Financial Times

Spence to double fleet to 10 ships
Aitken Spence Shipping Limited, the shipping arm of the blue chip Aitken Spence conglomerate, has spent about $27 million on acquiring five second hand cargo vessels and plans to double its fleet to 10 in the next two years.
“We’re building up our fleet and have just bought two more cargo ships,” Aitken Spence Shipping chairman and chief executive officer Parakrama Dissanayake said. “We plan to own up to 10 vessels in the next two years.”
The expanding fleet of cargo ships is making a growing contribution to Aitken Spence group profits.

The group's Cargo Logistics sector, under which shipping comes, recorded a 17 percent increase in revenue and a 15 percent increase in profits from operations in the financial year ended March 31, 2005. Total group revenue grew 10 percent to Rs 10 billion but net profit attributable to share holders fell 12 percent to Rs 1.1 billion as the tsunami hit tourism earnings.

Aitken Spence operates its ships through its joint venture with Ceyline Holdings, a group of companies with interests in different shipping activities such as ship agency, crewing, bunkers and freight forwarding. Soaring charter and freight rates have made investing in ships an attractive proposition to conglomerates like Aitken Spence, which is now the island’s largest container ship operator.

The group, through its Aitken Spence Hotel Holdings subsidiary, is also the largest hotel company in Sri Lanka. Dissanayake said Aitken Spence will acquire not only container ships but even break bulk conventional cargo vessels.

Aitken Spence Shipping has given all its vessels on time charter.
The Safmarine Boma, with a capacity of 600 TEU (Twenty-foot Equivalent Units or containers), the group’s fourth vessel, is on time charter to Safmarine, part of the Maersk shipping giant which is trying to take over P&O Nedlloyd.

The vessels do not call Colombo and instead are deployed in cross trades with Safmarine Boma plying between West Africa and Europe and others on the Korea-China sector and shipping cargo between the Indian subcontinent and the Red Sea.

“We’re not operating the ships but buying vessels purely for asset management,” Dissanayake said. “The fact that we have a vessel on time charter to the Maersk group shows they have accepted the management skills of Aitken Spence and Ceyline.”

Aitken Spence’s first ship was the 1,300 TEU Indonesian Star. This was followed by the acquisition of the 10,000 DWT multi-purpose vessel Sea Pioneer, and another ship with a capacity of 550 TEU. The latest vessel to be acquired is the Echo Dani with a capacity of 558 TEUs.

Dissanayake said demand for ships remain strong and prices are increasing. The company had got offers for one of its newly acquired vessels that are much higher than the price it paid. The Aitken Spence group is also eyeing investments in port terminal operations as part of an ambitious expansion both locally and globally.

Aitken Spence managing director Rajan Britto recently told company shareholders that it is interested in expanding the scale of its activity to include port operations.

The group is interested in participating in the development of the Colombo South Harbour when expressions of interest are called for, he said. The Harry Jayawardena controlled company was earlier known to be interested in acquiring the Jaya Container Terminal of Colombo port when the government was considering privatizing or ‘corporatising’ it.

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