The container industry has much to celebrate with volumes increasing and economies of scale cutting costs. The Hamburg-based company is upbeat, as it follows a programme of fleet modernisation to maintain its competitive edge.
Bernhard Schulte group started in 1883 and is now in the top rank of international shipmanagers, operating more than 360 vessels. Shipowning is the core business, with 50 vessels including newbuilding orders, mainly consisting of small and medium-sized container vessels. Here, the view across the River Elbe from its office in Hamburg.
The Bernhard Schulte management team, from left: Christian Breuel, Anke Hennings, Dr. Peter Bracker, Dr. Andreas Opatz, John Freydag and Ian Beveridge.
Optimistic
Nobody knows how the market will react in the future, says Ian Beveridge, Director of the Bernhard Schulte group. We are quite optimistic after recovering from the Asian crises. It is, however, fair to say that high time-charter rates will not be achieved in the near future due to the competitive market situation. It all depends on the world economy and the possibilities of trade recession in the U.S. market. The container industry experienced a dip in chartering prices at the end of 2000, but is slowly picking up. It is expected that the demand for containerisation of freight will continue to increase by some 89% annually. According to Norwegian brokers R.S. Platou Economic Research, the factor most critical to any heavier demand for container transport will be world economic growth. This applies in particular to the U.S. economy, which has been the engine which fuelled the strong increase in growth and trade over the past year. If the U.S. economy were to slow down at a rate considerably quicker than expected, that would most certainly affect the container ship market in an adverse fashion.
Large vessels provide new challenges
In the wake of this development the demand for cost reductions and increased flexibility and efficiency has resulted in the construction of steadily larger vessels. Many of the new vessels on order are of above 5000 TEU. Many are of tailor-made design for a specific trade. Changes in trade are difficult, as these vessels are inflexible in terms of operation. Long-term chartering contracts (up to 10 years) are considered necessary due to high operating costs. Constructors and operators are facing huge technical challenges as voyage speeds reach 25 knots, resulting in high stresses on the hull and risk of losing deck containers in heavy weather.
... Small ships offer flexibility
The Bernhard Schulte group is watching developments closely. The company manages many of the large, new vessels, but has not bought one yet. The possibilities of buying larger ships in the future will be considered when appropriate. Explains Beveridge: We have committed ourselves to the small-size container ship segment for the time being, as it will give us more flexibility in the market. By using container carriers of between 3803500 TEU we are able to operate more flexibly than with larger vessels. All newbuilding orders are secured through five-year chartering contracts. Five of the 17 vessels on order will be classed by DNV. This is the first time that the Bernhard Schulte group is making use of DNV class. One of the main reasons for choosing DNV was the new concept Container Express, considered of vital importance to meet the increased demand for efficiency during operation. The premise to make use of the concept is that all vessels are ISM certified and have a planned inspection and maintenance system in place. The group has also decided to make use of the class notation Nauticus Operation, which gives access to a range of decision-support tools. The Container Express programme will use a 3-D model as part of the Nauticus software. Through the new contract with DNV our crews will be responsible for carrying out continuous inspections between docking surveys, which will make best use of the tight schedule at ports, says Beveridge. It is the first time a class society has offered us such a service. We trust it will increase the safety of our operations and make us even more efficient and more successful.