It is a truism that shipping is a cyclical business, driven by a constant shift in the balance between demand and supply. Traditional shipowners such as Wah Kwong, who have been riding the wakes of shipping cycles for many a decade, have thrived on the waxing and waning moons of asset prices. However, the cyclicality of the shipping industry has been made increasingly unpredictable by new factors at work since the 2000s. The rise of China, with a seemingly relentless GDP growth and surging demand for goods and resources, led to an unprecedented boom in the shipping industry, driving the market to vertiginous heights between 2005 and 2008. Over-capacity and an unsustainable level of shipbuilding, however, soon plunged the market to a new nadir, the effects of which linger to the present day.
Ironically, the enormous pessimism generated by the prolonged downward cycle, which has stayed many a shipowner’s hand in ordering new vessels, has restored some level of equilibrium to the market. Yet as global trade becomes increasingly politicized and uncertain, and with disruptive new regulations and technology playing an ever-bigger role in ship operation, whatever optimism there is in a slowly rising – and volatile – market must be tempered with caution.
For Wah Kwong, while we are committed to our traditional role as responsible supplier of modern tonnage, we are cognizant of the need to make our business model more robust and resilient to market changes. This has led to an exploration of asset-light business strategy – “Wah Kwong Lite” – in order to optimize Wah Kwong’s value and natural advantages as a reputable international shipping company with unique insights, connections and know-how in East Asia. Over the past year, our team have been exploring different dimensions of Wah Kwong Lite. The first manifestation of this new strategy is the development of an integrated, flexible ship management solution that offers any combination of new-building supervision, operational, technical, as well as commercial management. In this regard we are grateful to our friends and strategic partners in China, whose trust and support has been indispensable to this development.
However, Wah Kwong remains, first and foremost, a shipowner. Despite the vicissitudes of the market, we have not shied away from placing orders for new ships, including a series of 11 ultramaxes from Chengxi shipyard, which were delivered between March 2014 and September 2015, and 4 aframax tankers, built respectively by Waigaoqiao and Sumitomo Heavy Industries, which were delivered in 2016 and 2017, as well as most recently two kamsarmax bulk carriers, to be delivered by Chengxi in the first quarter of 2020. The strategy set by our late President, Mr. George Chao, of owning and operating a diverse fleet of dry bulk carriers and tankers, has served us well and enabled us to survive in the extremely turbulent waters of the past few years. Our new-building activities are very much framed within an overall strategy of fleet renewal that is committed to this vision.
As we venture forward to embrace new opportunities and challenges, it is our tradition, values, and reputation, built up through three generations of stewardship, from our founder Mr. T.Y. Chao through the late Mr. George Chao to our current Chairman Sabrina, that have put us in a position to navigate out of the straits into unchartered areas. Since our earliest days Wah Kwong has been committed to running our own ships, as well as nurturing seafarers and ship managers, while from the 1990s, Wah Kwong has been building ships and supervising new- buildings in China. This has established Wah Kwong’s reputation as a knowledgeable and reliable partner in new-building supervision and ship management.
At the same time, Wah Kwong has significantly enhanced our efforts to provide high-quality training to seafarers with the launch of training facilities in Qingdao and Weihai. We hold regular crew conferences and training programmes for our own officers, as well as educational programmes in partnership with Shandong Transportation Academy, particularly for the handling of liquid cargo, which is one of the only programmes of its kind in China today, with state-of-the-art facilities.
We sail into the new cycle with a renewed belief in the values and direction set by our founders, with a strong sense that we are a company rooted in our history and heritage, but with the agility to adapt to new conditions and evolve.
When T.Y. Chao founded Wah Kwong in 1952 he had a vision of a great shipping company that would be the “light of China”. From the very beginning he understood that as a global business, he had a responsibility to represent and serve the needs of the community, and that the role of a shipowner was that of a bridge that connects people, companies, and countries. This vision led him and ten other likeminded shipowners in Hong Kong to found Hong Kong Shipowners Association in 1957, and led the first delegation representing Hong Kong shipowners to Taiwan in the same year.
By the 1970s, Hong Kong shipowners were considered by many to be one of the greatest shipping owners in the world, second only to the Greeks. By 1984, at the height of the “golden years” of Hong Kong shipping, Wah Kwong controlled a fleet of 50 dry bulk carriers and tankers. Like many other shipping companies, Wah Kwong had a major setback when the market crashed in the 1986, but we soon bounced back and, under the helm of our late president, steered the company out of the troubled waters. Throughout this experience, Mr. George Chao never wavered in his commitment to shipping or Hong Kong. Instead, his vision for Hong Kong as an international maritime centre started to take shape and to deepen, particularly after his term as Chairman of Hong Kong Shipowners Association in 1995–97, leading to his call for an independent Bureau for Transportation and Shipping, which he perceived as essential in addressing the needs of Hong Kong’s maritime industry.
When our current Chairman Sabrina took the helm of Hong Kong Shipowners Association in 2015, she undertook to address some of those needs. In particular, she took significant steps to reforming the Association from within, with the view of engaging major stakeholders in a more effective manner.
During her tenure, Sabrina re-visited the Association’s work programmes and re-organized the Association, with an enhanced committee structure and an expanded secretariat with broad expertise to strengthen liaison and dialogues with different stakeholder sectors at all levels – local, national, regional and international, to promote and protect members’ interests on issues of common concern.
Specifically, while the Association has continued to maintain a strong presence in the global and regional arenas, it also made the following achievements in local and national affairs:
One of Sabrina’s outstanding achievements as Chairman of Hong Kong Shipowners Association was to articulate Hong Kong’s natural competitive advantages as international maritime centre, which consist in its position simultaneously as a major international financial centre and a well-established shipping centre. In addition, together with peers from the finance and shipping sectors, she put forward a paper (“Maritime Leasing Paper”) that argues for the need to create better policies and more favourable business conditions to make Hong Kong a ship leasing centre, and to attract international leasing companies.
In response to the maritime leasing report, Ms. Carrie Lam, the Chief Executive of Hong Kong Special Administrative Region, announced in her most recent Policy Address (delivered in October 2018), that the Government has undertaken the following:
In other words, the Government’s response to the maritime leasing report is very positive.
At the same time, Sabrina has continued her father’s campaign to persuade the Hong Kong government to establish a statutory body for the maritime industry, which led to the establishment of Hong Kong Maritime and Port Board (HKMPB). This may be seen as an important milestone and first step, hopefully, to the establishment of a full-fledged Transportation and Shipping Bureau, the idea of which appears to be gaining momentum under the current administration.
Sabrina has set a personal example of how a traditional shipping company such as Wah Kwong may adapt and find its position in a fast-changing world while upholding our traditional values, and at the same time promote, elevate and help Hong Kong discover its maritime path in the cycle of change.
In recognition of her significant contributions to the global shipping community, Sabrina was named as the Connecticut Maritime Association’s “Commodore for the year 2018”.