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HANSA talked to Christian Rychly, Managing Director of Hamburg-based ship owner Leonhardt & Blumberg (L&B) about his optimism regarding[ds_preview] the company’s activities in the feeder business. Commenting on the study of SeaIntel, Rychly says, »this happened for a long time,« he says. This can be seen in Intra-Asia markets he argues, emphasizing that there – in the opposite of other trades – no cascade effect in the fleet can be seen. »Of course, bigger vessels are floating in because of both larger transport volumes and the pressure of even larger vessels on other routes. But we don´t see a bigger replacement of tonnage but instead additions to the fleet there. Especially the 1,700TEU units which we focus on, are not replaced,« he explains.

Rychly adds that he does not see any bigger concentration processes in the feeder business. The mentioned aspects in Intra-Asia trades are one trend, which according to the manager, is characterised by more complex logistic chains, more countries and ports to serve and more cargo. About half of the fleet of 39 vessels is sailing there (the other half active i.a. in Northern Europe, the Caribbean). In combination with the outsourcing activities by some of the Major Line Operators to the benefit of several feeder operators there are »chances for small or new players arising«. Besides, L&B believes that all vessels below 1,000TEU capacity will face bigger problems, as feeder vessels are getting bigger and bigger because of cost advantages. »Except for special niche ports, these units lose more and more relevance, especially when the bunker price increases again«, Rychly says.

At L&B, the staff does not see a negative impact of cascading, nor a positive one. »We focussed intentionally on one segment. In the past we sold several smaller units after a price slump and will continue to do so«, the managing director emphasizes. He expects a good development in this segment because of very limited new building activity and a high need of scrapping, as the segment is the oldest.

Another aspect is a satisfying price level on the second hand market. With this, the own fleet will get less diversified, but Rychly has a macroeconomic argument for the strategy »We observe a trend of relocation of production in the global economy, not only in Asia but also in Northern and Central America and in Europe. China is outsourcing some of its production facilities to Mexico or Turkey, for example. This has a positive effect on the 1,700TEU segment as bigger feeder vessels are needed.« Rychly believes that the 1,700TEU units will be the »classic« feeder in the future, that´s why L&B intends to expand its fleet of these – even if they are still to large in some cases and regions nowadays. With around 30 sister vessels he sees a remarkable cost advantages for L&B.

The fleet is planned to be modernized – not necessarily expanded – by second hand sales and purchases only. »There is still way too much capacity in the market, that is why we oppose new building orders. For S&P projects he expects some good opportunities in the next years. At the current price level you could operate a vessel with around 4,500$ OPEX«, he adds. And as the rates stand at around 7,000$, depending on the region, it would be worth focussing on 1,700TEU.

The very few remaining vessels initially funded by the German »KG system« are supposed to leave the fleet. For tonnage acquisition, L&B is working with a pension fund, but not a German one.