For 67 years, Hong Kong-based Wah Kwong Maritime Transport Holdings has built an enviable reputation as a reliable tonnage provider and a masterful asset player. However, continued volatility sparked by the economic crisis of 2008 has led Wah Kwong to shift to a business model that is more resilient to market fluctuations. Wah Kwong still sees itself first and foremost, as a shipowner, but also felt compelled to re-examine its strategy for the future.
The result is a new working model, given the snappy title Wah Kwong “Lite”. While still a work in progress, the addition of a service business focused on asset management as a part of the overall strategy, is fully up and running.
Decades of Experience and Strong Link in China. By leaning heavily on the company’s tradition and years of experience in cargo acquisition, Wah Kwong has been able to differentiate itself from traditional ship managers, as chief executive, David Palmer explains:
“Where we have been successful in recent years is in bridging the gap between the Chinese lease finance providers and the international chartering world. In the last 18 months, we have concluded 28 technical ship management deals that will double our fleet before the end of 2021. Of these 28 deals, 17 of these have operational management attached.
“We don’t seek to do ship management for ship management’s sake. We want to be involved where we can add real value to our clients. In most of our relationships, we promote operational management, where we work effectively with our owners and charterers and where we can help our clients view ship opex as an investment, not just a cost.”
Creating a strong bond with the Chinese leasing firms was eased by Wah Kwong’s rich experience in China and long relationships with Chinese yards. Currently, the company is building ships at six Chinese yards and are shortly to build at a seventh facility. This means in Mr Palmer’s words – “As an owner, our knowledge of the Chinese shipbuilding industry is probably second to none,” it also adds to Wah Kwong’s credibility as a high-quality newbuilding supervisor.
But Wah Kwong’s ties to China go deeper than that. Some 93% of the mariners sailing on Wah Kwong ships are Chinese. Meanwhile, close to 70% of the managers have served in the company’s fleet. This results in good working relationships between ship and shore. Looking to future recruitment, the company has for some years been working with Shandong University and its 3,000 marine cohort.
“We actively contribute to the university’s programme which has made us known across the campus and has assisted us when it comes to recruitment,” says Mr Palmer.Asked to explain what other benefits the diversification has made Mr Palmer says: “There was a need for a more stable base on which we could continue to provide rewarding careers for our people. By building up the asset management side, this allows for fluctuations in the more traditional side of the business. Meanwhile, the expansion of our fleet is affording many career opportunities, particularly for our seafarers.”The growth of the fleet has also meant a leap forward in technological capability.“We are working very hard on developing our systems to be able to handle the new ships as our transaction load will double. So, we are looking at new systems for tracking invoices, purchasing orders and effecting electronic payments etc.,” he says.
“I do believe that if you are going to be digitally efficient in the office, you have also to be digitally efficient at sea. Different clients need different systems to service their needs, so while we currently employ DNVGL we are sourcing an additional system.”Commitment to Hong Kong Marine Community Wah Kwong has also demonstrated an unusual commitment to the future prosperity of Hong Kong and its Maritime Community, as a proud Chinese company based in Hong Kong that has provided the territory with two Hong Kong Shipowners Association chairmen – George Chao, and his daughter Sabrina.As such, as chief executive of Wah Kwong, Mr Palmer is following yet another tradition when offering an assessment of what the territory might do to stay ahead of the pack.“Hong Kong has, for a long time, been a transhipment port like Singapore. But the opportunity for Hong Kong to be a gateway into China, connected to the Belt and Road is something we should promote. This is one way in which Hong Kong could distinguish itself from Singapore.“I think the Hong Kong initiative to attract the leasing companies is a good one. These companies wish to be offshore, so locating themselves in Hong Kong is a sensible idea for them. I also think attracting insurance companies in a similar fashion is also beneficial. Both these initiatives can differentiate us from Singapore.
“Singapore’s banking market is a little more closed than ours is, so we should exploit that advantage. Additionally, facilitating the Hong Kong Registry to be more efficient is a key issue that all Hong Kong owners would like to see, and it is encouraging to see that the Government is on to that.”
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
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