanding under the French flag. “While having French flags is more expensive, our customers have more certainty, because they are sure to get good and efficient service.” - Philippe Louis-Dreyfus, President, Louis Dreyfus Armateurs.
“It’s one of the most important shipping companies carrying the French flag. I don’t think the government would let this company go down.” - Robert Yuksel Yildirim, CEO of Yildirim Asset Management, on his faith in container giant CMA CGM, which he helped save in 2010.
One of OSG’s biggest bets was deciding to build a significant presence in the U.S. Flag market in 2005, but that decision was met with a lot of market doubt…While there are two big headwinds facing the U.S. Flag shipping market that industry experts consider negatives, they look to be positives for OSG. The first is the lack of ships being built in the U.S. due to the high costs as compared to the shipyards in Asia. The second is the aging U.S. Flag tanker fleet, which faces regulatory obsolescence due to the U.S. Oil Pollution Act of 1990. OPA 90 mandates phasing out half of the current product tanker fleet within the next 10 years. With these two barriers, yard capacity is limited, and replacing these vessels in a timely fashion will be extremely difficult. The combination of these headwinds could create significant supply tightness in the future, and OSG is perfectly positioned to reap the rewards, but not everyone shares Arntzen’s vision.
“We were criticized on our big bet because the U.S. Flag market was unprofitable then, and the product tanker market was not so sexy. We were also making a ton of money in our crude business. If I had listened to private equity and the hedge funds that ran our stock, we would have invested all of our money in crude tankers, but we didn’t. Fast forward to 2012 – we’re still around, and one of the reasons we’re still around is because of our U.S. Flag business, which is outperforming and making money while our crude business is losing money. So going against the grain was the right thing.” – Morten Arntzen, President, Overseas Shipholding Group
In addition to these passages, the book captures the unique character of storied maritime nations as Norway, Greece, the United Kingdom and Italy.
Dynasties of the Sea is available for pre-order through Amazon and Barnes & Noble, and will be offered in print and digital formats. Should you work directly with any of the shipowners or bankers featured, the book could be an invaluable business purchase!
It launches November 12, 2012.
