KGAL ship funds have enabled investors to benefit from the growth of global trade since 2003. The markets for ships are highly cyclical. Following many years of growth, we are currently facing one of the worst crises the industry has ever seen.
Long-term contracts with charterers and loss-of-hire insurance policies shielded our investors mostly in the initial years of the crisis. However, the expiration of contracts is currently leading to a host of new challenges. Ships have to be maintained to a high standard through professional asset management to ensure that, despite limited deployment options, they remain the first choice for charterers in future. We earn the trust we need from banks and investors to pursue our activities through reliable cash-flow management and controlling.
With AL Ships GmbH, the company responsible for our joint activities with V.Ships, we are best equipped to deal with these challenges in asset management. Since 2004, AL Ships has managed 35 ships for the KGAL Group alone and played a key role in the successful and extremely profitable exit of 18 ships. By monitoring technical management and ensuring ongoing coordination with the commercial requirements of the shipping industry, the company provides the best possible protection for ship investors’ interests, even in a difficult climate. To do so, it relies predominantly on its own very experienced staff, but also has unlimited access to the global network of the V.Ships Group, the largest provider of technical ship management services.
One of the main aspects of KGAL’s risk-averse approach to ship funds is long-term contracts with charterers. These have greatly stabilised the funds since the onset of the crisis in 2008. With the expiry of some of these contracts in 2011 and 2012, the focus shifted to pools with leading providers such as Heidmar or Maersk. These pools ensure continued revenue for the ships without any long-term tie-in to what are currently extremely low period time charter rates. In the container segment, we have so far always succeeded in securing new engagements without extended idle times. Refinancing in U.S. dollars prevents unnecessary risks due to exchange rate losses. Still, an effective market recovery is necessary in order to permanently stabilise all funds.
Dr. Jochen Körber
Head of Shipping Department
Following a degree of stabilisation in 2011, the three major segments in the shipping sector – container ships, tankers and bulk carriers – are once again in crisis. We fear that this will continue over 2013, as the surplus tonnage offer will only be gradually reduced through the increase of the transport volume. Depending on the ship class and size, we expect substantial differences in the time horizon. For example, smaller product tankers are to recover much faster than the large crude tankers. In the container ship market, the situation is the other way round: ships larger than 4,000 TEU are crowding out the smaller units from their standard routes.
The V.Ships Group is an international holding company and one of the world’s largest providers of ship management services. The group currently manages a fleet of over 1,000 ships employing a staff of over 24,000. For KGAL the partnership with V.Ships provides direct access to the market and to first-rate market expertise and infrastructure.
We operate two long-term joint ventures with Deutsche Lufthansa AG: Lufthansa Leasing GmbH, founded in 1989, and GOAL German Operating Aircraft Leasing GmbH & Co. KG, which handles the asset management of all operational KGAL aircraft funds.
The private equity expert ACP is a wholly owned Allianz subsidiary. ACP is one of the leading European investment companies in alternative investments, and Germany’s largest private equity investor. Its business activities are in direct private equity, indirect private equity, infrastructure and renewables. ACP has offices in Munich, London, New York and Singapore. The company has been active in Germany since 1998.