Mega-ships open door to new market for ship designer

Tuesday, November 17, 2015

Mega-ships open door to new market for ship designer

SUPPLIERS: Carriers' demands for mega vessels has opened a new market for Danish ship design firm Knud E. Hansen. The company announces its best results in years and looks set to hire more employees in 2016.

BY JOHANNES HARTKOPF-MIKKELSEN Published 17.11.15 at 13:55

Ice-breaker 'Antarctica', which has been ordered by the Australian authorities, adorns a poster in the meeting room of ship design firm Knud E. Hansen, whose offices are located north of Copenhagen. The ice-breaker, which will be delivered in 2019, is important to Knud E. Hansen because, as a specialized vessel, it demanded a lot of work and thus represents a good business case.

However, if one asks Finn Wollesen, CEO of Knud E. Hansen, which shipping segment carries the biggest potential over the next year, he points to mass production of vessels rather specialized vessels.

"Many mega ships have entered the market, and I believe that will create a demand for feeders," he tells ShippingWatch.

Finn Wollesen adds that, going forward, he imagines that the largest container ships will increasingly be loaded and unloaded in large ports such as Rotterdam, from which cargo will sail on smaller ships.

"Those we speak to say the trend is heading in that direction," he says, stressing that he is not an expert in logistics.

He believes so firmly in the new market for feeder segments, that Knud E. Hansen, which suffered a deficit of USD 64,331 last year, will be ready with two new feeder concepts around the new year. The concepts have a capacity of around 3,000 teu, and differ from one another by being tuned to different speeds.

The feeder concepts are developed on speculation - that is, without any immediate buyer - and have a development sum of over USD 71,000. He hopes to hit a demand from the market at the right time, though he declines to fix a figure on his expectations.

"It is impossible to say, whether a buyer will be tempted into taking a chance and building a vessel now, or whether they'll all wait around because nobody wants to be the first," says Wollesen.

He also sees a chance that some of the older container ships, which were considered large ten years ago, will be deployed as feeders.

"But that isn't as effective, because if you are building a new feeder and the oil price goes up again, then it might not be so efficiecnt to sail around with them," says the CEO, who uses a majority of his many travel days on selling.

Expects a better 2015

Sales are crucial for Knud E. Hansen, with 80 employees divided between six offices in the US, Europe and Australia. Wollesen explains that with a few exceptions including longer orders like the project with new British frigates and aircraft carriers, the ship designer's pipeline rarely extends longer than three to six months into the future.

"It's just like a law firm. You never know how many will come, needing assistance," he says.

After an "unsatisfactory" annual result in 2014 which delivered a deficit of USD 64,331, 2015 looks set to improve. Wollesen attributes this both to the decent demand for the ship designer's products, and the new management in its Florida office which primarily focuses on the cruise industry.

"That was our Achilles heel in 2014. We simply had bad management in the US, which cost us an arm and a leg," says Wollesen and explains that Douglas Frongillo, who launched Knud E. Hansen's US office in 2010, has returned to the fold after a brief spell as an employee at the designer's competitor, Carnival.

Finn Wollesen is optimistic about prospects for the coming years. The pipeline for 2016 looks good, the London office has been modernized and now has room for more employees, and there are clear ambitions of growing its staff.

"We have to grow in 2016. Not just in London but everywhere," he says, explaining that the only way Knud E. Hansen can reduce its cost price is by using its facilities in a more efficient manner.

"Our rent won't increase if we put five more engineers into the office here. But the costs per hour will go down."

This calculation naturally requires work for the five new engineers, but Finn Wollesen is also optimistic in this regard.

"The way I see it, shipping is on the rise. Except for offshore."

There are probably many who see it otherwise. How do you explain this?

"That's true. But we're also the first one to notice when something good happens," says Finn Wollesen.

Read more about the Icebreaker for the Australian Antarctic Division