Many global problems are impacting the shipping industry, from political conflict to disruptive technology. But some shipping companies are thriving. We talk to Lars Juul Jorgensen, CEO and CCO of Dubai Navigation Corp.
Global Marine Trends, predicting what the shipping world would look like in 2030, said: “The marine world in 2030 will be almost unrecognisable owing to the rise of emerging countries, new consumer classes and resource demand.”
The report argued that there would be greater competition from the developing world and challenges arising from the environment. Different scenarios might shape the world, from increased growth and cooperation to protectionism and shrinkage. Meanwhile, disruptive events and technology look set to shake up the industry.
What does the industry look like from the inside? We spoke to Lars Juul Jorgensen, CEO and CCO of Dubai Navigation Corp, a fast-growing shipping company founded in the Marshall Islands in 2017, about his company, history and the new regulatory environment. Located in Dubai, the company bought a total of six ships within the first nine months of operation, growing the fleet to eight within twenty-four months.
Hello Lars. Can you tell us more about your career in the shipping industry?
Throughout my career, I have been passionate about my work, and attracted to the Shipping industry’s many attractive aspects, with circumstances always being challenging and changing, it demands time and dedication to achieve goals.
Growing up on the coast just north of Copenhagen, my love and respect for the Sea have been a constant in my life. My father was a shipping executive and keen yachtsman who opened the world of shipping to me from an early age.
I started from the bottom-up, spending a few months training in the B&W Shipyard in Copenhagen, followed by two-and-a-half years with an entrepreneurial Greek ship-owner. The mantra was ‘No Ship – No Office’, so I was put on board their bulk carrier and tanker vessels for a few months followed by training in each office department of the company. It gave me an excellent opportunity to learn shipping from the ground up.
I’ve worked in the UK, Denmark, Greece, Germany, HK, Norway and recently in UAE with leading ship-owners, pool managers, charter-operating companies and shipbrokers – companies both large and small, public- and privately-owned.
Each of these positions enabled me to develop important personal skills and, combined with a natural analytical approach, turned into an ability to create networks to bring the right people and projects together.
What makes for a successful shipping operation?
Simplicity and flexibility are cornerstones for any successful shipping operation. I have applied these principles to establishing and expanding several companies, including Dubai Navigation Corp (DNC). DNC’s fast growth since the start in summer 2017 tells its own story, and today it consists of eight ships – a combination of bulker, container and tanker vessels.
More than 92% of the world’s goods are transported by ships. The economic benefits and fundamental flexibility that shipping provides to producers and consumers alike are still the same today as they were even 100 years ago.
What has changed is the increase in new regulations that mediate the health and safety of the ship, crew and cargo but also environmental sustainability.
Can you tell us more about the regulatory environment?
New IMO 2020 regulations will come into effect on the 1st January 2020. They will be a game-changer for many shipping companies for both new and old ships. In short, ships will have to change from using high-sulphur fuels (3.5%) to low-sulphur fuels (0.5%), unless a ‘scrubber’ is fitted.
It is a change of direction that I welcome, and it will guide shipping onto a path of improved environmentally friendliness. This ethos can be applied without significant adverse economic effects for producers or consumers.
However, the International Maritime Organization (IMO) have put these new regulations in place, but have in practical terms failed the Shipping industry when applying these new regulations. The frame-work for the new fuel regulations has not included the oil-majors/fuel producers.
The consequence is that the oil-majors have still not provided samples of stabile fuels that can be tested by engine makers, ship-owners and other related companies to prepare the ships and engines for using the new fuels and ensure the safe running of all vessels. Ship-owners have therefore been forced to invest and prepare for a wide range of fuels which including change of lube-oils, upgrading of filters and other engine parts. In other words, IMO have changed this issue from being an Industry issue to a Ship-owner’s problem. Owners have a very low level of certainty of what the future holds in this respect.
We in DNC are of the view that environmental improvements benefit everyone. We started our preparations in the first quarter of 2019, allowing us well over six months to prepare our ships for the new regulations and to ensure the safe running of our ships beyond 1st January 2020. Going forward, we wish to stand-out as being a prudently prepared ship-owner for this change.
What is unique about the way DNC is organised?
The technical and crew-management of DNC’s fleet of ships is with two different third-party ship-management companies, which embrace our core values and approach to running and maintaining our ships – including the environment. This meaningful tri-partite dialogue between our company, our ship-managers (who manage more than 300 vessels combined) and our suppliers is of strategic importance.
We have an efficient and economical model that works much better compared to having a full in-house ship-management (in our case of eight ships) which would not have sufficient or fast enough access to information and experiences to make well-informed decisions on new issues, such as IMO 2020.
This structure allows us to be flexible, nimble and economical. It will enable us to increase and reduce our fleet size as the markets move up and down without any time or economic restraints. This model equally also enabled DNC to ‘hit the ground running’ when we started the company. But it’s also a vital company attribute going forward.
What are your plans for the next five years?
The future looks challenging but also exciting from both a global economic and geopolitical point of view, which could also create new opportunities in world shipping trade patterns.
Short-term developments include the outcome of the current Iran tensions, Brexit, USA-China trade negotiations – these are just a few of the politically-driven aspects that already partly influence shipping companies, depending on the type of ship (container, tanker or bulkers).
Other issues – the GDP growth of G7 countries, new infrastructure projects such as powerplant or steel-plant projects and Oil prices – are impacting shipping too.
Dubai Navigation Corp’s plans are to continue our low-risk investment approach and expand our fleet, despite the economic, political or regulatory challenges. Our aim, within just a few years, is to have a fleet of over 15 ships, with 15-20% of these newer than our current fleet.