Mr Sjursen, I did not realize before that Hoegh is a family business... Hoegh Autoliners is partly a family business. 61,25% of the company is family owned, and 38,75% is owned by Maersk Tankers. Hoegh has been in shipping since the 20-ies, they went from private company to public, and then some years ago the family bought off all the shares at the stock exchange. And then Maersk came in and took a stake of 38,75%, at the same time putting all their PCTC (pure car and truck carriers) into Hoegh. It was a way for Maersk to get into this business. Before, they were never a PCTC operator; they built vessels and chartered them out to operators as vessel owners. In the Board of Hoegh Autoliners there are 9 persons, including three representatives from Maersk, three from Hoegh and three independent representatives. What were the company’s results for 2009? 2009 as expected was not that a fantastic year. We did go in loss on day-to-day operations, but with down payments on vessels and loans, etc., so it was not a financially sound year, let us put it that way. 2010 looks better, we started not so strongly in January-February, but usually in January-February business slows, we were picking up again in March, and we think for the rest of the year we will have results that are sustainable. And then we see growth from 2011-12 that is to help us keep sustainable business and start making money again. Last year, did you have problems with fleet utilization? Yes. Last year at the most we had 12 vessels in lay-up. That was regularly going down. 8 vessels have gone for scrapping. Right as we speak we don’t have any more vessels in lay-up, we just redelivered the last vessel. So, from April on all our vessels are again fully utilized. We have even been slightly active in the charter market and probably will be a little more active as we see that the market will pick up which means that we need to add capacity. The problem is that during 2009 rates have been under pressure so it is going to be a tough job for us to get the same amount of money for the same volume of cargo, just because of the very-very tough competition during the last months. With all these vessels in lay-up there has been a lot of overcapacity. But we see that other companies are doing the same, they are taking out more and more vessels. But we are probably the first PCTC company that does not have any more vessels in lay-up. Do you implement a rate restoration program? Yes, we are about to do that. I can speak specifically for the trades out of Europe: for the last few months, the market has picked up quite a lot. For the trades from Europe to Middle East there will be General Rate Increases coming up in April-May. We are debating the same thing for the trades to Africa and Australia. We also see that liner trades into US from Europe and as well as trades in other directions are picking up, and other carriers are implementing rate restoration programs as well. The problem is, some contracts were signed in 2009, in the period of time when everybody was depressed, and these are contracts for two, three, or four years. These shippers were lucky to sign their contracts at that time because they got low prices and it will take another 3 years to get them up. But for the cargo that is negotiated right now in the free liner business we will definitely see higher rates. And that is absolutely necessary. Do you renegotiate those contracts signed in the low market? We cannot do that, unfortunately. Maybe ro-ro shipping lines have been too nice, and are too nice still – but if we sign a contract in 2009 for three years, that’s it, we stand by it. It has been a tradition that customers are not always as loyal, if they sign a contract in a very high market and the market falls, they can come back and say, ‘Oh, we need a 20% decrease’. But when we sign a deal, we stick to it. How do you assess the Russian market in terms of its export and import potential? On the export side, we think the Russian market has a good potential. One of the reasons we started our office was that we saw that there was large volumes of trucks and agricultural equipment moving and we did not see how we can get around and get this cargo. That’s why we made a partnership with Dealex, and together with Dealex set up Hoegh Autoliners Agency Russia (HAAR). The effect was that we loaded a lot more cargo after we started HAAR than before. We see that there are a lot of trucks, buses and agricultural equipment going to be moved into places like Cuba, Venezuela, and Middle East. Still, the Russian market is not very mature. It was very much down and now it is coming up again. In Russia it is a very spot business market with big lots coming up all the time and we need to go for a tender for every lot. As a shipping line, it would be easier for us if we had a shipper who would say, ‘We are going to have 500 trucks to Cuba over the next six months’, then we would establish some type of a liner service with more regularity. As it is now, they go into the market and say, ‘There is 200 trucks and it has to be this date’, so sometimes it’s a logistics problem. Our setup is geared to more regularity. We have no problem doing spot shipments and we’ll continue to do that as long as the Russian market needs it. But we believe that for the Russian market to go even further it would be better if shippers would think about saving money and instead of shipping a lot at once when they incur large storage costs and movement costs 200 hundred at once and then you have to wait till the ship comes and then they do the same on the import side – But anyway this is the way the Russian market works and we play the game. When it comes to imports, the volumes are very much down, but we see some signs of recovery. We are active in Russia with the imports of Nissan, Subaru and GM Chevrolet. Through our subsidiary EMC we have regular calls with this cargo into the Fishery port in St. Petersburg. A lot of this cargo is transported by Hoegh Autoliners to ports like Amsterdam, for example, and from there we transship it with EMC to the Fishery port. We would like to see a little bit better infrastructure in St. Petersburg, but we work with what it is. We know that there are big investments outside St. Petersburg, and inside as well. There is ie. PLP, who say they will invest about one billion dollars in their downtown terminal. Then there is the port of Bronka, who says they would invest a billion dollars and there is the port of Ust-Luga. For us, as a carrier it looks good for the future. In 2015, if God willing, we are talking about three good operational ports, which means you will have a competition on the port side, and you will have a lot more lines coming in, and you will have a lot better logistics for the cars and trucks to get into and out of Russia. And in our judgment, for the Russian import and export to be more successful you need a better infrastructure in the Russian ports and especially in and around St. Petersburg. We are looking forward to 2013-2014. Then you will definitely see our big vessels in St. Petersburg. We hope that you will see our big vessels before that, but... We will have to see. So you consider other options apart from St. Petersburg, like Ust-Luga, for example? We have all our options open. We have to remember that it’s not carriers, like us who decide where the cargo moves, we go where the cargo moves. We can influence the traffic together with customers, together with ports, but the decision on where the cargo moves and how is made by the customer. And we can only be a facilitator and give advice where we think it is appropriate. If all the cargo from St. Petersburg moves to Ust-Luga, we will go to Ust-Luga. If it moves to Bronka, we will be in Bronka. If it goes to St. Petersburg, we will be in St. Petersburg. And if it goes to both places or to all places we will be in those both places or all places. Do you consider serving other trades to/from Russia, like the Far East or Novorossiysk? We have a lot of discussions about the Black Sea. In 2008 several feeder lines started services from the Mediterranean into the Black Sea. This meant that you had a second gateway into Russia. Usually, all the new cars used to come via Finnish ports and then trucked, and then there came feeder lines, some via St. Petersburg and then you also started to have a Black Sea connection. Unfortunately, the market fell to the point where all the Black Sea services were closed. And now it is starting to recover and we believe that for some customers a Black Sea corridor could be possible. We will definitely be open for discussions with both ports and customers to take Far East cargo in via Black Sea instead of the Baltic. It’s the same thing – we can influence, and we can give advice, and we can come with good ideas, but the decision making is on the customer side, and if the customer decides for the Black Sea, it will be Black Sea. Wherever they say, we will go. Did the Russian Government’s decision to raise the import dues for foreign cars do much harm to the market? It is difficult to say. You know, the market has been so low that you couldn’t really harm it. It could be that if they had not implemented such rules the imports would have been higher, but it is difficult to say. We have not thought about it really. We are now happy for everything that comes because there was a point when there was nothing. And now it is picking up again and every sign of recovery is good news. It could be that it was a bad timing to implement such rules in such a depressed market, that’s for sure. From a carrier’s point of view, it is not smart. But we are not in the business of interfering with the internal rules and regulations in Russia; we will abide by the rules that exist. Back to the terminal infrastructure in Russia, you mentioned the Fishery port – do you work with Petrolesport, or Sea port of St. Petersburg? We work with PLP with exports, with smaller volumes. We do a lot of exports business via our partners KESS. Unfortunately, our own service to the Fishery port, EMC, was not able to carry that type of cargo in or out of that port, as the facilities are not good enough. They are adequate – not great, but adequate for cars, but it is not possible to handle there any type of truck, or High&Heavy, or MAFI trailers. And via KESS and PLP it is possible. But PLP has informed us that they have closed their container berth for any type of PCTC vessels, and of course for us is it not such good news. They have told and showed us big plans for the big investment, a billion dollar, but that is in 2015. We are now in 2010. From now until then there is 5 years. We would like to have a possibility to have our big vessels into PLP in the meantime, so we are a little bit disappointed when we hear that they close the container terminal for PCTC. We believe this is short-sited and they should probably change their mind. It is not carrier friendly. Therefore we are very open to any suggestions from Ust-Luga, Bronka, and other place where they tend to be friendly when it comes to attracting our ships and cargo. But we would love to be in St. Petersburg. But we need the facilities, which at this point is a problem for big vessels. I think, for Russia to come up strong on both the exports and imports, you do need investment and you do need better terminal infrastructure. I mean, it works, but it can definitely be better, if you look at your competitors around Europe, there is still a way to go. But we think we know the Russians, and when they decide ‘We will do it’, they will do it. So the issue of launching your own service is basically the issue of having adequate terminal infrastructure? It is not only that. We already have our service with EMC, but we would like to have a better service and for our big ships it is partly the issue of terminal infrastructure, which is not there at the moment. We also have plans to expand our activities in the short sea and feedering business, which means more activity on the part of EMC, as well as in other segments of the market. And of course for us to expand our relationships with Russia through EMC, in the Fishery port it is not so easy, because it is what it is. If we were able to bring big vessels into St. Petersburg, if the cargo was there, we would do that. We have the new fantastic vessel “Hoegh St. Petersburg”, and we would love to see it coming here, but we need the cargo and we need the authority of PLP to give us an option to come in. It will be very strange for us, if we bring the cargo, the cargo is on the pier, and they tell us, ‘No-no, you cannot do this because this will mess up the container terminal’. This would be very disappointing. We hope that they will change their mind. Where is the “Hoegh St. Petersburg” currently deployed? It is the type of vessel we would put into the Far East to Europe and then Europe – Africa and Australia, and then Australia to Japan service, it will be in a sort of a round trip pattern. But this is not cut in stone. We are able to be flexible. If the cargo is there, we would do some extra scheduling and re-scheduling to have this vessel come to St. Petersburg. Recently you have been hearing quite often about new services launched, additional vessels and vessel calls – do you think this is a sign of market recovery or is it rather because the traditional markets been exhausted and lines are looking for new markets? No, I think that we definitely see an upturning market. We don’t think we are going to see 2008 again, 2008 was a crazy year when everybody shipped enormous amounts of cargo, and it resulted in a catastrophe in 2009, because a lot of the cargo shipped in 2008 was stuck in stocks around the world. Now a lot of this stock has disappeared, and we see shippers again shipping to order. Orders are coming in, cars are being sold, and manufacturers of equipment, cars, and High&Heavy produce not for stock but for sale. That is a big difference. Last year they were producing to stay alive and nobody really knew if what they produced was sold. Again, we don’t think we will see 2008 volumes in the near future, that’s not the point, for us the point is to get back to a sustainable level where carriers can start making some money again. That’s important. The trade out of Europe is picking up and so are Australia and South Africa trades, and also our liner service into Caribbean is being quite strong. We know that in other trades where other carriers are active, the situation is also improving – the Europe to US trade has picked up to the extent that the carriers are actually having problems with space. So, yes, I think this is a general turn up, the bottom is over, although we will not see the type of growth we saw in 2006-2008, and maybe we don’t even want it. But we need some growth, that’s for sure. Mr Sjursen, thank you for this interview and congratulations on establishing a Russian agency. As Hoegh, we are very excited about Russia. We are very happy that we were able to negotiate the partnership with Dealex and we are happy with the set-up of HAAR and also with the people that we have employed with the agency. We have received feedback from the market that they are impressed by the partnership. A lot of people have told us that we have picked the right partner in Russia – and we believe we have the right partner and the right people. For us it is the most important thing. Being successful is all about the people you have in the company. Assets like ships operated by ourselves and other shipping companies are more or less the same. Where you can differentiate is your organization and the people, and we believe – or we like to believe that we are a little bit ahead of the competition./Seanews.ru