|
| Flemming Jacobs a victim of circumstances |
| (SINGAPORE) A mix of trading conditions and official displeasure is the likely reason behind the surprise ouster of Neptune Orient Lines (NOL) boss Flemming Jacobs, according to a startled shipping community. Senior shipping executives Shipping Times spoke to were virtually unanimous in their view that Mr Jacobs' departure was at least one part market driven and one part behind-the-scenes intrigue. Record low freight rates combined with severe overcapacity have devastated profits across the container shipping industry, particularly for those reliant on the transpacific trade. This is especially the case with NOL's container division APL, which generates up to 75 per cent of its business in these lanes ending up with a record interim 2002 group loss of $266 million. But the straight-talking Dane's industry counterparts were in firm agreement that the results would have been little different, if anyone else had been in his shoes. 'Flemming's position is effectively dictated by the circumstances in the market at this moment and I don't think that anyone that is so heavily exposed to the transpacific trade could have done much better,' said a senior executive with a feeder operator. 'But as soon as something goes as bad as this, somebody's head has to roll,' added a mainline executive. 'I think there has probably been this type of reaction by the NOL board after coming under pressure from NOL's main shareholder, Temasek Holdings.' He went on to say that because Singapore Inc is used to so many successes with its government-linked companies, NOL's chequered history has become 'a real bone of contention'. 'It is not a case of Flemming Jacobs being allergic to red ink, but rather Singapore Inc being terribly allergic to it,' he said in reference to Mr Jacobs by-now legendary remark. Some executives speculate Temasek would have expected Mr Jacobs to be more aggressive with his cost cuts, lowering of capacity and disposing of assets to stop the heavy bleeding. But liner executives all too familiar with the vagaries of their business said a long term view was crucial because of the cyclical nature of the industry. Another liner executive pointed to the purchase of APL which was made prior to Mr Jacobs' joining. That purchase shot APL into the liner big league as the sixth largest operator, but also gave them bigger gearing and bigger exposure to the market. 'When you get into the deeper water the troughs and peaks of shipping get wider and longer,' he said. 'The shareholders have to realise that if you want to swim in the deep water you have to be prepared to go through the ups and downs.' A number of other lingering factors likely aggravated the situation ultimately causing the board and Temasek to lose their patience, say some. This included added tonnage commitments that started to be delivered in the worst of the rate trough, the apparent fall-through of a deal to buy P&O Nedlloyd that was as close as 80 per cent done in the middle of last year, and ongoing resentment of a higher cost and enlarged expatriate head-count. Some among the liner executives Shipping Times spoke to suggested the move was part of the apparent trend of expatriates being displaced from top positions at various GLCs, apparently for poor performance. Highlighting the well-known tongue-in-cheek reference to NOL as 'No Orientals Left', one expatriate executive suggested it might be replaced with 'APL - Ang Mohs Please Leave', 'ang moh' being local parlance for Caucasians. One executive says he expects a positive result from NOL in 2003, adding: 'Its a pity that Flemming had to go now as the successor can at the end of 2003 claim credit for turning the NOL group around.' In his view Mr Jacobs is one of the most skilled shipping executives in the business and 'it's going to be difficult to find anyone that can run NOL better. I don't understand the politics of the decision, but I guess that is what it is about.' What is clear, said another mainline executive, is that morale at NOL is at an all time low and whoever is hired to succeed Mr Jacobs needs to buoy the group's sagging spirit. 'NOL is known for its quality people, but my sense is that several NOL and APL people have been pushed out of the way and are lacking a sense of belonging.' Under Mr Jacobs, NOL recruited a large number of expatriates, including a fair number from his former company Maersk Sealand. 'He was quite aggressive in bringing people in, they were very good people, but the sense was what is wrong with us NOL/APL people,' a former NOL executive said. Whether this was a factor in Mr Jacobs' departure is unclear, but he said NOL director and Temasek-linked Boon Swan Foo had been intensively interviewing NOL staff, 'asking a lot of intimate questions' over recent weeks. 'The people are a powerful force that needs to be re-tapped,' he said. 'It is the people that will turn around the company, the industry piece of the puzzle nobody can change individually, this is a structural industry problem that has to be dealt with as a group,' he said. |
| © 2001-2024 Shanghai Shipping Exchange All Rights Reserved. | Copyright Declaration Contact us | |
| Shanghai ICP B2-20050110-1 | ||