One of the most notable success stories in the development of the containership market has been the role played by Erck Rickmers, chairman and chief executive officer of Nordcapital and of E.R Schiffahrt GmbH & Cie KG (both located in Hamburg) in the creation of new shipping and shipping-related ventures. He has continued a family tradition that stretches back five generations.
Nordcapital started its activities in 1992 and has since become one of the leading German KG ship financing institutions. In 2001 it became market leader, with approximately Euro205m equity raised. Erck Rickmers explains We do not use Nordcapital for raising finance for E.R. Schiffahrt alone; we have also realised projects with eight different German shipowners (involving some 48 ships), including Bernhardt Schulte and Klaus Oldendorff, though E.R. Schiffahrt has become the main partner of Nordcapital in building up our current fleet of 39 containerships.
In 1998 we decided there would be certain benefits for our investors if we developed shipping projects for ourselves. So we began putting this theory into practice by ordering newbuildings. Since the end of 1998 we will, by September 2002, have received a total of 15 post-panamax containerships from South Koreas Samsung Heavy Industries (SHI).
An eye to expansion
Erck Rickmers is unlikely to rest on his laurels. Our strategy is to become one of the premier charter owners of containerships we want to expand on what we have already built up. We have established long-term business relationships with some of the largest liner companies in the world, including Maersk (Denmark), which has ten of our ships on long-term charter, OOCL (Hong Kong), which has six 5,700 teu vessels, and P&O Nedlloyd (three 5,700 teu). All our ships are on long-term time-charters; we have a shore staff of 47 here in Hamburg to operate the fleet.
As a containership owner, with no diversification into other shipping markets, Rickmers is well-placed to forecast what future developments lie in the boxship trade. We feel that the percentage of chartered ships in the large carrier fleets will increase, and we want to benefit from this. So we try to identify the carriers needs and then agree the charter before ordering the ship.
Capital-intensive
This increase in chartered-in tonnage is because sea transportation is only a relatively small part of the logistic chain (door-to-door) the charterer offers to its customers. It is capital-intensive and can be easily out-sourced, in co-operation with quality partners such as ourselves. Many liner operators are now looking carefully as to where to invest, often not in capital-intensive sea transportation but in other areas of the logistic chain.
I believe that container transportation is a growth market. We will have growth rates in the range of 68% per annum over the next ten years. I also feel there will be a demand for even bigger ships than we see today. I see the largest design as a single-propeller, suezmax vessel, with a speed of around 26 knots, of around the 12,000 teu mark. Larger, twin-engined ships would not be economical. Faster ships would be a possibility on short-haul dedicated routes, but this will not be a major market.
Another development in the future may be that, while the market is growing, the carriers are looking for more direct calls. The problem with large ships is that they can only be economic if they spend a large proportion of the voyage at sea and avoid unproductive in-harbour periods. Carriers are now concerned about the costs involved in trans-shipments, so many are taking one step back and thinking more of panamax-sized (between 45,000 teu) ships, and direct calls. So, though the larger ships have been increasing in number, there is likely to be a future increase in the smaller (panamax) ships involving less trans-shipments and shorter transit periods.
Over-capacity a problem
Rickmers believes that there are too many shipyards in the world, with even more coming on stream in China. Cheaper ships, caused by over-capacity, can cause problems to residual values of existing fleets. However, if there is a demand for certain ship types, these can be built quickly, so there is unlikely to be a repeat of past fleet scarcity.
Hitherto, most of E.R. Schiffahrts fleet of containerships have been classed with Germanische Lloyd (GL), however the latest four post-panamax ships from Samsung, all of which are on charter to NOL/ APL, are classed with DNV. Rickmers explains DNV is the one of the largest and most reputable Classification Societies in the world, and although we have previously utilised GL on an exclusive basis, we believed it was important to establish a relationship with DNV as an alternative Society.
The Rickmers family has been in the shipping industry for a long time. There are now two different sides of the family. Erck Rickmers brother, Bertram Rickmers, operates Rickmers Reederei and Rickmers Linie, Erck Rickmers has built up Nordcapital and E.R. Schiffahrt. There is a glint in his eye when he talks about the growth of his two companies The highlight is definitely the series of 15 post-panamax ships. When I was a boy in Bremerhaven, where I grew up, my family owned Rickmers Werft. My father was in charge of the yard, and I spent much of my holiday time there. I thought the 580 teu ships being built then were truly impressive, and even ten years ago I never believed I would be involved in the building of 5,700 teu ships, and to have 15 such ships in our fleet. This is a great achievement and something we want to build on in the future.
Text: Alan Thorpe
Date: 2002-08-15