Marine Money’s Sarah Noonan came across this blog on Dynasties from Croatian economist, Nenad Bakic. I translated it thanks to Google Translate here is the link to the original blog post. Below is the English translated version
Dynasties of the Sea and HZ Cargo
Posted on 01.02.2013. 9:40 | 90 Comments
Just yesterday I finished reading an extraordinary book Dynasties of the Sea (released two months ago) when that’s news Duro Dakovic – expressions of interest in participating in the restructuring of the Croatian Railways Cargo. Seemingly different things, but very much related.
First Dynasties of the Sea is a book you should definitely read:
- All investors in the shares of Croatian ship
- Business leaders
- In general, people who are interested in how the world works today.
Truly impressive witness the most important people in the shipping industry today, written smooth and fun, and here’s part of the preface and introduction:
This explosion in world trade was one of the main reasons that more than a billion people joined the world middle class. It provided employment for workers in developing countries and lower prices – and therefore higher real wages – for workers in developed countries. A good portion of the world’s merchandise trade also flows in the reverse direction as coal and iron ore from Australia and airplanes produced by Boeing and Airbus find their way to the developing world. The improvement in the quality of life is beyond measure in places where electricity never touched lives until nowand where access to air travel has expanded to hundreds of millions in places where it had previously been enjoyed by a small, privileged elite.
It takes a special combination of self-confidence and optimism to be a shipowner – to sell ships when they’re making money, buy them when they’re losing money, build brand new ones just when the world has too many – and put a breathtaking amount of one’s own capital at risk in a business that is inherently perilous.
And then there is the lifestyle. Most successful shipowners work impossibly hard to build their businesses and even harder after they have earned the ability to stop working altogether. They think big when they are small, yet must maintain focus on the minutest details even after their companies have grown large. With crisis and opportunity constantly popping up in every time zone, it is virtually impossible to disengage from the business of international ocean shipping. Shipowners don’t have the luxury of shutting off their telephones – ever.
In the words of quintessential shipowner Coco Jacobsen, “If I expect my ships and my crew to work 24 hours a day, 365 days a year, then so, too, must I.”
So in a “perfect market” like shipping, in which brutal competition, chronic overcapacity and a reliable flow of destabilizing events conspire to give the industry the lowest cycle-to-cycle financial returns with the highest inter-cycle volatility of any asset-intensive industry, one might be tempted to conclude that the business would do nothing but destroy capital. “How do you make a small fortune in shipping?” well-known investor Jim Tisch jokingly asks. “Start with a large one.” Yet the fact is that shipping has contributed to more fortunes than any other business except technology – including Mr. Tisch’s.
Investors in the Croatian shipping stocks this would definitely be read. In this time when shipping world has dual problem (we say ‘squared’) scale, which until now were probably not seen: overcapacity of ships, but also too many shipyards continue to produce ships at high speed (for example, because of the government policy subvencionaške China) . But that is linked to exceptional changes, for example the effect of reducing the number of long tanker route due to a significant decline in imports in the U.S., a new type efikasnijiih ships (which can much of the existing fleet, even if it is relatively new, fast ‘out of the game’). This is one of the few branches where the Croatian company in a brutal global direct competition (and not as a possible government intervention in the construction industry), and in an industry is in terrible dynamics and cramps. Therefore, here are the financial indicators and globally comparable. Unlike eg fertilizers, for example, where the regional market Petrochemical and Yara are not in an equal position with respect to transportation and logistics costs, Tankerska Atlantic and are in direct competition with global players that lead leaders portrayed in this book. In this context, it should be compared, for example, indicators ATPL with, for example, indicators of one NM. Is it in the context of one ATPL expensive or cheap, everyone should judge himself. Leaders Marine impressive Navios also got a place in this book. Management of our shipping companies in direct competition with her.
The book is, however, excellent reading for all business leaders, and for all who want to understand how the world works today. Suppose one ‘innocent’ paragraph:
Free trade agreements have added to the volume for companies like Seaspan. “If trade barriers are removed, not just for shipping but generally speaking, for the tariffs and things, that will encourage more free trade, more globalization, more exchange of goods, and the comparative advantages can be fully utilized. That’s the beauty of free trade,” he said. “That was Adam Smith’s original concept of free trade. It enables the competitive advantages to be fully taken.”
Most of our investors can barely understand what this comparatively Vs. kompetitvno (provided that the politicians really like to say that somewhere in there / we have / blah … blah .. kompetivnu advantage, it somehow makes them far better to have only a comparative, we have by definition).
You see, Pakistan, Algeria and Macedonia have with respect to their trading partners a comparative advantage in something, and then it turned into a ‘competitive’ advantage (with respect to the other, which in fact also have a comparative advantage). Where the term ‘competitive’ advantage again quite vague – for example, a country can easily be ‘komepetitivna’ in many industries when decreasing salaries in half. Another thing is that the government of one country in Europe would not like to have her salary as citizens of Pakistan. Which brings us to the next step, and that is: Who can deny the Germans to be more productive (among other things, mostly because the accumulated capital, which for some of us continue to ‘hate’ – crazy, because they love phones, cars and the internet!) or the Pakistanis to work cheap, and Chinese both? And how will you Croatian citizen and the government to help him over that he “wants to have a salary that belongs to him.” What manipulation of ‘belonging’ in today’s world?
Second A link is that there are few areas where Croatia can have a ‘competitive’ advantage (read how you want) just in such a way that he wants, namely with a decent salary. And it is in those areas where the nature has endowed Annuity position. As we Norway or Ivory bjelkosti difficult to compete in the ‘tourism in the Mediterranean’, so we and our position can bring a nice advantage in transportation and logistics.
This is easy to miss, as we witnessed in the case of South Stream where Russia has chosen for them less suitable path to our detriment. And where we do not have such a geographical protection, our competitive position may go up in the air in no time (if only BELIEVED ‘our’ to manage the supposedly ‘our’ interests, just remember how quickly collapsed our biggest shipping line Croatia.
Even in situations where there is a certain (or strong) natural advantages, the question is who will take advantage of it, whose capital will be harnessed short time opportunity to use it. Just such a situation with the railway and other transport and logistics opportunities in our territory.
For the job at a lower level, one deals with (de facto bankrotiratni now) HZ Cargo, and he wanted to engage in a higher (to take advantage of upcoming opportunities regarding the corridors X and Vc) we know quite a lot. For example, in his next few years should be about 1500 new cars (official data DEH). Clearly, if HZ Cargoa not here, someone will perform the transport corridors, as we will fly to London and if not Croatia Airlines. And, of course, politics is clear that if the deal does not lead a company in Croatia (whoever was the owner of capital), business will be conducted in Graz, Vienna or Brno (headquarters and stations). And without capital HZC can not survive, much as I cried out that the ‘us’ (as Anthony says, there are people who say that the roads are ‘our’ even though we long for them far more than they cost – you know, socialists forget the other side balance sheet, and it is a long and equity, the ‘problem of socialism is that eventually consumes all the strange fumes’), so I think that this privatization project HZC we really take seriously (ie, I think it is a policy completely seriously).
And we come to yesterday’s announcement DD-ao participation in the consortium. If we talk only about 1500 of these cars, I think it would be worth some 120-170 million euros, if I’m not mistaken, and that is something you would already ensure stability in that DD can still go to the ‘kitovol’ at higher and more profitable projects (oily fish).
3rd In this context, I think I notice a further increase in revenue is extremely ambitious ĐĐH 2013th should be taken seriously (even if we do not take into account, and we need to be a company with a certain political orientation, so the administration was extremely harmful dating unachievable plans, which would virtually guarantee their dismissal – on the other hand, many cynics idiot and it is difficult to accept that maybe there are people who want generic and can succeed, and I do not see why such a right a priori withholding of administration DD ‘).
Clearly, in the part of the media who act like they own the water some autistic war against some stocks, you have such an incredible title after yesterday’s very strong and unveiling plans: SPECIAL: Shares Đ.Đ. Holding prices fell after the announcement of results.
What about those people in mind, it is difficult to understand, but maybe it would have been easier if we analyzed the correspondence of some editors on FB which states that the articles of Nexe (par excellence a big key, and zanimmljiva theme) ‘placed’ in a newspaper of by ‘some predators’ that it ‘wanted to destabilize the pension funds’ so that those of them buy some cheap shares or those of them dearly, but I can not remember something like that. Me to “KNOW” somehow “” seemed to have alluded to me (thank you, thank you!) But had not anything to do with this article on Nexe (editors is difficult to accept that there are issues that are important in themselves, and not just what you someone ‘pushes’). Or maybe you do not take the ‘war’ but simply do not understand anything, who knows?
So you might have a variant of the ‘predators’ might like to buy their mirovinci KORF (although they themselves somehow and now obvious that maybe was not that expensive at 45, 55 or 105 kuna, and frankly I believe it now) or DDJH (presumably predators are so stupid that they wanted to sell DDJH at 50 or 60?) or perhaps’ predators’ wanted to conveniently buy bonds or Nexe So maybe, who knows, this is part of the same assembly, ‘DDJH not grow as’ predators’ manipulate, buying, selling, investing and generally behave strangely, and our not expose it, because there’s nothing to uncover, but prevent this injustice ‘.
So that – thank you – hope to make good on shares DDJH (clear scans and counting the profits from the media, but of course not the losses if prices fall!). What can I do when I believed in the company, and generally Croatian industry, invested in its shares when almost nobody wanted, thus giving them the support and znbačajnu risked their money (e’m just a bastard!), At a time when ‘mrzioci predators’ expanding just ‘gloom and doom’ (presumably to justify their failures because ‘it’s all utter misery’), and a sincere and hard and tried to improve these tvrkte legal mechanisms (remember records from GS DD 2011th?).
And I’m interested in how the ‘predators’ DD-managed and manipulated by these announcements this great revenue growth, and that the diversified portfolio (energy, defense, transportation)? Or maybe they just see some before and others had m ** a?
Note: I shares and KORF DDJH, I do not ATPK NH and this is not a recommendation to buy or sell them. Clearly, if the shares DDJH KORF and still continues to grow at a very price I’m prepared to sell some so I kept some proportions in the portfolio. And maybe buy, who knows? Whoever would indeed could have known in this very dynamic world …