In early August, the China Navigation Company (CNCo) celebrated the opening of their branch office in Vancouver. In choosing Vancouver as the location to expand their North American presence, CNCo has highlighted the growing awareness of this city as an international shipping hub. “It’s a thriving shipping community,” said Chris Daniells, CNCo’s Commercial Director. “It has all of the key factors to be a first-class maritime hub … and just look at that view.” Daniells, along with Rob Aarvold, General Manager, Swire Bulk, sat down with BC Shipping News recently to discuss the new Vancouver office and how it fits into CNCo’s worldwide operations.
As part of the Swire Group (the 202-year-old conglomerate of businesses that includes the likes of Cathay Pacific, Coca-Cola and many, many others), the China Navigation Company was established in 1872. Originally trading on China’s Yangtze River, CNCo expanded operations, first, along the China coast and then later, operating regular multi-purpose liner services to Australia and New Zealand.
Photo above: Graham Clark (VIMC), the Honourable Bruce Ralston (BC Minister Jobs Trade, and Technology), Chris Daniells and Bernard Huizenga (Swire) officially open the CNCo Vancouver office. (More photos available.)
Throughout the 20th century, the company continued to expand both its fleet and areas of operation. Traditionally having served the Asia-Pacific region under Swire Shipping, CNCo set up a handysize dry bulk trading business in 2010/2011, and in 2012, established Swire Bulk. The company was then segregated into three main divisions: Swire Shipping, with a focus on liner shipping services; Swire Bulk, to manage a total of 90 ships including owned, long-term and short-term charters; and Swire Bulk Logistics, providing value-added services to assist with a customer’s logistics supply chain (for example, working with mining companies or raw material suppliers to find solutions to bottlenecks or inefficiencies).
Today, CNCo owns and operates about 135 vessels consisting mainly of handysize and supramax dry bulk carriers and multi-purpose liner vessels. Headquartered in Singapore, CNCo now operates in 16 countries including Canada. Taking a long-term view of growing its business, since 2013, CNCo has undertaken a newbuilding program comprising 61 modern and fuel-efficient handysize bulk carriers, multi-purpose vessels and one cement carrier.
With ever increasing activity on the West Coast, the decision to set up a presence closer to the Canadian market was a few years in the making. “We’ve been operating on the West Coast for about 15 years under a liner service agency agreement with Montship Inc.” said Daniells. “With Swire Bulk getting 90 ships in the water, we felt it was the right time. The West Coast/North Pacific is the biggest trade lane when it comes to minor bulks and if we want to continue to grow the business — and grow successfully — we need local teams in the market.”
Operating mainly handymax with some supra and ultramax vessels, Swire Bulk sees about 20 to 25 ships per month sailing along the West Coast from Alaska to South America. Volumes have been doubling year over year since being established in 2012. Aarvold noted that the entire West Coast will be run out of the Vancouver office. “The decision making is here,” he said. “Local partners — lawyers, financial advisors, etc. — are used for local contracts. We also work very closely with local service providers like Western Stevedoring and Tidal Transport. It’s very much a Vancouver operation.” Indeed, the new office, with 14 managers overseeing the dry bulk and liner businesses under its Swire Bulk and Swire Shipping divisions, is the largest CNCo office in North America (Swire Bulk also maintains an office in Miami, Florida, as well as a presence in San Francisco).
When asked about the decision-making process, both Daniells and Aarvold were quick to sing the praises of the Vancouver International Maritime Centre. “We met Graham Clarke and Kaity Arsoniadis-Stein and the VIMC team in 2016. They made it easy for us,” said Daniells. “Setting up a branch office in any country will always come with some challenges and the VIMC not only highlighted the benefits of Vancouver, they were also of great assistance in helping us set up in terms of work permits and connecting us with key contacts here in Vancouver. They sold it well.”
“Through our global network, we connected with CNCo’s Managing Director James Woodrow and his team in Singapore during Singapore Maritime Week 2016 and have since been working with them closely to inform their decision to set up an office in Canada,” said Graham Clarke, VIMC’s Founding Chairman. “By building a maritime hub that brings together products, companies and expert services, Canada will gain the advantage of the resulting relationships, synergies and high-level jobs creation. We look forward to increasing the economies of scale by attracting more shipping companies, like CNCo to Vancouver.”
Kaity Arsoniadis-Stein, VIMC’s Executive Director, added: “Canada is known for its strong modern economy, universal healthcare system, stable political environment, world-leading banks, high-caliber business support services, high-tech capacity as well as easy access to capital markets in North America. We are thrilled to be welcoming CNCo to Vancouver and we are committed to continuing to assist them as they grow their operations in Vancouver.”
In addition to VIMC, both the B.C. Government and the Federal Government were highly supportive in bringing CNCo to Vancouver. “We welcome The China Navigation Company to Vancouver and look forward to their continued success as they expand globally. The shipping industry provides nearly 12,000 people with good jobs up and down the B.C. coast. By continuing to build a strong maritime sector in British Columbia, our government is helping to create sustainable jobs and provide opportunities for businesses, like The China Navigation Company, to grow here in B.C. and reach new markets around the world,” said the Honourable Bruce Ralston, Minister of Jobs, Trade and Technology, who was on hand at the opening ceremony.
The Honourable Jim Carr, Minster of International Trade Diversification, while not able to attend in person, sent a message of congratulations and further noted: “There has never been a better time to invest in Canada. The China Navigation Company’s new Vancouver office is yet another example of success in attracting international businesses to this country, recognizing unparalleled innovation and providing fresh capital. Trade and investment with overseas partners is essential if we are to encourage long-term prosperity and an economy that creates jobs for the middle class.”
“The Swire Group is always looking at their long-term strategic goals,” said Daniells. “Our strategic objectives are very much aligned with what we see in Vancouver in terms of commitment to the environment and sustainability.” To that end, CNCo has one of the youngest dry bulk fleets in the world with an average age of 2.5 to three years. “Because of the young age of our vessels and noting we still have 10 ships on the dry bulk side on order, we are already ahead in terms of meeting the Ballast Water Management Convention as well as upcoming low sulphur fuel regulations. As a company, we recognize that it’s the right thing to do and we are always striving to be a market leader when it comes to environmental initiatives.”
Undeniably, CNCo has an impressive track record when it comes to addressing environmental sustainability issues, for example:
CNCo engaged MarorkaTM to provide data-driven energy management and operational performance solutions. By measuring variables like vessel speed, propulsion performance and fuel consumption and using those figures to set science-based targets, CNCo’s Energy Efficiency Operational Indicator (EEOI) has seen a steady decrease of CO2 emissions.
Swire Group’s Argent Energy has developed a drop-in replacement Bio Fuel Oil (BFO) derived entirely from waste-based sources for the IFO/HFO usually used in marine slow-speed 2-stroke diesel main engines. Research and development using CNCo vessels has been ongoing since 2015 with good performance results.
CNCo “green recycled” a total of eight vessels between 2012 and 2017 in China and India. The initiative is in keeping with CNCo’s core principles that support the IMO and industry efforts to raise the standards of ship-recycling facilities to eliminate lost time injuries and environmental pollution incidents.
Additional initiatives can be found throughout CNCo’s operations: providing empty containers and ocean freight carriage to 26 Pacific Island Countries and Territories to remove recyclables from the islands; using more sustainable shipping containers that use water-based paint and bamboo flooring instead of environmentally damaging zinc-based solvent paints and wood from unsustainably managed forests; and a number of community projects including aid to victims of natural disasters.
According to Robert Heal, General Manager, Swire Bulk West Coast Americas, CNCo’s Vancouver office will be focusing on four main sectors: dry bulk handysize, supra/ultramax and parcelling as well as a bulk/break bulk container liner service from the West Coast to Australia and New Zealand servicing their client base operating in the Americas. Regionally, the office will cover the entire West Coast from Chile to Alaska.
Rob Aarvold noted that the Vancouver office has a diverse and experienced team of specialists. “Bernard Huizenga, for example, has significant practical experience in the break bulk sector, while Tom Days focuses on sulphur and with our open office layout, the communication amongst the team provides for a higher level of service where they can assist each other according to their area of expertise.”
While there is no magic number, both Daniells and Aarvold expect CNCo’s activities in Vancouver will continue to grow. They did note however that there are current limitations with port facilities that may present challenges for Vancouver in the future. “Space availability, especially for project cargoes and break bulk volumes is already at capacity and choice is limited. There will be challenges as global trade continues to grow,” said Daniells, “but we’re looking at solutions and are working with existing providers to find ways around that.”
With an expected 150 ships in the CNCo fleet by the end of 2019, Daniells expects that growth on the West Coast will be in parallel to that. Aarvold added that growing the West Coast volumes from 20 vessels to 30 or 35 would be a good reflection of their growth strategy, further noting that the current trade wars have the ability to generate new opportunities. “Trade wars create inefficiencies,” he said. “Instead of buying from local partners, we have seen new trade flows with cargoes emanating from ports farther away which require more sea days and so increase the ton/mile ratio.”