Who would have thought container shipping could be so interesting? This was on everyone’s mind as we walked out of the headquarters of the United Arab Shipping Company – a building that is quite literally shaped like a ship at sea. In the “bridge” board room we enjoyed a glimpse into the container shipping world, as Gregory White, AVP of Corporate Development, led an in-depth 3 hour case study for UASC.
The most interesting points of the presentation usually emanated from when Gregory provided some new insights into the subtle but important challenges involved in container shipping. We learned about the costs and benefits of leasing ships versus financing, or the advantages of “slow steaming” (slower speeds save fuel and the cost of an additional asset – in this case a new ship – to cover an expected shipping schedule is more acceptable) over increased fuel costs to meet demand. In the end it was apparent that what we were looking at was an industry that has long since been commoditized, with high fixed costs and small operating margins that are highly dependent on utilization of assets. Maintaining a sustainable competitive advantage in this industry is like any other in a mature market: the bigger the better. Cost savings found from better economies of scale is what drives profit for UASC and its competitors, so we should all plan on seeing some mega ships floating around the world in the not-so-distant future.
The highlight of the meeting happened when we were introduced to the company’s CEO, Mr. Jorn Hinge, who wrapped the presentation up and was more than willing to answer a mixed bag of questions from the group.
Middle East & Turkey 