How Steamships is preparing for the next upturn (Part 1)

Despite being in ‘a relatively quiet time’, Steamships Managing Director Peter Langslow says—in the first part of an exclusive two-part interview with Business Advantage PNG—that the diversified company is becoming more efficient and is continuing to invest in its Papua New Guinea operations in preparation for the next upturn.

Steamships' Peter Langslow

Steamships’ Peter Langslow

Business Advantage PNG: How has the past year been for Steamships?

Peter Langslow: As we reported in our first half results, the underlying profit for the group was down by just 4 per cent January to June 2016. Since then, levels of business activity have remained relatively quiet, and our focus has remained on what we do and how well we do it.

So we have continued to look at our approach to the markets and the customers we serve, and the efficiencies of our operations. At Consort Express Lines, our strategic focus remains on operational efficiency and schedule integrity, thereby seeking to meet customer and market needs in respect of getting goods from A to B.

‘Port efficiency and infrastructure in Lae is much improved compared to the torrid years of the PNG LNG project construction.’

In mid-2015, we merged two separate shipping businesses, Consort Express Lines and Steamships Coastal Shipping, combining their respective liner and project and charter operations and driving internal efficiencies.

As well as this, we’ve been continuing with the liner fleet renewal that was started in 2014. A third, newly-acquired larger vessel was delivered and entered service at the end of 2016. At 8000 dwt capacity, it’s 60 per cent bigger than our previous generation of coastal liner vessel and is significantly more cost effective to operate.

Business Advantage PNG:  How serious are the congestion problems at Lae and Port Moresby?

Peter Langslow: Port efficiency and infrastructure in Lae is much improved compared to the torrid years of the PNG LNG project construction, and since the opening of the new berth at the Lae tidal basin at the end of 2015 the congestion problem in Lae has been almost entirely relieved.

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Prior to this, Consort was effectively losing one ship a month to congestion, just waiting to get onto a berth.  Such lost productivity was extremely damaging, so the turnaround in this regard has been very positive. There’s presently no congestion problem in Port Moresby.

Business Advantage PNG: Are you also upgrading the harbour towing business, Pacific Towing?

Three Pacific Towing tugs manoeuvring a ship near Motukea Island. Credit: Steamships

Three Pacific Towing tugs manoeuvring a ship near Motukea Island. Credit: Steamships

Peter Langslow: We will take delivery of another newly acquired tug shortly, our second within the past 12 months, as we continue to increase the capacities of our fleet.  The new acquisitions are larger, more powerful ASD tugs. ASD stands for Azimuth Stern Drive, which means the propellers can swivel through 360 degrees to provide thrust in any direction. Such tugs have great flexibility and manoeuvrability.

‘We are able to offer a more integrated end to end proposition to our customers.’

The vessel delivered last year (Keera) is operating in Port Moresby. The next will be despatched to another port within the country, again in order to provide improved capacity and service to the shipping lines serving Papua New Guinea.

Pacific Towing has a very impressive diving team which has been well recognised by our customers, and we continue to look at new services that we can introduce to complement our core towage capabilities.

Business Advantage PNG: In 2015, you merged your transport and port services. How has that worked out?

Peter Langslow: We’ve been benefiting from that merger internally in terms of improved operational efficiencies and synergies, and are able to offer a more integrated end-to-end proposition to our customers.

We also pulled [East-West Transport] off the Highlands Highway and are frankly pleased to have done so.  It was a loss-making operation and consumed considerable resources which can now be redeployed elsewhere.

‘We are proud of the standards we are now achieving in terms of safety and operational quality.’

We are proud of the standards we are now achieving in terms of safety and operational quality as well as the fact that our port service businesses continue to be PNG-owned, with 50 per cent local landowner shareholders working side by side with Steamships in growing these businesses over past decades. Together, we are reaping the benefits: in employment, dividends and accumulating equity.

This is the first part of an extended two-part interview with Peter Langslow. The second part is available here.

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