As Captain Eberhard Koch prepares to hand over the running of Österreichischer Lloyd Shipping to the next generation, he is working hard to ensure that he leaves a healthy company behind and will be free to focus on giving something back to Cyprus, where he has spent the past 14 years – and has no intention of leaving.
By John Vickers
Österreichischer Lloyd Shipping is the new name of the Group which began life as a family-owned shipping company almost 180 years ago (it was founded in 1836) and has now come full circle: having been involved in third party ship management, its focus is once again on ship owning and the in-house management of its own fleet. In 2008, all the shares of the company were transferred to the ownership of Chairman and CEO, Captain Eberhard Koch.
Recently, the company has undergone and major restructuring and rebranding, which involved a share swap and the finalising of a new long-term financing arrangement with its banks in Germany. “Now,” says Capt. Koch, “after these changes we are ready to take institutional and private equity partners on board. The new structure ensures, firstly, that Österreichischer Lloyd Shipping remains a family-owned company, which is important for me for two reasons: I want to remain at the helm as I have been since 1991 and also because my daughter is at present working with a great shipping company in Hamburg and I expect that, in a couple of years, she will be ready to come to Cyprus and to take over here so I want to deliver her a healthy family-owned company.”
In order to be able to compete with other shipping companies, the Chairman explains, new investors are required, both to strengthen the balance sheet and to enable it to acquire new ships. “The last seven years have been very difficult for us,” he tells me, noting that “We put our own money into the ships to keep them running”, something that has led to the present situation of which he is very proud: “We are still here and we are now a very healthy company. “
Koch has a very clear vision for the company (“We want to steam ahead on our own course as we did in the past”) which means controlled growth and sticking to the niche markets in which it has already proved successful. “We don’t want to turn into a huge company with 50 or 100 ships,” he explains. “I’m talking about 10 to 15 ships, which I feel is a very healthy basis for this company. Today we are involved in multi-purpose ships under 1,000 TEU [twenty-foot equivalent unit for containers] and we would like to stay there because our earlier investment is now showing a profitable return. This is our market, where we know that we can earn some money for the future.”
Although 180 years is an impressively long history and Österreichischer Lloyd has been through many different incarnations since its foundation, I suggest to Capt. Koch that there always a certain amount of risk involved when changing something that has worked well for years. He agrees:
“Yes, there is, and I am proud of our history, of the old flag with the Austro-Hungarian crown, and of course I am proud of the name Österreichischer Lloyd so any change is difficult. But having been asked many times if we are another classification society like Germanischer Lloyd, I wanted to make it clear that we are a shipping company and I’m glad to say that the message appears to have been clearly understood.”
He goes on to explain that, “Shipping has changed considerably and, with international investors coming on board in almost every company, you now have to present yourself in a completely different way in order to attract them.”
He makes the point that he has never looked for short-term investors (“The Americans tend to join companies for 3-5 years, which is too short for shipping”) but for those who would be in it for the long term. He was involved in what he describes as “some really interesting negotiations” during the recent Maritime Cyprus 2015 conference, while last year he undertook a company roadshow in the United States where he found a great deal of interest in the company’s setup:
“The results of our in-house management were there for all to see and they liked what they were seeing,” he says..“Our main asset is our in-house management and our team of onshore employees, many of whom have been with me for 20-25 years; our second biggest asset is our seamen, some of whom have been with me for a similar length of time. They know that they are working for me and my team and they are very proud of it.”
The staff played a leading role in the major change of direction taken by the company in 2008. “I asked my staff how they saw the future and the clear answer was ‘in-house management for our own ships’. We all felt that we should concentrate on the newbuildings and give our crew an opportunity to show how brilliant they are on our own ships only. After we switched from ship management to ship owning, we were able to achieve what we wanted to do.”
It is no secret that 2015 has not been a good year for the global shipping industry and Capt. Eberhard Koch confirms that the crisis is not yet over:
“We’re still in crisis and, in some ways, it has worsened. Owners should not be ordering new ships these days. Present bunker prices mean that so-called eco-ships no longer have an advantage over traditional older ones. We have spoilt the market, especially in the bulk carrier segment, with new orders coming on top of the existing oversupply. In the container segment, the shipping lines have decided to build ultra-large container carriers of 21- 24,000 TEU and this will certainly have a cascading impact on the ships below this, so the future of the smaller ones is very unclear. For now, and despite the low price of oil, the crisis hasn’t gone away.”
Österreichischer Lloyd’s restructuring/rebranding project has coincided with the company’s 20th anniversary in Cyprus. Capt. Koch admits that his was one of the last German shipping firms to set up a subsidiary in Cyprus, even though many of his clients had been suggesting that he do so for a number of years. “I was too busy in Hamburg and in Vienna,” he recalls. “We were very proud to use the Austrian flag, the Austrian government was very interested in shipping and supported us, and we had an excellent relationship with the Ministry of Transport. But we could not convince the government to adopt the Tonnage Tax system, even though many other countries already had it. That was really what made me decide to open an office in Cyprus.”
In 2001, he decided to move permanently to Cyprus with his family. It was, he says, the best decision he has ever made. “The Mediterranean lifestyle, the healthy, safe way of living here is amazing,” he enthuses. “Nothing and nobody in the world could ever persuade me to go back to Germany!”
After 14 years on the island, the Chairman and CEO of Österreichischer Lloyd Shipping has reached a point where he feels that it’s time to give something back to his adopted country. He explains what he has in mind:
“I want to do this by promoting the Cyprus flag, which is why I have decided to stand for election to the board of the Cyprus Shipping Chamber. Cyprus has a quality flag and a brilliant Department of Merchant Shipping, which is doing a great job and providing fantastic assistance to ship owners, but we still need to do more to let people know about Cyprus.”
By coincidence, when Capt. Koch decided it was time to do something, so did the Minister of Transport. “I am extremely happy about the way he is dealing with the promotion of the Cyprus flag and the Cyprus shipping cluster,” he tells me. “I have been appointed as a member of one of his working groups and we have already done a lot to give him ideas of how he can promote both the Department and the flag.”
Cyprus has a lot to offer the international shipping community, he stresses, “including the best Tonnage Tax system in Europe”, which is why the country needs to do more to promote itself. “There is strong competition from Dubai, which is currently focusing on Greece after the recent crisis,” he warns, adding that “Portugal has its sights on Germany and there is Madeira and Luxembourg too. I truly believe that we have the best things to offer and I am glad that the Minister is very active on this issue.”
And he is planning to stay at the helm of the company for another two years?
“God willing, yes!” he says, laughing. “I’m very happy to stay here as Chairman of the Board. I have a very good COO in Captain Alexander Legowski, who has been with me for over 20 years so eventually my daughter will have him by her side too. Loyalty is a quality that I have always encouraged and promoted and that includes loyalty to Cyprus. I still consider myself to be a guest here but I was accepted as a friend from the moment I arrived in 2001 which is why I want to do something more in return for everything the country has given me.”
By John Vickers
Österreichischer Lloyd Shipping is the new name of the Group which began life as a family-owned shipping company almost 180 years ago (it was founded in 1836) and has now come full circle: having been involved in third party ship management, its focus is once again on ship owning and the in-house management of its own fleet. In 2008, all the shares of the company were transferred to the ownership of Chairman and CEO, Captain Eberhard Koch.
Recently, the company has undergone and major restructuring and rebranding, which involved a share swap and the finalising of a new long-term financing arrangement with its banks in Germany. “Now,” says Capt. Koch, “after these changes we are ready to take institutional and private equity partners on board. The new structure ensures, firstly, that Österreichischer Lloyd Shipping remains a family-owned company, which is important for me for two reasons: I want to remain at the helm as I have been since 1991 and also because my daughter is at present working with a great shipping company in Hamburg and I expect that, in a couple of years, she will be ready to come to Cyprus and to take over here so I want to deliver her a healthy family-owned company.”
In order to be able to compete with other shipping companies, the Chairman explains, new investors are required, both to strengthen the balance sheet and to enable it to acquire new ships. “The last seven years have been very difficult for us,” he tells me, noting that “We put our own money into the ships to keep them running”, something that has led to the present situation of which he is very proud: “We are still here and we are now a very healthy company. “
Koch has a very clear vision for the company (“We want to steam ahead on our own course as we did in the past”) which means controlled growth and sticking to the niche markets in which it has already proved successful. “We don’t want to turn into a huge company with 50 or 100 ships,” he explains. “I’m talking about 10 to 15 ships, which I feel is a very healthy basis for this company. Today we are involved in multi-purpose ships under 1,000 TEU [twenty-foot equivalent unit for containers] and we would like to stay there because our earlier investment is now showing a profitable return. This is our market, where we know that we can earn some money for the future.”
Although 180 years is an impressively long history and Österreichischer Lloyd has been through many different incarnations since its foundation, I suggest to Capt. Koch that there always a certain amount of risk involved when changing something that has worked well for years. He agrees:
“Yes, there is, and I am proud of our history, of the old flag with the Austro-Hungarian crown, and of course I am proud of the name Österreichischer Lloyd so any change is difficult. But having been asked many times if we are another classification society like Germanischer Lloyd, I wanted to make it clear that we are a shipping company and I’m glad to say that the message appears to have been clearly understood.”
He goes on to explain that, “Shipping has changed considerably and, with international investors coming on board in almost every company, you now have to present yourself in a completely different way in order to attract them.”
He makes the point that he has never looked for short-term investors (“The Americans tend to join companies for 3-5 years, which is too short for shipping”) but for those who would be in it for the long term. He was involved in what he describes as “some really interesting negotiations” during the recent Maritime Cyprus 2015 conference, while last year he undertook a company roadshow in the United States where he found a great deal of interest in the company’s setup:
“The results of our in-house management were there for all to see and they liked what they were seeing,” he says..“Our main asset is our in-house management and our team of onshore employees, many of whom have been with me for 20-25 years; our second biggest asset is our seamen, some of whom have been with me for a similar length of time. They know that they are working for me and my team and they are very proud of it.”
The staff played a leading role in the major change of direction taken by the company in 2008. “I asked my staff how they saw the future and the clear answer was ‘in-house management for our own ships’. We all felt that we should concentrate on the newbuildings and give our crew an opportunity to show how brilliant they are on our own ships only. After we switched from ship management to ship owning, we were able to achieve what we wanted to do.”
It is no secret that 2015 has not been a good year for the global shipping industry and Capt. Eberhard Koch confirms that the crisis is not yet over:
“We’re still in crisis and, in some ways, it has worsened. Owners should not be ordering new ships these days. Present bunker prices mean that so-called eco-ships no longer have an advantage over traditional older ones. We have spoilt the market, especially in the bulk carrier segment, with new orders coming on top of the existing oversupply. In the container segment, the shipping lines have decided to build ultra-large container carriers of 21- 24,000 TEU and this will certainly have a cascading impact on the ships below this, so the future of the smaller ones is very unclear. For now, and despite the low price of oil, the crisis hasn’t gone away.”
Österreichischer Lloyd’s restructuring/rebranding project has coincided with the company’s 20th anniversary in Cyprus. Capt. Koch admits that his was one of the last German shipping firms to set up a subsidiary in Cyprus, even though many of his clients had been suggesting that he do so for a number of years. “I was too busy in Hamburg and in Vienna,” he recalls. “We were very proud to use the Austrian flag, the Austrian government was very interested in shipping and supported us, and we had an excellent relationship with the Ministry of Transport. But we could not convince the government to adopt the Tonnage Tax system, even though many other countries already had it. That was really what made me decide to open an office in Cyprus.”
In 2001, he decided to move permanently to Cyprus with his family. It was, he says, the best decision he has ever made. “The Mediterranean lifestyle, the healthy, safe way of living here is amazing,” he enthuses. “Nothing and nobody in the world could ever persuade me to go back to Germany!”
After 14 years on the island, the Chairman and CEO of Österreichischer Lloyd Shipping has reached a point where he feels that it’s time to give something back to his adopted country. He explains what he has in mind:
“I want to do this by promoting the Cyprus flag, which is why I have decided to stand for election to the board of the Cyprus Shipping Chamber. Cyprus has a quality flag and a brilliant Department of Merchant Shipping, which is doing a great job and providing fantastic assistance to ship owners, but we still need to do more to let people know about Cyprus.”
By coincidence, when Capt. Koch decided it was time to do something, so did the Minister of Transport. “I am extremely happy about the way he is dealing with the promotion of the Cyprus flag and the Cyprus shipping cluster,” he tells me. “I have been appointed as a member of one of his working groups and we have already done a lot to give him ideas of how he can promote both the Department and the flag.”
Cyprus has a lot to offer the international shipping community, he stresses, “including the best Tonnage Tax system in Europe”, which is why the country needs to do more to promote itself. “There is strong competition from Dubai, which is currently focusing on Greece after the recent crisis,” he warns, adding that “Portugal has its sights on Germany and there is Madeira and Luxembourg too. I truly believe that we have the best things to offer and I am glad that the Minister is very active on this issue.”
And he is planning to stay at the helm of the company for another two years?
“God willing, yes!” he says, laughing. “I’m very happy to stay here as Chairman of the Board. I have a very good COO in Captain Alexander Legowski, who has been with me for over 20 years so eventually my daughter will have him by her side too. Loyalty is a quality that I have always encouraged and promoted and that includes loyalty to Cyprus. I still consider myself to be a guest here but I was accepted as a friend from the moment I arrived in 2001 which is why I want to do something more in return for everything the country has given me.”
