Embarking on expansion

Ken Bloch Sorensen speaks to Gulf News about UASC

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2 MIN READ

Gulf News: Why is UASC investing in its own shipping agencies?

Sorensen: The traditional business model for the industry is that you want to represent your own interests. Also, because of our limited size in certain markets it had not been economical for us to run our own agencies.

Now with the size and order we have, it makes sense to continue to look at those opportunities. So it becomes viable to have our own agency network.

Also, it is important to sharpen your own profile, image and control costs and sales in respective areas. When a country is big enough for business we look for an opportunity to invest in the network. There will be announcements coming across Asia. We are doubling the size of the company in two and half years and that warrants these kinds of investments.

Gulf News: How many ships are on order at present?

Sorensen: There are eight ships on order. They are 6,850 TEUs. They represent, including containers, more than $1 billion worth of investment. The ships alone represent a value of about $850 million. This order was executed in early 2005. The ships will be delivered in 2008.

Gulf News: Do you have plans to order new ships?

Sorensen: UASC is a 30-year-old company and has had a history of ordering ships every 10 years. If you look at the order now it will double our capacity. What we wish to get into is a situation when the company keeps ordering regularly. Our board has agreed to further invest in the company. So there will be a lot more orders coming.

Gulf News: What has the board decided?

Sorensen: The board has decided to continue to invest in the company. There will be investment in ships, containers and agency networks.

Gulf News: When will the next order come?

Sorensen: Next year, may be. It is the timing that is important. I only say that funds are available to do it at the right time. The plan is to sustain acquisition in the market overtime. We need a certain amount every year.

Gulf News: Would you order mega container ships?

Sorensen: There are ships out there that are rumoured to be 11,000 TEUs. Ships of that size do not fit our current operations. So it does not make any sense to have them. It warrants major investment not only in your own networks but also in terminals. These ships are so big that they can call only at a number of specific ports in the world. Economic feasibility of these ships warrants much larger trade.

Gulf News: Do you think such ships are needed?

Sorensen: I think they are, depending on your operations. They are inflexible because they can be traded only in certain parts of the world. So you need the volume to sustain them. You can argue that the flexibility of these ships and added cost of feedering makes them less viable. Maersk is testing the waters now. They have decided to go further than that.

Karl Jeffs/Gulf News

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