Harmony at home

A Turkish shipowner has found that ordering vessels at domestic shipyards has some clear advantages.

The symbiosis between Turkish owners and Turkish yards breeds a different type of animal from many other countries. The Bayraktar Shipping Group of Istanbul is one of these.

The name Bayraktar literally translates as "flag carrier" and it could well be maintained that the group has indeed carried the flag for Turkish yards.

Its latest project, which was revealed a couple of months ago, will see it build the first supramax bulkers to come out of a Turkish yard. Currently, it has two 1,300-teu containerships under construction and is committed to building three of 1,700 teu. All the orders have been awarded to Tuzla-based Cicek Shipyard.

The group's fleet currentlystands at 11 units five general cargoships built between 1979 and 1992 and six multipurpose (MPP) containerships, built between 1999 and 2005. The fleet is entirely Turkish-built.

Last year, for the first time in its 60-year-plus history, Bayraktar planned to order ships abroad. Together with fellow Turkish owner Ince Denizcilik, Bayraktar went to Cosco Zhoushan to book the supramax bulkers.

Group fleet manager Erhan Bayraktar says that although the companies had a deal, it failed to gain approval from the yard's board. Outsiders have suggested that Cosco itself nixed the orders because it wanted to keep the capacity for its own newbuilding programme.

A return to the drawing board saw Bayraktar take the decision to build in Turkey.

Three 58,000-dwt bulkers have been firmly booked, two for delivery in 2009 and the third due out of the yard in 2010. Three optional units also are being mooted.

Erhan Bayraktar believes Cicek is among Turkey's top yards and is investing in technology and know-how.

"We are supporting the yard and they are giving us priorities. I think we are going to keep on supporting the yard quite a long time," he said.

Indeed, there seems to be something of a mutual admiration between Bayraktar and Cicek. Yard manager Berke Cicek is equally complimentary about the shipping group's activities.

But neither the yard nor Bayraktar will reveal the price of the bulkers. In fact, Erhan Bayraktar says it is impossible to do so, since the shipping group is purchasing most of the equipment and Cicek is providing the manpower.

Bayraktar started its newbuilding foray in 1998 but, up to 2005, the group was also doing more than just buying the equipment. "We were also organising the piping, the painting, the insulation you name it. The yards were only doing the steelwork and some outfitting," he said.

As a shipping group, Bayraktar controlled 400 to 500 people to build its ships but today, he says, things are improving and yards are offering more of a package.

The average shipowner with a newbuilding orderbook does not have these concerns. The three optional supramaxes at Cicek are dependent on Bayraktar being able to secure three more main engines. It has already contracted to buy main engines for the two 1,300-teu boxships and the first three supramaxes.

He believes that even if a contract is signed today and the company thinks it will get the engine in February or March 2009, it may still not get it.

"I'm sure there will be a delay. This really worries us because the key issue is to get the main engine because this is the biggest equipment we have," he said.

Quite a lot of time is spent on ensuring high specifications for the vessels, Bayraktar says, noting that, for example, the group's bulkers will have a controllable-pitch propeller that "some people say is not really needed for a bulker".

When the new ships are delivered, their employment will be split approximately 50-50 between time-charter cover and spot operation.

Bayraktar's existing fleet is similarly employed. The five MPP containerships are all on time charters with CMA CGM, Mediterranean Shipping Co (MSC) and Zim Lines, while the general cargoships are working spot.

Bayraktar says the 1,300-teu newbuildings, which are due for delivery in May and November 2008, are being built to be flexible enough to do container trades or to carry grain, breakbulk or general cargo. And to hedge its bets, the new containerships will also have 240 reefer plugs.

"In today's market, if I put the vessel on a time charter maybe we would bet $15,000 per day to $16,000 per day but for the bulk trade, we could easily go up to $24,000 per day to $25,000 per day. We haven't decided which way to go. I think the market will tell us how to act on that," he said.

By the end of this year, Bayraktar hopes to dispose of itoldest and smallest ships, the 1,250-dwt Arif Kaptan (built 1979) and 4,150-dwt Erhan Bayraktar (built 1983).

The disposals are a strategic move Erhan Bayraktar says will allow the group to use its human resources correctly.

"Instead of using 18 men on that ship, I will put the same [number of]men on my bulker," he said.

Five years ago, Bayraktar told TradeWinds that the group was interested in expanding into the tanker sector with vessels of between 7,000 dwt and 10,000 dwt. Although such a project has not happened, he says the interest is still there.

"I think we will place a tanker with him, maybe of 10,000 dwt," Bayraktar said, referring to when Cicek's slipway frees up at the end of 2008.

He added: "We are a quite centralised management here. We take fast decisions and this helps us to move in a compact way."

Over the past year, the group has been testing out the American Bureau of Shipping (ABS)'s NS5 quality system both in the office and on a pilot ship. Bayraktar thinks it is a good quality-management tool and visualises that it will be put on most of the group's vessels by the end of the year.

And his predictions for the future? Five years down the line, if everything goes according to plan, Bayraktar expects the fleet to pass 500,000 dwt. All of which, by current indications, will have been constructed in Turkish yards under the watchful eye of the shipowner himself.

By Gillian Whittaker, Istanbul