URSABLOG: If You Know What’s Good For You

Stereotypes are dangerous things. They have caused much injustice and pain to many people in the world over time, both individually and collectively, but we – by that I mean me – are above all that, because we are enlightened, intelligent and sensitive people who would not dream of disparaging a person just because of the colour of their skin, their nationality or their political opinions. Right? Sadly, wrong. And worse than that, we need stereotypes so that our minds can navigate this world, otherwise we would go crazy. We simply cannot process all the information that we upload in our daily lives without resorting to some short cuts, and we do this automatically, without consciously thinking about it.

In the ship sale and purchase market, the types of ship and where they are built are subject to such short cuts. Or blatant prejudice, especially if you are the broker trying to persuade a potential buyer to consider something a little outside their comfort zone. One of the questions I like asking students is: Out of the following countries, which builds the best dry bulk carriers

?-?????????Japan

-?????????South Korea

-?????????China

-?????????The Philippines

-?????????Vietnam

The answer they give is invariably either Japan or South Korea. I remain non-commital at this stage. I then ask random students what cars they drive, and why they chose that car. If I am lucky I get those that chose Volkswagen and Seat or Skoda. We drill down further, and I point out that a Volkswagen, although immediately identifiable as German, may not actually be made in Germany, and will have the basic chassis, parts and design as the Seat or the Skoda. So why pay more for a ‘German’ car? They point out, reasonably enough, that a Volkswagen will have a higher resale value, which just goes to show that a ‘German’ brand has a longer shelf life than a ‘Czech’ or a ‘Spanish’ one, in the eyes of secondhand car buyers anyway. I am not denying that this is important at all, as the ease with which you can offload an asset that is no longer of use to you is an important consideration.

I then move back to bulk carriers, and mention the Tsuneishi shipyard group, Japanese in origin, but with shipyards in Zhoushan in China, and in Cebu, in the Philippines. The ships from all three yards are marketed at the same price (subject to payment terms and delivery) although whether they actually get the same price in the contract at the end of the day I cannot confirm. Their resale value is different however, with the Fukuyama, Japan (and Tadotsu) commanding a premium over the other locations. In some cases this is simply a matter of some of the ships built at the other yards facing certain problems later in life, but generally the rule holds. This is ironic, because the steel used, and in many cases, the blocks preconstructed, are made in China, to be assembled and fabricated into a whole ship in Fukuyama and Cebu. Japanese knowhow and an eye for quality is valued as much as German precision, even though the truth is a little more complicated in real life.

I have clients that would never, ever buy a ship built in China, despite the ship being built in NACKS or DACKs, COSCO and Kawasaki joint ventures, with Japanese design and quality control, or buy a Tsuneishi Zhoushan kamsarmax either. Likewise when Hyundai Mipo shipyard were building handy bulk carriers in Korea, and then in Vietnam, even though the design was exactly the same, and there was a discount for the Vietnamese ships, and even though both builds have, as far as I can see, performed equally well since, buyers would not only pay more for Korean built, they would only choose Korea.

Is this prejudice? Or even worse, racism? It is hard to say. Buying a ship is a multi-million dollar investment and one must assume (again a stereotype?) that shipowners have done their homework and will buy the best deal for them. Certainly having a fleet of Japanese or Korean built vessels at the exclusion of all others is seen as a mark of distinction amongst certain owners, even if better – and by this I mean better designed, more economical ships – are built elsewhere.

The answer to my question – who builds the best ships? – is of course: it depends. It depends on what the buyer wants, and what their priorities are, and their priorities, like every human being, are informed by heuristic short-cuts as well as dedicated research. And however good the research, the proof of the pudding is in the eating, or in this case, operating and trading a vessel over a long period of time.

But shortcuts, heuristic or lazy, can be harmful. When I first started shipbroking in Liverpool, my colleagues were suspicious of their southern brother and sister brokers (although like today, there were very few sisters on the broking desks doing deals).

“Those London brokers” they would say, “I wouldn’t trust them as far as I could throw them.” Which wasn’t very far in many cases. But this was patently untrue: I could, and still can, trust many London brokers as has been proved by not only working amongst them for many years, but doing business with them too, even until this day. You will hear comments about Greek owners (all 500 plus of them), German bankers, and Danish operations departments, lumping them together with various adjectives – crazy, difficult, inflexible, take your pick. But once of course we get to know them individually, the prejudice falls away, and we see them for who they really are. They may turn out to be better, or worse, than we imagined. Our reputations however, individually, collectively, will always go before us.

Many years ago, before I even arrived in Liverpool, I worked in a pub in the south-west of Ireland, in the middle of the Ring of Kerry, which was the middle of nowhere, in the best of ways. I gained valuable experience in dealing with people, and drunk people (probably a good training for the shipping industry), and learnt to observe and listen to what people are saying. (Never forget that a barman or barmaid will always hear what you say, despite displaying complete indifference to you.) I remember one Englishman passing through on a road trip and settling down to a pint of Guinness and engaging with the locals. Imagining himself the sophisticate, and the rest of the company less so, he was bemoaning how everyone was affected by marketing and advertising campaigns.

“These poor idiots,” he was saying, “they fall for every it every time. A Mars a day helps you work, rest and play. Mr Kipling makes exceedingly good cakes. Beanz Meanz Heinz. All because the lady loves Milk Tray. They lap it up, and buy this rubbish, just on the basis of what some flash kid with braces [suspenders] thinks up after a long lunch at Le Gavroche.”

The company nodded sagely, to all appearances agreeing with him. He finished his pint, and indicated to me to pour another one. After a pause, one of the company, a farmer, piped up:

“So tell me, sir. Why is it that you are drinking Guinness?”

Quick as a flash, the visitor replied:

“Because it’s good for you, of course.”

?

This conversation was repeatedly retold many an evening after that, to great amusement to the company, always assuring me that they of course meant no offence to me, an Englishmen. I took none, of course.

It is easy to fall into the trap of the lazy shortcut, it’s how our minds are hard wired. But in the search for new tonnage, or new brokers, or new bankers, or even a new romantic partner, try and snap out of the usual frame of mind, and concentrate on what your priorities really are. You will find that once you focus on the details, a different and perhaps surprising picture will emerge, one that may prove more profitable, and easier, than the one you thought of. It may even turn out to be good for you.?

Simon Ward

www.ursashipbrokers.gr