[vc_row][vc_column][vc_column_text css=”.vc_custom_1476364222236{margin-top: -20px !important;}”]David Williams, CEO, Safmarine[/vc_column_text][vc_column_text]
China, India and South Africa together represent about a third of Safmarine business. China is currently restructuring, South African economy is slowing down, but in India the growth is coming back
Q Tell us in brief about Safmarine global operations?
Safmarine started operations in June 1946 when some South African industrialists and American shippers came together to start service between South Africa and the US. I started my career in Safmarine in 1986, after we launched the containerised services between South Africa and Europe under the SAECS consortium in 1978. We covered trade to the US, Europe and the Far East. In 1999 we were acquired by the A.P. Moller Group. And since the acquisition, the Safmarine brand has grown five times bigger than it was in 1999 and our profits also grew three times. Our volume has grown more than five and half time in the past 17 years. Our core business is trade to and from Indian subcontinent, Middle East and Africa.
Q Does Safmarine own ships?
Safmarine is part of A.P. Moller brand which is an international container carrier, so the ship fleet is owned by A.P. Moller Group.
Q As a business model how does Safmarine differ from A.P. Moller Maersk?
We focus on trade related to Africa and West and Central Asia. We have 26 trades that we operate on and what makes us different is that Maersk line is a global carrier so lot of focus is on East-West trade. Around 40 per cent of our business is from Asia to Europe; Europe to US and Asia to US. Safmarine focuses on core markets of South Africa and West and Central Asia. Another differentiator is we have a very customer focused approach and we will be moving our head office back to Africa.
We moved to Antwerp in 1996 after the acquisition of CMBT and considering the business focus it made sense that we moved from Cape Town to Europe. Subsequently, after the acquisition by Maersk in 1999 and running it separately till 2012 where the global financial crisis was upon us and we had to look back at our business and decide what was relevant going forward. So the best thing we thought was to consolidate our position and reduce the overlap of having two head offices – one in Copenhagen for the Danish organisation and in Antwerp for Safmarine. So we have come through this five-year period where we have a small integrated team for Safmarine in Copenhagen. This is a clear demonstration of the fact that the brand is seen as different – Maersk Line being a European brand and Safmarine an African brand.
Q Shipping business is cyclical in nature but this time business slow down seems to be longer and painful. Your comments?
We have focused on two areas that are seen more positively in terms of economic growth. If you look at our core focus regions – Africa and West and Central Asia, these markets will have 4 to 5 per cent GDP growth through 2020 and beyond. On the whole East Africa is growing very positively and other countries in the west and north western Africa are also showing growth.
Historically container trade has grown as a multiple of global GDP and last year for the first time it fell below to one time of the GDP growth, I think it was 0.8 or 0.9. We see global economic growth at between one and three per cent over the next couple of years. Probably it may not get back to the same growth levels that we experienced in the past, achieving four to five per cent growth in our markets would be a very positive achievement.
Q Are your operations in core markets influenced by developments in China?
I don’t think any market exists in isolation anymore, so what happens in China, India or South Africa is interconnected so it depends on the way global trade develops. If the US or European economy slows down then the demand for goods there decreases, which means production in China slows down. China is currently repositioning its economy from investment and export led to consumption led, which is a big transition for them. But China is an agrarian economy so there will be demand from growing population and their economy will see double-digit growth in the days to come.
Q How is the ports sector in Africa?
There has been huge improvement in the port infrastructure in the entire African continent with lots of investment coming into both ports and land side infrastructure and this has made it easy for competition to come in. Earlier there were more challenges than vessels lying outside of Nigeria Port. But now the infrastructure has improved and while the callings have declined temporarily they have made movement of goods in and outside the port much easier. The next development we will see is development of infrastructure on the land side to meet the increase in number of vessels calling at African ports.
Q In Africa do you have trade imbalance issue?
In most of the emerging markets you have this situation wherein there is more import of consumer goods in 40 foot containers, while the exports are in 20 foot containers. In South Africa we have an additional imbalance that lot of export is refrigerated food packed in 40 foot reefer containers, while imports are significantly less.
Q What are the major demands you see from the customer?
In the current economic situation everyone is very cost conscious and there is lot of pressure on freight rates and our strategy is to offer the lowest cost in the market, while offering the highest level of service. We are reconciling our operations to have very lean and effective organisation, while delivering customer service that is better than the market.
[/vc_column_text][vc_single_image image=”3672″ img_size=”full” add_caption=”yes” alignment=”center”][vc_column_text css=”.vc_custom_1476364140308{margin-top: -20px !important;}”]Bimal Kanal, Director – India, Sri Lanka & Bangladesh, Safmarine[/vc_column_text][vc_column_text]
Q How important is India for Safmarine?
China, India and South Africa are equally sized in terms of our top three business destinations and together represent a third of our business. In India we operate out of 15 ports and 46 ICDs. We have 4 per cent market share of India’s containerised EXIM, which is close to 400,000 teu per annum and is 22 per cent of Maersk Line and Safmarine combined volume. Comparing us with Maersk Line, we are one fourth of their business. Among India, China and South Africa, we expect India to grow faster as China’s economy is restructuring and South African economy is slowing down. We have been upgrading our product and have introduced new services to East, west and South Africa. In east Africa we have a service called MAWINGU, which is a direct service to Tanzania and Kenya. MESAWA is a direct service to South Africa, extending to central West Africa. Most of the services are from Mundra, Nhava Sheva, Pipavav and Hazira.
Q Some of the cargo goes to Africa via Europe. European ports are targeting Indian cargo wherein they act as a hub port. So how does this work?
In the international scenario a trading company may have office in Geneva, London or Singapore and they can still ship directly to an African Port. The LCL business from India to Africa has to pick up. Indian exports to West Africa go in full container loads and include small machinery, confectionary, pharmaceuticals, household items and electronics. Imports from Africa comprise of cashew, timber, coffee. From South Africa metal scrap, manganese ore and copper comes to India. Manganese ore is shipped in containers.
Q What are your plans for growing Indian operations?
We have introduced new products into Africa, US east coast and have the best services to Mediterranean and North Europe. A direct service from India to China is CHX that comes into Chennai. We plan to introduce service to the Middle East.
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