Heroes, reputation, recovery, and appetite – we’ve heard it all from Kyriacos Panayides, Managing Director of AAL Shipping, but don’t expect him to make a big song and dance about it.
We dive straight in to discussing the current challenges facing his company amid a pandemic. Panayides fondly refers to the officers and crew on board the fleet, as the industry’s heroes, saying that without them we would have no global economy. “There has been no significant improvement in the issue of crew changes, so crew on board are still suffering from prolonged contracts with only a few ports offering crew change capability. This is harming the mental health of these frontline workers, who are trying their very best to keep global trade moving.”
In addition to experiencing voyage deviations to perform crew changes, the travel restrictions prevent their engineers and cargo superintendents to board their vessels and attend loading and discharge operations. “Thankfully, we have invested heavily in training and have experienced crew on board who can execute smooth operations without the need for our engineers on shore to be present. But most of all we still need to try to maintain our schedule integrity and trust with clients.”
Moreover, Panayides says, “low port productivity with reduced stevedore gangs at certain ports and increased congestion is leading to extreme delays and badly affects the scheduling. This comes at a heavy cost and it is challenging to pass the cost to shippers. “
“As the MPP market recovers from an increase in demand driven by cargo flowing in from rivals like the container and bulk carriers, the MPP’s share of dry cargo has increased. This has led to improved freight rates and margins. This presents “happy days” for us and the opportunity now naturally lies in expanding the fleet to cope with the increased cargo demand, as well as exploring the most beneficial service model for each trade lane – whether a liner or tramp option. In line with this, we can now agree on fairer terms with our counterparties. Shippers dictated terms for more than a decade, now this creates a fairer landscape.”
Always striving for growth, the company has now added more vessels to its fleet. When explaining the purpose of the four G-Class vessels, Panayides says, “they fit perfectly into AAL’s fleet profile and global service models. Throughout the years that we have been trading them, they have performed exceptionally well and delivered on the high service standards demanded by our customers. We are now happy to have these types of vessels with us for the long-term.”
The ‘G-Class’ term was developed for AAL’s internal classification purposes and global ports beginning with the letter ‘G’, were chosen for the individual vessel names. “Before we renamed the Pacific Action, we took a company-wide vote and ‘AAL Gibraltar’ was chosen.”
When it comes to sustainability, these vessels combine the two worlds of project and bulk cargo, the latter needed in the majority of their backhaul voyages. “More diverse cargo and a greater parcelling capability on a vessel means less sailings and this is good news for our customers and the environment.”
AAL still views offshore renewables as an attractive growth market and their trade route focus is maintaining frequency in their main trade lanes connecting North Asia with the continents of Oceania, Europe and the Americas and maintaining regular sailings into Africa, mainly to its west coast.
Consolidation & Growth
When asked about his thoughts on consolidation in the heavylift/MPP shipping market, Panayides was forthcoming in his response when he said “Our sector has already experienced several waves of major consolidation, compared with other shipping segments. Few major players have survived the recent prolonged recession, without cutbacks or consolidation, and that’s not going to end. Despite maintaining our strong independence, AAL has on occasion set-up alliances and other forms of partnerships on key trades within the regulations, and I see it as a positive endeavour when ethics, service standards and objectives are aligned.”
“Our customers and vendors know our 26-year history well. We have always maintained a long-term vision and a strong appetite for growth, despite only focusing on sustainable growth and neither being bullish with growth forecasts nor looking to court headlines. This is the mistake other shipping companies have made in the past and the consequences were unfortunate for them. AAL is undergoing a strategic growth strategy and our management and teams are fully aligned behind these objectives. Just do not expect us to make a big song and dance about it – it is not our way.”No firm announcement has been made on these growth plans yet.
With regard to transparency in the market, this is one area that AAL has been constantly advocating for with Panayides talking openly at conferences and events about the Heavylift/MPP segment being behind other shipping sectors such as tankers, bulk and containers.
“One can argue that the vertical sector complexity and broad cargo mix of our sector creates difficulty in reaching the transparency levels of other sectors, but for me this is not an excuse. We are grateful for those organisations that are driving research and data analysis within our sector and pushing for greater transparency. Despite this, the MPP sector still lacks certain tools, indexes and benchmarks to rely upon and steps need to be taken between cargo stakeholders and carriers to build transparency.”
The Last Word…
“As things stand today, it looks like the shipping industry is seeing the green shoots of a long-awaited recovery and we are confident that this could last for some time. It is a great pleasure to finally begin to justify the heavy investment and patience placed in our companies during the long recession and repay that unwavering support.
Let us hope that our hunger for newbuilding does not outdo the sector’s appetite again, let’s not repeat the mistakes of the past and again swell the fleet to oversupply and drag our sector into turmoil, which next time might last even longer than a decade. I am still hopeful that this time we will see more mature market behaviour that will bring sustainable long-term gains for all parties involved.”