PCL is part of the Kuok Group, whose interests include commodities, logistics, properties, hospitality, and maritime. Kuok’s maritime related businesses are grouped together under Kuok Maritime Group which has four business streams – shipping with PCL, offshore business PACC Offshore Service Holdings (POSH), Pacific Workboats, and shipyards under the PaxOcean brand.
The privately held shipping business under PCL has generally cut a low profile but as it celebrates its 50th anniversary in 2023 and last week CEO Hor Weng Yew sat down select media, including Seatrade Maritime News, for a broad ranging discussion about its business.
Hor comments that PCL is one of the few shipowners that can be described as “Singapore born and bred”. Although Singapore enjoys a high standing as an international maritime centre most of its shipowners and operators are international companies, even if in some cases they have chosen to locate their global headquarters to the Lion City.
The largest part of PCL’s business is in dry bulk, which is where it started 50 years ago, although Hor notes that as well as commodity cargoes this business encompasses specialist project cargo business such as the shipping of blades for wind turbines.
Today PCL’s bulk carrier business is very much focused on geared vessels with supramaxes, ultramaxes, handysize vessels, as well as some multi-purpose vessels. These are sectors where the company sees itself as being able to make “a little bit of a difference”.
In a change from the early part of the 2000’s PCL’s dry bulk fleet is largely owned, having previously been active in long-term chartered vessels from Japanese owners. Hor said they do take short-term charters to cover their whole cargo system but have cut down a lot on bareboat and time charters. “I think we probably do better in terms of our own borrowing and financing than under a charter,” he says, although does not rule out charters and lease deals if the terms are right.
Diversifying its business around six years ago PCL moved into the product tanker sector. This was around a year after Hor joined the Kuok Group company bringing with him extensive experience in the tanker sector from AET where had held the role of President and been involved with the business for around two decades.
“We had a pretty positive long-term view of the whole products and product tankers market so we decided to go in with the MR tanker segment.”
The MR sector offered both regional and global trading and fitted well with Kuok’s business.
Moving into the tanker sector PCL took a cautious approach setting up a small team to understand the technical management of vessels so that when the timing was right to acquire MR tankers it was “very comfortable to be able to service the energy companies”. Hor explains: “So we didn’t just plunge in and buy a whole bunch of ships, we made sure we could deliver well.”
Today the company has a small fleet of eight MR tankers on the water with two newbuildings to join the fleet next year.
While PCL saw good fundamentals for the product tanker market prior Russian invasion of Ukraine it is a market that has been a clear beneficiary of the crisis with a change in cargo flows increasing tonne miles for vessels. “But of course, the question is the current crisis in Ukraine and Russia - what does it mean if it is prolonged? What does it mean that there's some resolution?”
With these uncertainties Hor says the company is focusing on the fundamentals of the market. “Near term next 12 months are very positive, longer-term, we still see a lot of demand requirements, but the flows could change.”
There has also been a reconfiguration of refining capacity over the last 5 -10 years with a downsizing in Australia, declines in Europe, while there are a lot of new refineries in India and China, which have changed the dynamics of the market.
PCL started in the product tanker sector acquiring modern secondhand vessels and is now shifting to newbuildings which offer better efficiency and fuel consumption. With high secondhand prices at present Hor says it has sold some of the first tankers in its fleet this year. These older vessels will see increasingly low efficiency versus newbuildings in coming years.
PCL has taken delivery of two MR newbuildings and has two more to come next year, and further orders could be on the cards if there are no plans as to when this would be.
In the big picture. “I think we'll continue to grow the MR tankers [fleet], but the timing on when we will order I can’t quite give that visibility,” Hor explains.
The preference is towards newbuildings as PCL has control over the specifications with a particular liking of super-eco vessels, and it can choose to work with two yards which the shipowner knows can deliver what it wants.
But this does not mean that the company would rule out buying secondhand vessels. “But I don't discount the right ships in the right price. Why should we discount the secondhand ships because we can do modification and retrofits, and we can probably do that better than some of the others because of our own shipyards,” he says.
PCL also a has gas shipping business which has been involved in LPG shipping primarily focused on Indonesian and regional business.
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