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Surviving the downturn in the shipping industry: GAC more optimistic about 2010

Quality of service providing, innovative solutions for laying up vessels and a diverse portfolio of services, able to cater all ship owners’ needs were among the key factors that helped propelled GAC Group forwards during 2009, despite the

downturn that hit the shipping industry. In an interview with Hellenic Shipping News Worldwide, Mr. Bengt Ekstrand, the Group’s Vice President for the Asia Pacific area, said that the company managed to increase its shipping calls volume by 14% last year, while also appearing optimistic about 2010 as well. But, he also warned that “if the market doesn’t pick up, there will be an increase of cold lay ups during the first 6 months of 2010 onwards”.

GAC Group is involved in various areas of the shipping industry, from port and logistics, to marine and services. Could you give us some insight on how 2009 developed for the group in terms of its activities?

Our main focus last year was to consolidate and review our activities as to improve our service towards the customers.
Overall, the Group fared relatively well, thanks to our service and geographic diversification. Having a diverse portfolio of services and a strong growing customer base have always put us in good stead.

Given that 2009 proved a rather challenging year for the industry in general, as a result of a slump in trade and the global financial crisis, how would you say it affected your business?

We saw pressure on rates, stagnated and reduced volume; but, in spite of the global gloom, we are in sound financial position and hold sufficient resources to ride out the tough times.
Since our inception in 1956, GAC’s pioneering spirit has always helped us thrive in challenging environments. We see the global downturn as an opportunity to explore more innovative solutions to enable customers to reduce their operational costs.

With Singapore being a major transit point in the Asia Region for all sorts of cargoes, how would say that the area was affected by the crisis?

GAC Singapore has not been adversely affected by the global downturn. In fact, the company has been doing very well with 14% growth of shipping calls volume in 2009. It is true that a lot of players have been suffering, but, it depends on which part of the supply chain you are working in. For example, companies who provide owners matters services in Singapore would have done well, whereas those handling container liners could be adversely affected.

Was GAC involved in servicing of the hundreds of laid-up vessels off the coast of Singapore and if so what were the main challenges?

There are a lot of ships, especially the container vessels, have been laid up due the crisis. This is the opportune time for agents to explore new solutions to help the shipping industry. GAC has developed innovative services that not only save costs, but time, lives and cargo as well. GAC Ship Lay-Up Solutions helps owners / operators avoid non-profitable journeys, and reduce wear and tear, fuel consumption and insurance premiums during periods of low demand is one such offering. Thanks to the Group’s global reach, customers benefit from flexible choices in lay-up locations globally. Currently, we can arrange different modes of lay-ups from cold to long term at nearby ASEAN locations or globally depending on the specific need of each client requirement, their vessel and their area of trade.
However, Singapore regulation does not allow vessels to be laid up around the country, so they all have to go to Malaysian or Indonesian waters, out of Singapore port limits. GAC Singapore keeps providing as much support as they can; but our GAC offices in neighboring countries are more favorable for this service as it becomes much more economical that way.
The main challenges for ship lay-up providers are to find good lay up locations and being able to offer broad services.

Do you believe that the number of these lay-ups is gradually being reduced?
It’s expected that if the market doesn’t pick up, there will be an increase of cold lay ups during the first 6 months of 2010 onwards.

What are your company’s future plans? Are you planning any new types of services or maybe a further expansion of your global network?
We are continuously looking for opportunities to grow. In 2008, the Group launched its new growth strategy “Vision Y-Global Values” to take the entire group forward to 2012. This new five year plan both builds on the growth momentum created over the past five years and adds an important values component. Vision Y-Global Values is also a set of practical initiatives for creating a more sales-driven organisation. Amongst other things, we will put more energy into Global Account Management. The strategy is to focus on individual industries and roll out a customised service programme, tailored to customers’ needs. Our goal is to move up the value chain in our clients’ overall business strategy and deliver wide-ranging solutions with measurable results.
Leveraging our unique expertise in shipping, marine and logistics, we will offer more integrated services combining shipping, marine, logistics and solutions operations to deliver greater value. Through our latest business area GAC Solutions launched in April 2007, we bring best practices and expertise from world-class suppliers/manufacturers with GAC’s commercial skill and customer knowledge to offer the maritime industry specialist offerings. We are also adopting stronger management systems, as well as invest in human resources, training and IT.
GAC started out in the Middle East in the 1956. Now we have used the Gulf as our base and expanded our business both in geography and product portfolio. Our number of offices has grown from 200 in 2002 to 350 today, and our staff strength has also grown from 5,000 to over 8,000 during the same period.
The GAC brand stands for global reach and it’s reflected through our tagline “Wherever you go”. Wherever our customers go, we are there to provide comprehensive yet value for money services.

What were your customers main concerns this year?

Shipping principals’ main concern was high bunker price, low freight rates, and overcapacity in the market.

Which are your estimates about 2010? Are you optimistic?

In general, I believe we will enter 2010 in a much more optimistic mood compared to last year. GAC will continue to be prudent and try our best to support our customers to seize the arising opportunities as economy recovers.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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