Essberger eyes expansion in chemical tankers market

The largest operator of parcel tankers in the European coastal trades considers move into deepsea sector.

The privately owned shipping business, which is now run by the third generation of the family, is preparing to celebrate Essberger’s 100th anniversary in 2024.

JOHN T Essberger, the largest operator of chemical tankers in the European coastal trades, is eyeing numerous options including new markets, larger ships and possible acquisitions as it seeks to expand within its core business sector.

Already far bigger than its nearest rival, the Hamburg-headquartered company sees scope for consolidation in this highly fragmented sector, and opportunities to broaden its geographic spread.

“Our aim is to grow and strengthen our market position,” said Eberhart von Rantzau, managing director of the Deutsche Afrika Linien/John T Essberger group of companies, who runs the family-owned business alongside his brother Heinrich.

The renewed focus on tankers follows the sale of DAL’s Europe-southern Africa container line service to Hapag-Lloyd earlier in the year.

Although a long-established and highly respected player, and a key member of the Southern Africa Europe Container Service consortium, DAL recognised it was too small to remain in the liner trades that are now dominated by global heavyweights.

But DAL chose its moment well with the sale, which included the 6,500 teu DAL Kalahari (IMO: 9400095) plus its agency business, finalised at the height of the container shipping boom when secondhand ship prices were soaring.

Since then, freight rates have come crashing down as demand stalled, depressing vessel values as well.

But the group has not sold all its container interests, having retained ownership of three 2,500 teu boxships that are chartered out. DAL has also acquired Durban Container Park in a joint venture with its agency partner Sharaf Group, which provides container storage space in both Durban and Cape Town.

Neither does Dr von Rantzau rule out further investments in the container sector at some stage in the future, although there is nothing on the agenda right now.

Instead, the group is concentrating on tankers, the backbone of the business since it was founded in 1924 by John T Essberger, the grandfather of Eberhart and Heinrich.

Essberger now owns 32 parcel tankers of between 4,000 dwt and 11,500 dwt, while the recent joint venture with Norway’s Stolt-Nielsen brings the combined fleet in the E&S Tankers pool to 45.

This is more than twice the number of the second largest operator in this rather low-profile but vital shipping sector which handles more than 300 different commodities in highly specialised chemical carriers, all fitted with stainless steel cargo tanks. The total number of similar parcel tankers in the European coastal trades is around 160 vessels.

The E&S Tankers pool has carried 6.7m tonnes of cargo in 2022, and major customers include big industrial groups such as Dow Chemicals, Shell and Borealis.

Many of the market participants operate just a few vessels and, with shipowners now facing so many regulatory demands, smaller operators may decide to withdraw once current market conditions start to ease from some of the best levels ever experienced. Demand is so strong now that customers are prepared to accept ships of up to 30 years old. But age restrictions will return once the market subsides, which is when a further round in rationalisation is likely.

That could offer investment opportunities for Essberger as it considers numerous ways to grow the business.

Essberger has already completed several acquisitions in recent years, starting with the Dutch group Vopak Chemical Tankers in 2003. United Chemical Tankers of Germany was bought 2011, followed by Crystal Nordic Tankers in 2017.

Speaking to Lloyd’s List in Essberger’s head office on the banks of the River Elbe, Dr von Rantzau said another area being considered was the possibility of expanding from European coastal operations in the Baltic, North Sea and Mediterranean, to the deepsea chemical tanker trades across the Atlantic.

That would probably require larger tankers up to about 30,000 dwt, according to Dr von Rantzau.

While opportunities in other sectors of the tanker industry are being explored, “the main focus is on how to expand our core chemical tanker business”, said Dr von Rantzau.

In the meantime, the company aims to have its first zero-emission vessel in service no later than 2030. By 2045, the goal is a climate-neutral fleet.

As part of that programme, Essberger is investigating wind-assisted sailing, as well as blasting and repainting vessels and cleaning the propeller on a regular basis, while ship speeds have been optimised. Essberger has also tested biofuels that will gradually be introduced across the fleet.

Regarded as traditional shipowners who always invest a large amount of equity into the ships they buy, the Essberger family currently has four 6,600 dwt chemical tankers on order in China for delivery in 2023 and 2024, when the company will be celebrating its 100th anniversary. These will be LNG-fuelled with the flexibility to switch to methanol or ammonia and will also fitted with shore-power equipment.

In the wake of the KG crisis that did so much harm to the German shipowning community when many newbuilding orders were driven by tax incentives instead of demand, and funded by borrowing rather than equity, Essberger’s position is clear.

“If you want to buy a ship, you must be able to [afford it], and not depend on banks or financial institutions,” said Dr von Rantzau. “You should always be able to buy outright. That is very important.”