125 years of stability and development

Nowadays there are few shipping companies that date back to over hundred years. One of the biggest Russian sea carriers, the far eastern Shipping Company, known as FESCO, - celebrated its 125th anniversary this year, which makes it one of the oldest shipping companies in the world. So what does this fact mean for the world community of sea carriers? Far Eastern Shipping Company President & CEO Evgeniy Ambrosov comments:

– It is true that among big shipping companies around the world FESCO is the oldest. Naturally, the 125th anniversary provokes rightful respect from numerous partners and improves the image of the company in Russia and abroad. It is clear to everyone today that FESCO lives up to such considerable age with dynamic production growth, preservation of traditions and the fact that the company values its seamen and hopes for even higher output from their difficult job. And most importantly, FESCO has its future. Because might and strength of any company underlies in its assets and in maritime industry such assets are personnel and fleet of the company. The Far Eastern Shipping Company fleet includes different types of ships – from container vessels that make up major part of the company’s fleet to ice-breaking transport ships that deliver cargoes to the areas with limited period of navigation.

The fact that FESCO has developed and already puts into effect an ambitious but absolutely feasible program that proposes investments into the company’s infrastructure also gives confidence in the future. The program costs over 750 million USD till 2010, the company’s property presently amounting to approximately 600 million dollars. Keeping in mind that our main interest lies in container business, implementation of the program will enable us to renovate and extend the container segment of our fleet and property.

The Far Eastern Shipping Company reached its 125th anniversary as one of the most stable sea transport companies in Russia. Presently, FESCO tries to broaden the horizons of its activity, laying stress on continuity of transportation process, especially in transportation of containerized cargo. For this purpose, a project to unite our sea lines with rail ways was implemented through the establishment of Russkaya troika and Neokont companies. Thus, nowadays FESCO is a multimodal shipping company guaranteeing cargo transportation by a single bill of lading from international ports to any point in Russia and neighboring states. By 2006, investments into this project will amount to minimum 100 million dollars. The program is carried out with the assistance of our partner, the largest Russian transportation companies JSC Russian railways, which secures the process and attracts more customers and more cargoes to the Transsib Railway.

It is worth saying that in order to carry out our large-scale strategic plans we are ready to put maximum investment to develop main FESCO activities. To be specific, we don’t distribute profits among shareholders, asking them to be patient and give us some time to get stronger and secure our positions on the developing market. But one must not forget that since 2002, FESCO shares price raised 10 times, which in fact made our shareholders ten times richer.

Today, the company is selling out its secondary assets and reinvesting the funds into new projects, including those of fleet renovation. Thus, last year we acquired three new ships that have already started to payback the investments. A unique ice breaking supply ship FESCO Sakhalin was put into operation earlier this year. Since September she has been providing delivery of supplies to oil-drilling platform Orlan, preparing oil derrick for operation in winter season before the start of continuous industrial drilling and oil production and providing safety of its operation.

Talking of fleet renovation, undertaken by FESCO, one can’t but mention that by doing so the company has virtually restored and now is implementing key assets reproduction program. The fact that container park is currently undergoing a total replacement, also speaks for itself. The leased containers are being replaced with own ones, thus saving a considerable amount of current operating expenses.

Over the last two years FESCO has shown a dynamic increase of profit by Russian accounting standards, which rose from 19 million dollars in 2003 up to 35 million dollars by results of 2004. Rate of capitalization puts FESCO on the 52nd place among all Russian companies; no wonder investors are literally knocking at the company’s doors now.


– Talking about future, in which segments of the sea shipping market the company plans to occupy leading positions in 5 – 10 years?


– We are looking for deep integration into the Russian shipping system and plan to handle the ever increasing flow of Russian domestic and foreign cargos not only by sea but by land as well. In fact, the very idea to combine efforts with JSC Russian railways aims at not giving up our huge potential to foreign corporations, but to use it by domestic shipping companies, to improve Russian transport system on our own and bring it up to international standards.

As it was mentioned before, the main direction of our business activities is container shipping, and that is why our main flow of investments goes to this particular segment of the market. In five years, the size of FESCO container ship fleet is to be replenished with 14 brand new ships, their dead-weight considerably exceeding that of the currently operated ships. By our estimations, container capacity of the company’s fleet will rise by 140% by 2010, the total dead-weight increasing by 390 thousand tons.

In accordance with the program of building container ships for FESCO, on the 25th of October this year, keel of a new feeder container ship was laid in Jinling Shipyard, China. This vessel is the second in the series of four container ships ordered by FESCO from this shipyard. Keel of the first ship was laid on the 16th of June 2005, and on the 7th of November the container ship called FESCО ASKOLD was launched. In fact, this project is considered to be very advanced and gained wide popularity among European ship owners. All four container ships will be delivered to FESCO during next year.

Besides, within the framework of the same program, the year 2006 will witness commissioning of three more container ships, currently under construction in Wismar, Germany, with the capacity of 2741 TEU each.


– Evgeniy Nikolayevich, are there any plans to expand the company’s geography and scope of operations?


– Now FESCO activities are mainly focused on the Pacific Ocean, but later on we plan to expand them to the Black and Baltic Seas. We also intend to increase the amount of coastal transportations, participating in the Far East sea basin activities.

We are seriously considering the prospects of increasing our share of bulk cargo market and are going to extend and renovate the existing bulk carrier fleet of the company.

Naturally, we hope to develop our potential as one of the world’s best companies operating ice breaker fleet as well. The icebreaking operation, carried out by Krasin in Antarctic last winter fully justifies FESCO attempts to secure its position in this sector of sea market.

On the whole, future of the far eastern Shipping Company is to operate major national fleet and become an industrial sea and rail carrier.

Go to Index of # 4(14) 2005

 

# 4(14), 2005
Shipping