Ahead of the curve

Gulf Energy Maritime CEO, Ahmed Al Falahi, reveals how perfect timing and tight management have propelled a new launch shipping company to the big leagues.

How would you characterise 2008 for shipowners?

With the demise of some very significant financial institutions, and oil soaring to over US$145, all owners have witnessed quite an exceptional year. I am pleased to say the financial facilities we have were fixed a long time ago. Fortunately we are not in need of major financing in the current market, which is good for us, but that need could have some very serious implications for highly leveraged owners.

Speaking from a GEM point of view, this has been another very strong year for us. Three major things will mark it out for me, namely the company's net profit performance, the revenue for the company, and receiving additional vessels from our partner yards in South Korea.

We also divested of two vessels. These were the two oldest in our fleet, and we made a good profit. It wasn't a forced sale, but they were no longer a good fit with our profile. Age-wise the vessels were in excellent condition, but we are aiming to manage a fleet with an exclusively young profile.

The year's not over yet, and we are ready to receive two more vessels before the end of this quarter, bringing the fleet size back up to 11. An additional six vessels will be received in 2009 bringing the fleet to 17. These are both Aframax vessels being built by Samsung and will be the largest in our fleet.

Quite a spending spree: is this a good time to expand?

In terms of the credit crunch our exposure to its effects are fairly small because we have no urgent need to raise capital. I think even if we went for financing we would still be able to source this, but it would definitely be at a higher cost than that which we secured three years ago. We deal exclusively with local banks, and these institutions have been with us for the past four, nearly five years.

We have vessels on order which need to be financed, but these loans do not need to be secured until 2011, by which time we hope the credit crunch will have eased and hopefully everybody will be glad to be beyond these exceptional circumstances. It's not to say it has all been plain sailing. Business has been quite challenging, but for reasons outside the extreme financial situation.

So you have seen costs increase?

Certainly. The oil price skyrocketed during the year, and indirectly we have felt this. As an owner the bunkering, or fuel costs aren't our responsibility, that falls to our charterers. However, we do buy a large quantity of lubes for the machinery on board our vessels, and those costs have risen with the feedstock price. Our biggest fixed-cost increase has been seen on the crewing side.

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