The daughter of a traditional shipowner today urged the industry to return to the old ways and resist the lure of financial speculators who care mostly about a quick profit.
Angela Chao, deputy chairman of New York’s Foremost Group, appealed for a professional approach to vessel ownership at a keynote luncheon speech at the Association of Ship Brokers and Agents (ASBA)’s annual cargo conference in Miami Beach.
Shipping was spoiled by the commodities boom that ran from 2003 until the world financial crisis in 2009 by has a chance to mend its ways, she argued.
“Those days are long gone,” Chao said. “Our industry has to return to the basics. We’ve statistically reverted back to our mean.”
She cautioned against “offices just filled by investor relations staff.
“This cannot be fulfilled by financial players who enter the industry to make a quick buck. Hence the mess we’re in today. Shipping was commoditised during those boom years. Ownership and management were put in the back seat.”
The speaker told of how her father, James Chao, came to New York from Taiwan in 1958 as a newly minted captain “with a thick Chinese accent and no relationships — so he started Foremost.”
Chao originally brought three children and that quickly became six. One of Angela’s siblings is Elaine Chao, the current US secretary of transportation.
Speaking of her father’s approach to business, and to feeding his growing family: “If he worked harder, longer and smarter, he’d gain more business.”
Amid talk about things like “paradigm shifts,” some principles remain constant, Angela Chao argued.
“Do what you say you’ll do. Make your words count. Sometimes life is just that simple.”
Among the planks of Foremost’s traditional approach, it does not buy secondhand vessels. It closely supervises newbuildings at trusted yards to its own high specifications, opts for sister vessels fixed with top charterers, and does all management in house.
Foremost operates a fleet of 18 bulkers with two more on order. The company has been active in the past two years in growing and renewing its fleet, moving on six kamsarmax resales in 2016, then ordering two kamsarmax bulkers and two capesizes last year.
The moves are now followed by early signs of a dry-bulk recovery. As Chao said in her remarks, “we’ve only in the last few months started to come out from under the heavy orderbook that’s been such a drag on earnings.”
Asked by TradeWinds after her remarks whether she is convinced that recovery is real and lasting, Chao smiled and gave a look that seemed somewhat short of total conviction.
“I hope so,” she said. “But the concern is always that a recovery can be killed off by newbuilding orders.”