December 18, 2014
Abbey Sea wants 10% of local grain exported via Argentine-flagged ships
Privately-owned group in talks with world’s largest grain exporters, first Argentine firm to order construction of vessels at an Argentine shipyard
Argentina’s Abbey Sea Shipping Services is in talks with the world’s largest grain exporters seeking an accord so that 10 percent of the country’s grain cargo can be exported via Argentine-flagged vessels, for which the privately-owned group has ordered the construction of several large grain bulk carriers and eight tug-boats.
"We are asking them just for a minor market participation," Ricardo Cazou told the Herald in an interview on Saturday.
"Today, those cargoes are mainly handled by European and US-based companies who also control the freights. And we say: Why couldn’t we offer freight at market value? Why seek abroad what we can have at home? They wanted to see either the Argentine-built ships or projects to build them."
Cazou said that, in line with its "brokerage spirit," Abbey Sea was generating businesses for third parties, mostly for exporters, giving as an example the sale of six Argentine-built grain bulk carriers to Dutch and German interests.
"But then I said: ‘Let’s start building four ourselves and become Argentine ship-owners’."
His company started its activities in 1999. Fourteen years later it formed Abadía del Mar (Spanish for Abbey Sea) to act as Argentine ship-operator/ship-owner.
The group enjoys the support of the SOMU maritime workers’ union, the Seafaring Captains’ Centre and the pilots’ union, he said, adding that it is quite hard to push the bill through either the government or Congress.
The group has placed an order with the Río Santiago Shipyard (run by Buenos Aires province and the largest ship-builder in South America) to build four 20,000-mt.DWT, 160-metre-long, 24-metre-wide grain bulk carriers with an option for two more. On slipway Number 1 a series of four 40.000-mt.DWT bulk carriers will also be built. It has also placed an order to build eight tug-boats. Work is due to start next month.
There are no precise dates for the Shipyard to hand over the vessels. Building a grain bulk carrier takes two years and tug-boats 18 months.
The first bulk carrier is already under construction and construction of the tug-boats is due to start next month, Cazou said. He declined to comment on the cost of the bulk carriers, just saying that the final cost will depend on the prevailing market at the time of their launching.
The vessels will hoist the Argentine flag and have Argentine crews.
"As a result of these contracts, the Río Santiago Shipyard has a busy schedule until 2025. It is the first time in over 40 years that its three slipways busy. We are the first Argentine company launching an initiative of this kind in about 30 years," Cazou said.
He added that the international context and Argentina’s debt default make it very hard to get foreign financing and this leads to a delay of up to one year in the ship-building process.
"The Argentine ship-owning market is very small and is not able to cope with Argentina’s heavy exports programme. The country has a 100-million-tonne grain harvest and it exports nearly 60 percent of it. There are no Argentine-flagged vessels able to carry the crop."
Cazou also said that the accord with SOMU and the other unions was aimed at lowering costs.
"Argentina’s great problem lies in its exploitation costs. Crew and fuel costs are very high. We have no advantages against foreign competition. There are no loans or subsidies for the shipping industry.
“In the field of fixed costs Argentina is about 70 percent more expensive than the remaining markets. To compound things, inflation is awfully high and the official dollar exchange rate is frozen. The worst aspect is the lack of investment, not just in the shipping sector, but in general. It is highly unlikely that, beyond the lack of legal security, investor come here when they cannot repatriate dividends.
"Even so, we are betting on that this will change," Cazou said.
"However, if for any reason, market conditions for the Argentine-built vessels are not favourable, I will always be able to export them."
Under the rule of three-time President Juan Domingo Perón,Argentina from the 1940s built the ELMA merchant shipping fleet which, at one point, had some 60 cargo ships, nearly half of them locally made. However, neo-conservative Peronist President Carlos Menem (1989-1999) sold them for a song.
National deputy Gastón Harispe, from the populist Peronist President Cristina Fernández de Kirchner’s Victory Front coalition, is fostering a bill to rebuild the national merchant fleet. The deputy says that lost frreight is costing Argentina about US$7 billion a year. Several shipping sectors and unions back his project. (See Buenos Aires Herald, April 21.)
Asked to comment, Cazou said that he does not agree with Harispe’s initiative but declined to elaborate.
ABBEY SEA BUSINESS
Abbey Sea engages in the whole range of maritime activities, including forwarding, logistics, cargo agents, maritime agency, and freight, cargo and ship brokerage.
As a pool ship-owner, it has a stake-holding participation in third-party flagged vessels around the world, and operates a fleet of over 75 ships.
It concentrates in the area of the River Plate (Argentina and Uruguay). It does some business in Brazil, and also Paraguay, via the Paraná-Paraguay waterway or Hidrovía.
The company specializes in general cargo, bulk cargo (i.e. soy, wheat, maize and by-products, fertilizers, paper, iron, sulphur, etc.), and project cargo (oil rigs, train wagons, rails, machinery, etc.)
It has a regular line to the West Coast of Africa (Nile Dutch Africa Line) and a general and project cargo service from Chinese ports to Argentina, with the Hamburg-based Rickmers-Linie, the leading specialist in global transportation of break-bulk, heavy-lift and project cargoes.
Abbey Sea is a member of BIMCO, a shipping association registered as a Non-Governmental Organization with all relevant UN agencies. Abbey Sea has its own offices in Buenos Aires, Rosario and San Lorenzo (in the Rosario port complex) and sub-agents throughout Argentina and Uruguay.
It has won a tender from re-nationalized YPF oil company to assist the re-gasification ship at the port of Bahía Blanca for which the María Luisa II tug-boat has been sent.