Vessel Charter Company Thrives Amid Marketplace Disruption
June 25, 2013 - SCMR Editorial
Box Ships Inc., the Athen’s-based container vessel charter company led by chairman and CEO, Michael Bodouroglou, has been doing something remarkable over the past three years…making money.
Bodouroglou has pursued a policy of purchasing new vessels even though the industry’s main dilemma is generally judged to be an excess of tonnage on the seas. By acquiring and operating modern ships and employing them in “period time charter,” the company appears to have found a formula for sustainable success.
In this exclusive interview, we investigate what makes Box Ships run.
Supply Chain Management Review: Your success suggests that there is still room in the container liner industry for new players. Is that true? If so, Why?
Michael Bodouroglou: I would say there is selectively room for new players in the container industry, as long as you have strong operations and a proven track record of managing vessels. This is due the decline of the German KG model, which used to provide roughly 50% of the independent tonnage to the liner operators. That source of funds has dried up, for now, and created an opportunity for other ship owners to enter the containership market to fill that void.
SCMR: It would seem that you are able to pursue profit, while larger institutional carriers are pursuing market share. True?
Bodouroglou: Well, I believe everyone is out for profit at the end of the day, but market share does mean a lot to them. However, they have shown some restraint now that the market is challenging and are also now focusing on profitability instead of market share. In the end, what is the use of market share if it means you are losing a lot of money? It is better to be profitable and have a solid business model.
SCMR: Will the Panama Canal expansion have an impact on your business?
Bodouroglou: Eventually, the expansion will cause trade patterns to change, but no one knows how they will change or to what extent yet, so we feel as long as we are flexible, we will be able to adapt to the new changes, so there should be no real impact to our business.
SCMR: Are emerging markets served by your business?
Bodouroglou: Very much so. We operate containerships that are in the mid-size segment, panamax size and post-panamaxes, which are flexible enough to operate in emerging markets. In today’s market, all the incremental growth is coming from emerging markets, and we believe we are positioned to take advantage of that. That being said, the developed world, particularly Europe and the United States, are still the largest drivers of the industry, so even a modest slowdown in those economies has a much larger impact on the industry than the growth coming out of emerging markets at this stage.
SCMR: What can other carriers learn by your example?
Bodouroglou: I think it would not be wise of us to think that we can constitute an example for others. After all, we have not been in this market that long. What I can say, however, is that in this business the vessels must be maintained and operated at the highest level. As an owner/operator of vessels, you have to understand that the containership business, more than any other shipping sector, is a logistics business, and if our ships encounter delays, it may mean that Walmart may not get enough TVs or x-boxes for the Christmas season, so you must be tuned into that and build a reputation of a reliable partner for the liner companies.
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