SHIPPING FORECASTS

Oman 2017 | TRANSPORT & LOGISTICS | INTERVIEW

TBY talks to Tarik Al Junaidi, CEO of Oman Shipping Company, on the effect oil prices have had on the industry on the last two years and what needs to be done to strengthen the company's position in the market.

Tarik Al Junaidi
BIOGRAPHY
Tarik Al Junaidi joined Oman Shipping Company in 2005 as head of commercial. In 2010, he was promoted to Deputy CEO and in 2013 he assumed the role of Acting CEO, and in 2015 he was promoted CEO. Prior to joining OSC, he worked for HSBC and before then at Global Enterprise looking after sales and marketing. In 2013, he completed an Executive MBA in shipping, finance, and offshore from BI Management School in Norway and Nanyang Technological University in Singapore. In 2004, he completed an MBA from The University of Western Australia. He also holds a BSc. in international business & marketing from Florida Atlantic University, USA.

What were the drivers behind your impressive profit margin last year?

For our fleet and contracts, around 60% is focused on long-term contracts, which ensure steady cash flow for the company. About 40% of our vessels are in the spot; therefore, the flow of contracts provide a cushion for us whether the market is up or down. The spot market is where companies can earn more or less depending on how the market goes. 2015 was a great year because we have about 15 very large goods carriers trading in the market. The drop in oil prices has caused a higher demand for the usage of very large cruise carriers (VLCCs). The rates and the demand for hiring VLCCs have gone up, while our operating costs have gone down. Therefore, our margins have gone up and this made for an excellent year. Moving forward, it will hopefully be a good market in 2016 and 2017, after which it will reduce. When ship owners see something good, they tend to spoil it by buying vessels on a speculative basis in order to get a piece of the profit. All of a sudden there are many vessels coming in and we see this happening for the next two years, which will reduce the market.

What is the significance of the Oman Express Service for the overall shipping industry of the country?

This is run by our subsidiary Oman Container Lines. We started first by connecting Sohar to Jebel Ali, which is a weekly service that runs successfully. We launched the Oman Express Service in April 2016. The whole idea was to capture all the Omani ports and link them to Jebel Ali. Right now, the service is there to promote tradability. Real connectivity between ports in Oman and influential foreign ports is one of the difficulties we face. Service is once every two weeks right now and we seek to create awareness of its benefits. Once we see that the service is successful, we will try to link Omani ports with other regions. Jebel Ali is a major contender in transshipment, because mother vessels travel there and it is well connected to the region, with daily services to Oman, Kuwait, Bahrain, and Saudi Arabia. This vision will not be realized overnight; we need to see what we can create, and we need to understand what customers really want.

Do you have plans to expand your fleet to strengthen your position in the market?

We currently own and operate 47 vessels and have an additional five vessels coming in by the end of this year, which takes us to 52 vessels. There was a time we started to move out, but now we want to focus a great deal on Oman and bring all of our resources back to the country. There is a great deal of industry coming up here, such as refineries and the mining sector. We are trying to provide the shipping solutions for these industries. The feeder vessels connecting Oman to the region are the type of projects that we are going to concentrate on moving forward.

What is your outlook for Oman Shipping Company over the next five years?

I would like to see us not only concentrate our trade in Oman, but also become a key player in the region. This would mainly be in the wet side for product tankers as well as bulk areas. The bulk area is mostly for the mining industry and the minerals coming out of Oman. The wet side product tankers are mainly for the refining capacity, not only in Oman, but also in the GCC. We want to work closely with the stakeholders in the refineries to understand how we can provide the transportation for them.