Celebrating the 150th anniversary of The China Navigation Company in 2022, Swire Shipping and Swire Bulk are charting a course for a strong and sustainable future.
The waters have certainly been turbulent for the international shipping sector over the last year but by combining flexibility with their traditional core values, Swire Shipping and Swire Bulk are achieving strong results.
Sam Swire, China Navigation Company Chairman
"With Swire Shipping and Swire Bulk we are active in two major segments of the shipping industry – both are performing well in the current high market, and will continue to reap the benefit of several years of shareholder investment," says China Navigation Company ("CNCo") Chairman, Sam Swire.
With the pandemic causing unprecedented global supply chain disruption, Swire Shipping is successfully weathering the extremely challenging operating conditions to take advantage of historically high freight rates, as it celebrates its 150th anniversary.
"This year is shaping up well, which is significant considering it is also our 150th anniversary and therefore a great way to start the next chapter in our long history," says James Woodrow, Managing Director of Swire Shipping which changed its name from China Navigation Company in October 2021.
Woodrow explains that the name change was seamless and logical as the business was already widely recognised as Swire Shipping and the move has been well received by customers in core Pacific markets. The name change has also coincided with some excellent results.
"We are doing well," says Woodrow who explains that the global supply chain disruption and log jams have created a shortage of assets from ships and berths, to warehouses and manpower.
"Some 12% of the global fleet is at anchor waiting to go into port – it's normally about 2-3%," says Woodrow.
It is a very similar story at Swire Bulk, formerly the dry bulk division of CNCo, which separated into an independent company within the Swire group, in January 2021.
"Despite the global pandemic situation that has had significant impact on different aspects of global trade, we remain in a good position," says Chief Executive Officer, Peter Norborg. Swire Bulk shares the same rich heritage as Swire Shipping and both companies can trace their roots back to 1872 when John Samuel Swire founded The China Navigation Company. His company started transporting cargos of soya bean cake from Manchuria in China, to the lower River Yangtze, on Mississippi River-style paddle steamers. As Norborg explains, Swire Bulk will celebrate a double anniversary in 2022:
"We are one year old but we are also 150 years old – we are very conscious as a management team of the history and it dictates how we conduct our business," he says. While business is strong and forecasts are optimistic, both companies have had to be extra agile and adaptable to take full advantage of extremely testing operating conditions – something that John Samuel Swire might well have admired.
Both Swire Shipping and Swire Bulk plan to remain within their existing sectors where they have built expertise and track record.
Adaptable and flexible
We are seeing some opportunities develop in the trans-Pacific trade from China and East Asia to Pacific Northwest ports, which we hope the additional investment we are making in our fleet will help us to develop. While the 2,400 TEU to 2,700 TEU capacity of a Swire Shipping vessel is relatively small, it can still be highly effective. For example, Woodrow explains how one key customer, a big importer of furniture into the USA had thousands of containers stacked up in Vietnam, one of their major production sites, causing supply disruption. Being smaller, Swire container vessels were able to navigate up the Saigon River to Ho Chi Minh City, load containers and ship them directly to Everett in Washington state on the US west coast. This by-passed log jams and avoided queues for berths in big ports like Los Angeles and delivered an imaginative solution for their customer.
On any day, Swire Bulk has 140-160 vessels operating worldwide and the company currently owns 32 of them. The unusually high freight rates for container shipments have also called for some agile and unorthodox approaches:
"We are now carrying containers on bulk carriers," says Norborg, who adds that some customers are reconsidering whether their goods would be better shipped as break bulk rather than by container because of the recent increase in rates.Safeguarding staff from the impacts of COVID-19
While the pandemic has caused much of the disruption which has driven up rates, it has also created a huge challenge for management and placed an enormous burden on ships' crews.
"For us, the safety of our crews and shore staff is always the number one priority," says Woodrow who explains how constantly changing pandemic travel restrictions have meant that crew changes for some of the 1,000 or so seafarers on the company's books are often disrupted. This means tours of duty have to be extended, putting extra strain on ships officers and crews. "While a usual tour might be four to eight months, some seafarers have been away for in excess of 12 months despite us doing everything we can to help them," says Woodrow and those support measures have included diverting vessels to southern Myanmar so crew members could get home.
As Woodrow points out, seafarers often can't go ashore when their ship is berthed in port; not even for a short walk or to do some shopping. It's also tough for those stranded ashore unable to join their ships and provide an income for their families.
Swire Shipping has done everything possible to mitigate the problems, support their staff and communicate the changing schedules effectively to minimise uncertainty. As a result, Woodrow says morale has been, "remarkably high amongst our officers and crew and they have been very understanding."The 150th anniversary today
For both these modern shipping companies operating with an international footprint, the 150th anniversary represents much more than an interesting historical anecdote or a footnote for annual reports.
"The history has relevance and that is part of the reason why we changed the name from CNCo to Swire Shipping because most of our customers know us as Swire's. The Swire name has real value because of the history and the values it represents: Continuity, Teamwork, Humility, Excellence, Endeavour and Integrity," says Woodrow. There are even some common challenges from the old days, as piracy, pandemics and foul weather can still affect the shipping industry.
"The history comes with a responsibility but it provides our identity, our core values and it provides a real competitive advantage," says Norborg.
Navigating the future
Both Swire Shipping and Swire Bulk plan to remain within their existing sectors where they have built expertise and track record. The current strong markets and challenging operating conditions are forecast to continue well into 2022 and both companies are forecasting excellent results in their 150th year.
Growth beyond that may depend on whether current customer preferences towards using smaller ships/smaller ports and switching cargos from containerisation to bulk, becomes part of a longer-term change. This is what Woodrow calls the, "64-million-dollar question".
Woodrow sees Swire Projects division as the key to growth outside the more traditional sectors. It provides specialist shipping services to the energy, resource and infrastructure sectors in the global project logistics market and is currently highly-focused on the wind energy sector.
The company is investing in special multi-purpose vessels capable of shipping huge wind turbine blades and other key components from factories in China, Malaysia and Indonesia to the increasing number of wind farm sites in Europe and the USA.
A sustainable future built on tradition
The 150th anniversary in 2022 is a major milestone for Swire Shipping and Swire Bulk and underlines the importance of history and traditional values to both companies, as part of their unique market identity and the way they conduct business. The recent unprecedented operating challenges also serve as a useful reminder that it is easy to be blown off-course in shipping, if you don't adapt and change.
"The constant factor in shipping is that it is never a dull day – there are always surprises," says Woodrow and the CNCo Chairman echoes the sentiment:
"We have a responsibility to ensure that we remain well placed for the inevitable market downturn, though as ever with shipping, it is very hard to know when that will be. I am confident, though, that we have positioned ourselves well for whatever challenges come down the line," says Sam Swire.
