Morten Arntzen: Has 100 ships – wants a model
Morten Arntzen is a breath of fresh air in US and international shipping. He arrived in the USA as a three-year-old in 1958, since his father was going to establish the Norwegian law firm of Wikborg and Rein’s first US office. The family came by sea from Norway, just like real immigrants did half a century before.
“I’m still looking for a model of the Bergensfjord, the ship we arrived in,” he admits, looking nostalgic, when we meet him in his Overseas Shipholding Group (OSG) office in New York, USA. He stayed in the US, married, and had four children.
Shipping – and skiing
Maybe he was predestined to climb right to the top of one of the world’s largest shipping companies?
“If you’d asked me what I wanted to be when I was a boy, I might not have been able to tell you. But the fact that I became what I am may be almost because it had to be like this. When I first started to work in a bank, I was transferred immediately to the shipping department. Norway and Norwegians were, then and now, synonymous with shipping. That’s just as clear as the fact that Norwegians are born wearing skis. Without knowing it, I’d probably even then started on the path to becoming a shipowner. It’s a career and development I’ve never regretted,” he says convincingly.
People and expertise
At the same time, he thinks Norwegians should be less concerned about parts of their shipping industry being bought up by foreign companies.
“We ourselves have just acquired Stelmar, the Greek shipping company. We’ve not only bought the ships, we’ve also got the entire organisation and that’s much more than just steel ships. It’s people and it’s expertise. And you can’t move either people or expertise very easily. Nor have we any desire to do so. We are satisfied with the well educated, highly skilled and strongly motivated staff we found at Stelmar Shipping, and we intend to build more upon it. The value of the shipping environment in Greece is an important part of what we’ve acquired. The same applies to Norway. Teekay at least claims that it has more employees in Navion in Stavanger now than before. I don’t know the figures for Bergesen since Worldwide took over, but I’d be very surprised if the Sohmen family thinks differently to us: they have acquired the ships, but they’ve also bought the expertise of the staff and an important part of the unique shipping environment in Norway. In the same way as Helmut Sohmen operates out of Hong Kong and has a lot of activities in Singapore and Oslo, we have our head office in New York, a great deal of activity in Newcastle in England and now also Stelmar in Athens.”
Most active year in OSG’s history
Morten Arntzen has been at the top in OSG for just over a year; perhaps the most active year in the company’s history. With barely concealed pride, Morten Arntzen lists the events that have taken place:
- The most important was the acquisition of Stelmar.
- Their fleet increased to more than 100 ships.
- They managed to prove they have in-depth knowledge of LNG and won the Qatar gas tender in competition with eight other shipping companies.
- They ordered four LNG tankers from Hyundai and Samsung for delivery from 2007 to 2010.
- Together with Euronav, they acquired the only four double-hull ULCCs in the world at a price of USD 112 million each. Arntzen does not hesitate to call that the number one shipping ‘theft’ of 2004.
- They have also made a recommitment to investing in the US Flag market.
Backed by technical competence
“Our growth is backed by technical competence,” says Morten Arntzen. He is concerned about the shipping companies themselves retaining the technical operation of their own ships. “I don’t believe in outsourcing the technical management of our ships,” he says. “We are often asked: Do you control the technical management? And we’re glad we can answer that we do. In addition, we have the capacity to add to our fleet without having to increase our onshore organisation significantly.”
OSG is one of the world’s premier energy transportation companies with a staff of 3,850 employees, of which 350 work onshore. Together with its partner Qatar Gas Transport Company, OSG recently signed a contract for the largest LNG carriers on order to date. Two of these 216,000 m3 vessels will be built at Hyundai Heavy Industries and two at Samsung Heavy Industries – all four to DNV class.
“We have high expectations for our collaboration with DNV,” says Morten Arntzen. “DNV is a fantastic global organisation built on intellectual capital,” he states, emphasising that DNV was chosen for both its knowledge of LNG and its relationship with the two Korean shipyards.
New tax schemes
After 17 years the US has created a level tax playing field for US companies competing in the international markets. The Jobs Creation Act of 2004 signed into law by President Bush in October 2004 restored the deferral of foreign-source shipping income for US shipping companies.
“This means that companies like OSG will no longer be burdened with a 35 per cent tax disadvantage when competing with the rest of the international tanker world,” says Arntzen.
Had this already been in effect, OSG would have saved some US $95 million in taxes during the first three quarters of 2004.
More Jones Act ships. OSG has ambitions to build 10–15 Jones Act product carriers. Kvaerner Philadelphia shipyard is a partner to move forward with the programme.
“Shipping has become a serious industry, with several large players that have long-term goals and which also have sound earnings and large profits. In addition, quality and safety are at the top of the agenda for all the big players. The OPA 1990 must take its share of the honour for this. The infinite consequences of a possible oil spill led to all serious players putting quality first. This has paid off many times over for the entire industry, and has resulted in a complete change of focus. For us in OSG safety, quality and protection of the environment are at the top of the agenda.”
Morten Arntzen would also welcome a consolidation among the class societies.
“This would be good, both for DNV and for the industry,” he says.