with Michael Kahn, Managing Director, Jumbo Offshore
Your father, Mr Kahn Senior, had the insight to start a brand new niche market by introducing the concept of Heavy Lift Shipping to the world 42 years ago. Naturally, being the pioneer in one niche gives you the edge when striving to become the leader in the industry – which Jumbo Shipping already is. However, you are now the one in charge of not only maintaining this position but also expanding it into other niches such as subsea installation. What’s your strategy to maintain your leadership in heavy lift and replicate it in offshore installation?
Our strategy is summarized by our motto: Reliable Strength. In addition, safety and a pioneering spirit are always part of our strategy.
The founding of Jumbo Shipping in 1968 was a result of my father’s perception that international trade couldn’t be carried out only by containers. From this insight – which may seem obvious today – it followed that world trade needed special transport solutions for very heavy goods. Hence, he swam against the tide and pioneered in the business of transporting big and heavy cargo. Already in 1956 he had built a new ship for cargoes that didn’t fit into the container box. MV Stellaprima, her adjustable tween deck and 12-ton derricks, was a remarkable innovation for its time. From the beginning, Jumbo has established itself as a pioneer in the heavy lift shipping industry. Nowadays, Jumbo
operates a fleet of 14 dedicated heavy lift vessels, with a lift capacity of up to 1,800 tons.
Our development curve has always shown a deliberate and parallel growth in quality and size. In this context, and after visiting the OTC in Houston, we started Jumbo’s offshore branch six years ago. Naturally, at the beginning entering a new market was challenging since many activities seemed new to the company’s culture. However, we realized that ‘going offshore’ was an interesting option for Jumbo.
The reasoning behind this decision was that cutting-edge engineering, efficient and safe transportation, a partnering mentality towards our clients and a long-term vision are engrained in Jumbo’s DNA. We always try to find innovative ways to solve logistical challenges. These characteristics meet perfectly with offshore industry requirements. Furthermore, offshore installation – a segment that overlaps in many ways heavy lift shipping – lacked a player with our characteristics.
Looking for a natural fit, we started out with conceptualising a new method to install wind turbines. But we soon moved away to other offshore segments in the Oil & Gas sector, with fantastic one-off jobs, that were closer to our company’s heart. Nowadays, Jumbo Offshore has a clear focus on transporting and installing subsea structures, mooring systems and smaller jackets and topsides.
Another segment that overlaps with lifting and handling heavy cargoes is land and river transport. If a client wants door-to-door transport, Jumbo has in-house engineers that can take the cargo and bring it from factory to jobsite, whether it is at 4,000 meters high up in the Andes or deep inside Turkmenistan, where you have to build roads and bridges. Jumbo can be responsible for the entire process thanks to our unique and hard-earned expertise. As a service provider Jumbo markets these logistical and engineering services in relation to our shipping activities, thus offering Total Transport Solutions. In addition to lifting, loading and transporting, Jumbo Offshore is able to install the cargo, e.g. manifolds or mooring systems.
How are you managing to integrate the two core activities of Jumbo? To what extent are Jumbo Shipping and Jumbo Offshore different or complementary?
We have a very different approach towards the well-established Jumbo Shipping and new-kid-on-the-block Jumbo Offshore. The main ambition for Jumbo Offshore is to build a strong and constantly growing organization matching the level of our shipping business in terms of performance and client relations. By growing I mean growth in experience and performance. The goal is to build a solid company with an excellent reputation. We do not try to grow at any cost. With each new contract we try to go one step further, taking a calculated risk, but always within our limits.
Although Jumbo Offshore has been around for only a few years, we have started to built a reputation as a reliable contractor able to work all over the world.
Obviously, a young company has limited room for error. This means that we have to work extra hard to avoid damage, avoid accidents, come up with practical and workable solutions and do the job right from beginning to end. And that is as it should be.
Already Jumbo Offshore has worked, and is currently working, in Malaysia, Australia, the deep waters of the Gulf of Mexico and West Africa. Whether it will take one, five or ten years to create the organization we want, is not the driver. We want to build a reputation of reliability, of engineered solutions that work, of putting safety first. That is the driver.
Six years after its establishment, what’s the significance of Jumbo Offshore for the group as a whole in terms of revenue share and total growth?
Without talking in specific numbers, since we are a private company the offshore business is a core activity for Jumbo and it is here to stay. As I mentioned, there are synergies between our clients and the two units can learn from each other, increasing their efficiency.
Jumbo has invested considerably in its offshore business and has carefully built a strategy based on quality and close relations with our clients. Thus Jumbo is one company with increasingly integrated and synergetic business in heavy lift and offshore installation.
Naturally, the world leader in heavy shipping has an extensive international presence. How close is the offshore business from this reality and how do you manage to penetrate the more challenging and sometimes nationalist emerging markets?
A company cannot take all steps at once; it needs to focus on its long-term objectives and base today’s decisions on tomorrow’s opportunities. In the last six years our staff at Jumbo Offshore has travelled a lot and chosen our projects worldwide carefully.
Jumbo Offshore’s sales department has grown and we have sent engineers to Perth to work solely for the offshore business. Jumbo already has offices all over the world for its heavy lift shipping activities and we are now in the process of identifying the right locations for its offshore business as well. We are already present in Korea and we will keep on expanding in Southeast Asia and Far East markets via Perth and Seoul – not to forget our offices in Houston, Mumbai and Singapore.
We have to first identify the opportunities in the market and use our resources to keep expanding our accumulated expertise. It’s a continuous process of identifying the right places to go and the key is: focus, focus, focus!
Sometimes it is very hard to say no to a business order because it would mean that for the next six months our resources and people would be working and earning revenue. However, Jumbo would rather not take a job than to compromise on areas that are not our focus or that are still beyond our capacities.
Even though Jumbo is a private company, the projects and vessels that it operates comprise large investment sums. One tends to think that these can scarcely be financed in times of financial crisis. How were Jumbo’s investments affected by the financial crisis and how is the company expecting to overcome the financial challenges the crisis has caused?
This is the biggest advantage of being a privately owned company – since its origins 40 years ago Jumbo is financed very conservatively. Surely we don’t want to be overleveraged! This is in line with our strategy to be the best, not the biggest. Jumbo has a long-term approach to this vision and keeps true to it.
It’s also true that these are hard times on the shipping side and the crisis could still get much worse. Furthermore, any L-shaped recovery underperforms new tonnage coming into the market. However, since Jumbo is in an excellent financial position, it is able to assess the best investment options in heavy lift and offshore. Therefore even if we need some source of financing for new or replacement ships, we are financially strong enough to get the best deals available.
How do you envision the future of Jumbo in the coming years?
Firstly, our main priority is to keep on building an accident-free company both in shipping and offshore. Our continuous ‘Stay Well’ safety campaign and our in-house Dual Crane Ship Simulator are key instruments in achieving this goal.
Secondly, Jumbo Shipping’s main ambition is to continue as the absolute market leader in the top segments of the market and have a comfortable position in the middle segment, always trying to stay one step ahead of the market in terms of quality. Once again, it’s about being the best, not the biggest. Furthermore, Jumbo’s proximity to its clients allow us to identify the best opportunities and most promising niches for further growth – though at a much more gradual pace than with our offshore business.
Then, thirdly, Jumbo Offshore. In the last six years Jumbo has done some very challenging jobs and is continuously building its reputation of specialized expertise in the offshore industry. If Jumbo Offshore can match the reputation, the quality and worldwide reputation of Jumbo Shipping, this would be a great achievement. Every day we work hard to achieve this goal and I’m very confident that we will manage to do this over the next five to ten years.
Even though the Dutch Oil & Gas Industry is relatively small compared to international standards, the country has produced many flagship players across the entire value chain – from Shell to Fugro, from Damen to Huisman. Would you say that the so-called Dutch expertise and Dutch entrepreneurship are common assets of the Dutch Oil & Gas industry or they are simply part of a very successful branding initiative?
Even though such national perceptions and generalizations may sometimes be hard to materialize, there is definitely a specific image of entrepreneurship and excellence attached to the Dutch companies in the international industry. For instance, at the OTC the Dutch pavilion is the biggest, since all the Dutch companies exhibit in the same area. Thus, we are recognized as a block where quality and ‘smart risk-taking’ seems to be the norm. The Netherlands have a strong maritime cluster, in which shipowners, shipbuilders, suppliers and other participants often work closely together to realize innovations.
Besides, in the past decades many Dutch companies have become world leaders in their niches. Small or big, they are either the best or one of the best in their field – from the service industry to the E&P and so on. As you mentioned, Jumbo is already an example of that in the heavy lift business and we try to do exactly the same offshore.