Stena from Gothenburg, Sweden is a well-known international shipping business, in particular in Northern Europe for its Stena Line – one of the largest ferry operators in the world. Stena Bulk (one of the world’s leading tanker shipping companies), which is less known in comparison, has offices overseas, including in Singapore, and views Asia as significant to be present in as here is where the strong growth will be going forward. Stena Bulk is also embracing digitalisation to be at the forefront as the world is entering a new era – albeit at a slower pace in the very conservative sector that is shipping. Our pilot to learn more about Stena and the development within this shipping sector is Mr Lars Malmbratt, General Manager of Stena Bulk Singapore.
It feels appropriate that from their Suntech Tower top floor, near the waterfront in Singapore, Stena Bulk’s team members have an excellent view of the surrounding waters and shipping activities.
There, Lars Malmbratt, who arrived from Swedish headquarters about a year ago, is the office manager and GM for the oil sector, while his Danish colleague David Simonsen is responsible for product tankers.
Stena Bulk (founded in 1982) controls a combined fleet of around 100 tankers, and the company recently took full ownership of Stena Weco from its Danish partner Weco Shipping. Stena Weco operates Medium Range (MR) tankers. The other two companies under Stena Bulk are: Stena Sonangol Suezmax Pool with the Suezmax super tankers and Golden StenaWeco with its Intermediate tankers (10- 20.000 dead weight). MR vessels transport refined products of various kinds, while Suezmax tankers transport crude oil. The bulk of their customers are major oil and chemical companies.
Aside in China new Stena tankers have recently been named in the region. In February 2015 the IMOIIMAX MR chemical tanker ‘Stena Impression’ was celebrated in Singapore, as the first of ten vessels delivered. The IMOIIMAX tankers have been designed to transport both vegetable oils, chemicals as well as clean and dirty petroleum products. In a joint venture this vessel is owned 50/50 by Stena Bulk and Indonesian Golden Agri Resources (GAR). And in January 2016 another MR tanker, ‘Stena Imperative’, was named at China Merchants Wharf in Hong Kong.
“We try to have a footprint out here in Asia and it was really a joy to name the ship in Singapore! Our customers are out here, so we try to hold such festivities where we can invite collaborators and give them an opportunity to visit the ship and have a nice dinner where it is presented,” says Lars.
“It is one part of the Asian profile to have close partnerships with Asian customers. We look very actively at it; to do something together; not only selling and buying,” he explains this kind of joint venture like with GAR.
A few tanker models at the office have French names: “They were built from the beginning to go on a time charter for Total that leased the ship over a longer period. And then they can name the ship.”
Aside joint ventures the financing of tankers is usually a mix pot, both own financing via equity from Stena and bank loans.
“You can also have a larger involvement of an equity partner, who usually knows nothing about shipping but find us as operators within shipping and the sector to be interesting. So they then enter with a certain per cent of the cost for a number of boats. It’s a growing concept on the market in recent years. We are seeing a lot of interest from Chinese and Korean investment banks, though Stena Bulk is currently not doing these kinds of deals,” explains the GM.
With too much investment into new tanker repeating itself in cycles one wonders if these aforementioned investment banks contributes to a situation like now in 2017 with record high crude oil tanker delivery throwing the market’s supply-demand out of balance!
On the Suezmax front (the largest size of tankers) one per week is being finalised and will continue to do so for another year, according to Lars.
“Historically it’s a question of what is lowering the oil price. If it’s a downturn in the world economy or lowering demand, then of course also transports of oil decrease, or at least the increase decreases. Usually it is increasing all the time!” he explains. “The consumption of oil has gone up so we have not seen any decrease for the need for oil transports. What more has an impact on us is the number of ships on the water. When you have had a few good years many start placing orders for new ships to meet the demand. ‘Here we can make a lot of money,’ the think. And then when the market finally dips a lot of tonnage is coming out on the market.”
Overall shipping is having a hard time and the sector is now heading into a, in Lars’ words’, “pretty challenging market”, mainly due to the many new ships.
“You have many investors from non-shipping companies, and when they see a curve only pointing up they jump on the bandwagon and invest.”
Stena Bulk is currently taking delivery of many new tankers. “But those are in system freight that are special and not really part of the rest. So we believe a lot in this kind of diversified and broad shipload capacity.”
Stena Impression is such a vessel with the configuration of several small tanks providing for considerable flexibility in regards of cargo combination – something that fits very well within Stena Bulk’s existing global logistical systems.
These IMOIIMAX tankers come with a large number of innovative technical solutions, which together, when sailing at service speed, result in 10-20% lower fuel consumption compared with other vessels of the same size.
Within technology-development and innovation Lars says that Stena’s biggest achievement is this significant reduction in fuel consumption.
“Better engines and other propels and hulls that have given big results. And this is in itself a major reason for building new ships, since the fuel cost is such a large part of the operative costs.”
“Stena also now has an Information and Transformation department with the intention to utilize all the information that is available out there – a very interesting development that we have put a lot of focus on. You have great opportunities to make the work more effective today, when the development is moving forward fast. Shipping has been dominated by dinosaurs, it’s a very traditional business sector, so I think we actually have a large opportunity to do something differently,” states Lars.
“In a sector that is so standardised, and everyone does the same, you must find the places where you can make a difference. Stena has always been very quality-conscious and have invested a lot – which has been the right thing to do. Now we are entering a new era, both regarding what the energy consumption will look like going forward and where things will be produced… the world is changing fast. So one must keep one’s ears and eyes open!”
And he does not want to take credit for being unique with this statement.
What the Swede has noticed so far is that things take time in Asia – with a slightly longer process than back in Scandinavia.
“You have many meetings not resulting in anything right then. But long term it gives results. And it is our task to identify business opportunities and needs from our clients etc. One should not underestimate such meetings even if they can seem somewhat strange sometimes. That kind of patience and trust-building is very much needed.”
“No doubt, a company like Stena must have a significantly increasing business over in Asia. It is clear that a lot of the business will move here where you have the increase on the market, so it is very significant for us to be present here and build these relations.”
“It is continuously a relationship-driven sector, where you do business with people you know and have a history together with. And it will continue to be like this, but I think we will use technology in different ways onwards.”
We have many different companies within Stena and now we are trying to collaborate across the companies to help each other to connect with already established contacts that one can use for one’s sister businesses. We believe a lot in that: assisting each other both with regards to contacts and knowledge/idea-sharing and be a mentor for one’s colleagues. So that is an interesting work we have started.”