A voyage between crises and successes
The First World War had entered its final months when Christen Smith, a Norwegian entrepreneur and master mariner, invited investors to become shareholders in Skibsaktieselskabet Christen Smiths Rederi. Before the war, Mr Smith had become the youngest man ever to command a Norwegian merchant vessel, at the age of 27 he was master of the largest ship in the nation’s merchant fleet, the steamship Henrik Ibsen.
The Belships story could have ended just months after the Company’s inception. Shortly after Christen Smith took delivery of his first three newbuildings, freight rates plummeted. 40 per cent of Norway’s merchant fleet was laid-up by 1921. The creative Christen Smith desperately sought a solution outside the box. And he found it.
Railways were being expanded on a massive scale. In the so-called new world (Africa, Asia and South America) railways were being constructed to bring out resources from remote areas and to facilitate development in these regions. Locomotives and railway cars were manufactured in Europe, primarily in Great Britain. This is where Christen Smith saw his opportunity: no vessels were able to transport the heavy locomotives from Europe to the new railways, the traditional solution was to dismantle the locomotives, ship them in parts and then reassemble them at the destination. Christen Smith had found his niche. He designed ships with heavy duty cranes and derricks on deck, able to handle even the largest locomotives in one haul.
The concept became an immediate success. For more than a decade Christen Smith dominated the heavy lift trade. The chimneys decorated with the CS initial and the anchor (which still is Belships’ logo), became a familiar sight in ports all over the world. The names of his vessels all had the prefix BEL (Smith’s first two vessels were BELFRI and BELGOT), and in shipping circles heavy lifters were soon commonly referred to as “belships”.
High ambitions and economic downturns tend to be a poor combination. In the mid-1930s the Company found itself in dire financial straits. Christen Smith had to undergo tough negotiations with his creditors. The Company was restructured and emerged in 1935 under its new name: Belships Company Limited Skibs-A/S. Two years later, the Company made another share issue and became listed on the Oslo Stock Exchange. The Norwegian newspaper Aftenposten covered the event under the title: “Christen Smiths famous 38 000 tonne Bell fleet secured for Norway”. The glorious news was however overshadowed by another event the same day: the christening of baby prince and heir to the Norwegian throne, prince Harald.
Through the 1937 listing and restructuring, three brothers became key shareholders: Axel, Frithjof and Jørgen Lorentzen. They soon assumed control of the Company. The brothers, their children and grandchildren would remain at the Belships helm for the next eighty years.
Christen Smith stayed on as a key member of the Company’s management also after the restructuring, but succumbed to cancer after just a couple of years. He died in London in 1940, 57 years old.
During the Second World War the Belships fleet was in greater demand than ever before. Heavy military equipment needed to be transported efficiently over great distances. For the duration of the war, the fleet was under allied control. The owners back in nazi occupied Oslo had little or no contact with the vessels during this period. Like so many other Norwegian shipping companies, also Belships suffered losses of crew and ships, which constantly faced the threat of torpedo attacks by German submarines.
The post-war decade became Belships’ heydays as a heavy lift shipping company. The world was being rebuilt after a devastating war. Locomotives and heavy machinery for industry and power plants were needed everywhere. In addition, the four year-long war on the Korean peninsula created significant transportation needs for the American forces.
But what goes up, tends to come down. As conventional liner vessels increasingly were equipped with heavy gear, the demand for the “belships” receded during the 1960s. Reconstruction after the war was completed, and with decolonisation the emerging countries increasingly set about manufacturing their own railway equipment and other heavy goods. The age of Christen Smiths invention, the heavy lift ship, was coming to an end after more than forty years. Belships sold its last heavy lift vessel in 1972.
However, the Company entered changing times in good shape. The heavy lift trade had been highly profitable for years and the Company had the financial resources to explore new opportunities. After having wet their feet in tankers, dry bulk, refrigeration and car transportation, Belships chose to focus on dry bulk and large tanker vessels. Then the 1970s shipping crisis hit.
Dramatic changes in world trade, with particularly adverse effect on oil trade, coincided with an excess capacity of tankers. For years, the global shipping industry was dried up. Belships had contracted several new ships just before the market imploded. Almost brand new vessels were laid up, sold at losses or scrapped. Belships crude tanker adventure came to an abrupt halt.
Belship’s management recognised that the times called for a focussing of the Company’s activities, and chose dry bulk and the vessel category handysize; medium-sized vessels of 35-40 000 dwt. In the mid-1980s, Belships made one of its boldest moves ever. Dry cargo freight rates were low and prospects highly uncertain. Nevertheless, Belships acquired a significant number of handysize vessels, and stretched the Company’s financial capabilities to the limit. Then the market turned. Towards the end of the 1980s, dry bulk rates were at exceptionally high levels and Belships risk taking was well rewarded.
During the 1980s, Belships together with other shipping companies revitalised the Western Bulk pool, which at the most operated nearly 80 handymax dry bulk vessels. The Western Bulk concept was taken further when Belships was central in establishing the shipowning company Western Bulk Shipping (WBS). For six years Belships owned 45 per cent of WBS and owned most of its handysize vessels through the joint venture. However, a conflict with other shareholders ended with Belships exiting WBS.
The Western Bulk controversy coincided with the Asia crisis at the end of the 1990s. Dry bulk rates fell to very low levels after some strong years. Belships needed to rethink its strategy. And the answer this time around was diversification. “Asset play” was the melody in fashion. Belships turned to larger dry bulk vessels as well as product tankers, with limited exposure in long term ownership of the steel. Also, Belships acquired the small Scottish gas tanker company Gibson Gas. Even at the outset, Belships clearly communicated that the acquisition was opportunistic, stating that it was “an interesting business opportunity, not a change in strategy”. As it turned out, the acquisition of Gibson Gas was unsuccessful.
Nevertheless, as a new millennium dawns, Belships’ activities are broad. Operations include three tonnage categories of dry bulk, product tankers and small gas tank shipping. Optimism prevails: the Asia crisis is over, and freight rates are climbing. All looks good. Until four hijacked airliners change the world.
When world trade finally recovers from the financial aftermath of 9/11, dry bulk is leading the way in the shipping markets. China’s economic growth creates a strong demand for raw materials, and in the coming years the Middle Kingdom is the main driver in the dry bulk market. Belships decides to once again put all the eggs in the dry bulk basket, expands the fleet and acquires 50% of Elkem Chartering. Once again Belships has hit the bull’s eye. Dry bulk freight rates reach all time high levels both in 2003 and 2004. Belships says goodbye to Gibson Gas and orders new ships. For the first time in quite a few years, Belships will have a significant and fully owned dry bulk fleet. And the Company turns to the new vessel category Supramax; dry cargo ships between 40 and 60 000 dwt. Times are extremely good.
Once again events in the United States changed the game. The 2007-2008 financial crisis affected world trade on an unprecedented scale. Freight rates plummeted again and financing of newbuildings became extremely difficult. When the crisis hit, Belships was in the process of acquiring six new vessels. Financing of the entire programme proved impossible, and Belships had to reduce the fleet expansion programme at a significant loss. In the annual report, the Company’s Board of Directors described 2008 as “a year of extremes”.
As the financial turmoil subsided, it was once again China that brought dry bulk freight rates back up. Belships made a profitable divestment of its stake in Elkem Chartering and exited all other segments but Supramax/Ultramax dry cargo. The Company’s strategy going forward is straight and narrow: A pure supplier of Supramax/Ultramax dry bulk tonnage. At the beginning of 2018, Belships operated six vessels in this category on 1-3 year contracts.
When Belships merged with the Lighthouse companies in December 2018, the fleet was more than doubled and a forceful and pure Supramax/Ultramax dry bulk company was formed.
The merger also marks the end of an 80-year long family era. Through the decades since the Lorentzen brothers took part in the restructuring of Christen Smith’s shipping company in 1937, the brothers and several of their children and grandchildren have been key owners and executives of Belships. The transaction represents the end of that tradition.
2018 will go into history as not only the year of a centennial anniversary, but also as the end of an era and the beginning of a new.
|(This article is taken from Belships annual report 2018)|