Heavy Ambitions

Casting Off Confined Trade Shackles

By Carly Fields

AAL Shipping has come a long way since its Netherlands beginnings in 1995, when its sole purpose was to launch the first dedicated multipurpose liner service on the Australia-Asia trade.

With a start-up fleet of just three chartered-in vessels, AAL kicked off with a service between Southeast Asia and Papua New Guinea, Queensland and the Northern Territories of Australia.

This year, celebrating its 25th anniversary, its niche is considerably wider … and heavier. It has positioned itself squarely in the mega-size multipurpose vessel tonnage sector, serving long-haul trades. Cementing its broader focus, it added four Warnow-Class, or W-Class, 33,271 deadweight-tonne ships to its fleet in October, boosting its operating tonnage to just under 740,000 dwt.

Speaking to Breakbulk, General Manager Felix Schoeller explains the significance of the latest additions. “Our strategy since 2014 has been to grow our global services and footprint organically, as opposed to actively courting M&A activity. In practice, this has meant expanding our infrastructure and representation in key markets – boots on the ground – and increasing our capacity and regularity on target trade lanes. Where there has been mutual benefit, we have cooperated with other carriers on specific routes.”

Over the past three years, AAL has brought in 14 ships under commercial management, allowing its fleet to reach a critical size and make it a “force to be reckoned with in target markets,” Schoeller said.

“Today, the fleet comprises 25 MPVs of multiple sizes that offer the market flexibility and choice for all cargo types.”

AAL has worked hard to throw off the shackles of its historic Austral-Asia focus. While it still has a strong foothold in Asia, it has spent the last five years building a presence in the Americas and in Europe. “We have been on the U.S. West Coast and U.S. Gulf for the last five years on pretty much a monthly basis and our Asia-Europe and Europe-Asia business has been successful and is growing.”

New Locations

Next up are the Atlantic trades and other emerging markets, seen as “steppingstones” for AAL. The important thing is that we have the right tonnage and regularity on the trade routes in which our customers are active,” Schoeller said. That said, sustainability is paramount to AAL’s growth strategy. “We are ambitious and entrepreneurial, but also realistic about today’s challenging market of global uncertainty.”

Those opportunities might well improve this year, but with caveats. Schoeller sees an uplift in 2020 if investor confidence holds, if the trade war between China and the U.S. is resolved and if the bulk market remains steady and stable.

“There are a lot of ifs, but we are very positive about the number of requests for tenders and quotations that we are seeing. If investor confidence stays firm a lot of projects should go ahead in 2020.” Then, by the end of 2020 and the start of 2021, the project pipeline should come into play, Schoeller added.

But that’s not to say that there isn’t any breakbulk business to be had in the meantime. “Everyone assumes that if there’s a mediocre year then ships must be empty. The reality is that ships are not empty, but the market for suitable cargo is much more competitive than ever,” he said.

Schoeller reflected on the situation in 2017 when much of the MPV tonnage was out in the charter market. “That made it very competitive and put freight rates under pressure for shipowners.”

Now, most of the ships that were controlled by non-vessel-operating common carriers have found a home with operators leading to a better balance. However, his biggest fear is that operators with short memories will return to the shipyards to place speculative orders as soon as the market turns. While he accepts that there may be orders for new ships for specific trades or projects, he urges “no crazy newbuildings over the next two years.”
That will be the key to stabilising the market and proving AAL’s move on mega MPVs.  

Carly Fields has reported on the shipping industry for the past 20 years, covering bunkers and broking and much in between.

Image credit: AAL