Danish product tanker giant Torm’s new boss is not losing sleep over a recent spate of resignations and the pullout of two key pool partners, although the move has raised eyebrows among some in the industry. The reason for this is that the company is still strongly supported by good staff and a shipping fleet that now consists of a fairly large number of vessels owned by it, newly appointed chief executive officer Jacob Meldgaard said late last week in Singapore.
Early this month, Swedish shipowners Marinvest and Gotland pulled out of Torm’s clean tanker pools to join newly launched competitor Hafnia Management. According to Melgaard, the pool concept becomes important when a company is very small.
“At a conceptual level, I think what is required for any operation, whether you are in tankers or in a totally different business, is scale advantage,” he said in an interview with Platts in Singapore.
“So when we are discussing the pool concept, then the importance of a pool if you are very small, is very high. Let us go back 10 years, [when] the number of owned ships [for Torm] was rather small.” He said that then inviting people to join the table was logical since it could provide the pool partners cost and efficiency advantages.
“For any smaller entity, a pool is extremely important because of scale advantages. [But] actually now Torm has made itself rather independent of the pool concept,” he said. “Torm is today the world’s second-largest owner of product carriers. This means that the company is very different from what it was 10 years ago when the pool partners and the concept was very important.”
He, however, clarified that he was not against the pool concept. “It means that I am very relaxed at a financial level because there are too many ships in the market. I can charter in ships, commercially manage ships, attract new pool partners or buys ships,” Meldgaard said. “So there are a lot of levers that I can pull, which are not against the pool concept, but which are all creating scale.”
He specially mentioned the importance of the LR2 Pool arrangement, which has a fleet of 32 ships with Torm and its partner Maersk Tankers owning almost an equal number of ships.
“One pool, which has been important for me to retain is the LR2 segment … we only have 15-16 ships. AP Moller [Maersk], which are the partner, have the same number [of ships],” Meldgaard said. “When you have as many ships as I do — who is then winning or losing. I would say it is a similar thing. So, therefore the relationship for me is of the most strategic importance, than having a few ships.”
Meldgaard’s entry into Torm coincided with a spate of resignations.
“I have no doubt that, should it be needed, we are able to attract very competent people to our company. I don’t want to make that decision hastily,” he said. Seven former staff joined the newly launched Hafnia Management, whose CEO is the former Torm executive vice president, Anders Engholm.
“At a personal level, I would have loved [to have] the privilege of working with these people because one of the reasons why I joined Torm was that I respect the organization itself,” he said. “On a professional level, though, I am not concerned because the perception that we have a very solid company has been confirmed by what I have seen in seen [in the organization].”
Meldgaard, who was formerly the executive vice-president of Denmark’s Norden shipping, has set up an interim management team at Torm with him as the head of the tanker division, and including three other people. “I think we have 85 years of shipping experience among the four people.
So it is not an inexperienced team that is in place to run the interim role and to have a chance to find out who is it that can take different roles internally and who from the external world,” he said. While some may have viewed the exit of the shipping veterans, who had years of shipping experience behind them, as a loss for Torm, Meldgaard was surprisingly sanguine about it. Asked about the popular Pareto principle, commonly known as the 80/20 rule, which if applied to human resources means roughly 80% of the work will be done by 20% of the individuals, he said:
“I don’t believe in it. I don’t believe that 80% of the work is done by 20% of the individuals. To me, everyone has a job and they all matter.”
On possible competition from the newly launched Hafnia Management, he said “absolutely” no time was spent discussing this matter. “I actually think for Denmark it [the launch of Hafnia] is an extremely proud signal that we can tell the world that now we have another startup company in a knowledge cluster [instead of] starting operations in Shanghai or Singapore.”