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Eitzen Bulk A/S, a member of the Eitzen Group, is an international shipping company that is among the top five Handymax operators in the world. It specialises in carrying bulk products such as coal, petcoke, agricultural products and iron ore, and last year carried 16.7 million tons of commodities.
Established in 1997 as Tschudi and Eitzen Bulkers A/S, when the Eitzen Group purchased EAC Shipping A/S, the company became Eitzen Bulk in 2003 when it was bought by Camillo Eitzen&Co ASA. Today it is a market leader in its field and has regional offices in New York, Rio de Janeiro, Singapore, Hong Kong and Melbourne.
Eitzen operates a fleet of around 60 vessels, with a total carrying capacity of around 2.5 million dead weight tonnage, (DWT). This consists of chiefly Handymax vessels, although it also operates Panmax and Handysize platforms. The company's fleet includes two ships, the Sibulk Dedication and the Sibulk Innovation, which are the largest fully lumber fitted bulk carriers in the world.
The company conducts its business as a ship owner and operator, although it currently does not own any ships. Managing director Niels Jorgen Lausten explains: "We charter all of our ships, so technically we do not operate our own vessels. We sold the last ship that we owned in October last year and we were satisfied with the price we got, which was nearly double what we paid."
The current market situation means that Eitzen does not intend to buy any new vessels in the foreseeable future, as Niels explains: "Our current strategy reflects how we read the market. We have not bought anything because of the current prices, we sold our last vessel last year and now we are staying put."
However, he explains that the current trend for high prices will change: "Prices are bound to come down again and when they are down to a level that we feel comfortable with then we will re-enter the acquisition market, the right time to buy is when the market is low not when the market is hot. We do expect it to change slightly towards the end of the year but it will be more of a seasonal correction rather than fundamental changes."
He continues: "Whether these changes happen in 2006 or 2008 remains to be seen. We bought ships in 2002 for around 16 million dollars and they are now worth around 33 million dollars, basically double the price."
Niels admits that many of the company's key competitors in the market are adopting the same strategy of waiting for prices to fall: "Some of the biggest operators and competitors of ours have been selling products, we do see the occasional buyer at these prices. They must have their reasons for buying, but we wouldn't do it, that's for sure."
Much of the variation in the market depends upon industry and market growth in China. Niels admits that this is where Eitzen intends to focus much of its attention in the coming years: "China is the guiding stick when it comes to predicting of the bulk market today, if you can get China right then your are well along the way."
He continues: "What is certain for the Chinese market is the import of raw materials to enable their exports. They predominantly import iron ore for their steel industry. To a very large extent they have their own coal although they do import some."
This rush to the Chinese import market has had some adverse effects on the bulk transport industry. Niels explains: "These sudden imports and exports are having an effect on the stay in ports in terms of the waiting and discharging times for ships. Instead of staying an average of three days in port in China you could be staying for 14 days."
Looking forward, Eitzen's future plans are structured around a five-year strategy. Niels says: "Our working base is a five year plan which is addressed every autumn. We will be meeting in October to access our current situation." Within this strategy are plans for future expansion, market led acquisitions and consolidation.
Niels continues: "The important thing for our organisation is not just volume but also to be profitable, however, to be profitable you have to make a certain impact on the market. You have to concentrate on what you are doing well and do that even better, but if your customers are asking more of you then you have to listen to them and develop new skills, if necessary."
A key development planned for the company is to focus more on logistics and shore handling, Niels says: "We are already involved in self loading and self discharging but we want to get more involved in logistics."
Eitzen already operates 63 Peinar grabs, used for loading and unloading its vessels at ports that lack the capabilities, and it plans further expansion. Niels comments: "We have a number of systems that allow us to load at certain ports that are inefficient or lacking equipment. We wish to further this to move into land based operations."
Niels believes that a key to the company's success is the emphasis that it places on its workforce: "At any given time that is the most important asset that we have. We probably have a bigger organisation than most of our competitors which means that our biggest single asset is our organisation, our staff."
Eitzens customer orientated service also sets it apart from its key competitors, Niels explains: "Our biggest competitors are companies with their own ships. Having our own ships is a secondary concern for us, primarily we wish to be a freight trader. We have a number of contracts for customers and we have ships to perform these contracts. So, whereas other companies are having a lot of problems focusing on their own fleet we are able to focus purely on our contracts and serving our client base."
The company continues to plan for the future and wishes to become a true market leader, Niels says: "Our position today may not necessarily be sufficient in two or three years time so we are always monitoring what is going on in the market so that we can protect our position." However, Eitzen is currently a market leader with a very successful freight operation, Niels concludes: "We personally consider ourselves among the top five competitors in the world and we feel that our present position is providing the impact that we want to have in the market."
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