The Chelsea Dominance. The declaration of intent?
When the “new shipping world” was being built there was Phoenix Petroleum first which was not into shipping anyway. Many thought Phoenix Petroleum would end up like the “independent” oil players then which had a few gasoline stations here and there but were never a threat to the major oil players which have foreign genes. But with the smiling face of the world-famous Manny Pacquiao as mascot, Phoenix Petroleum grew until it challenged the Big 3 which were Petron, Shell and Chevron (which was the former Caltex and Mobil). That was blasphemy for the oldtimers which saw Filoil never got anywhere before.
Phoenix Petroleum got far because they changed the rule of the game. Where before local oil companies had to invest in local refineries to be granted permission to operate, Phoenix Petroleum simply had to import fuel from Singapore and it so happened in Southeast Asia oil prices are only high in the Philippines because a lot of taxes are tacked on to the price of fuel as oil is the milking cow for taxes of the government which rules a vast horde of people exempted from paying taxes because they are too poor.
Along the way to being the fourth Oil Major, Phoenix Petroleum established Chelsea Shipping to handle their fuel transport needs and the company operated a fleet of tankers. But Chelsea Shipping never operated the biggest tanker fleet in the country and their fleet never exceeded ten tankers.
But this year, 2017, Chelsea Shipping made a lot of sea-shaking moves in shipping. Early this year rumor leaked out already that they have already acquired majority control of Trans-Asia Shipping Lines Inc. (TASLI), a Cebu-based regional shipping company with Visayas-Mindanao routes. A bare few months later a boardroom fight erupted in 2GO, the only national liner shipping company left when Dennis Uy, the principal of both Phoenix Petroleum and Chelsea Shipping tried to claim what they felt was their rightful representation after buying shares and the old management group represented by Sulficio Tagud, the old top honcho resisted. But in the end Tagud and company waved the white flag after 2GO gained market value because of the fight and Dennis Uy took control of 2GO.
Weeks passed and the local shipping world was rocked again by a new development when it was announced that Chelsea Shipping is acquiring Starlite Ferries Inc., a Batangas-based regional shipping company lock, stock and barrel. Starlite Ferries has routes to and from Mindoro and its fleet is being reinforced by newbuilds from Japan acquired from a loan from a government-owned bank. It seems the coffers of Phoenix Petroleum and Chelsea Shipping are overflowing to the brim. Is there another acquisition in the making?
Chelsea Shipping now has foothold to the top three passenger shipping hubs in the country which are Cebu, Manila and Batangas. In tankers they are also strong in another hub which is Davao which has the cheapest fuel in the whole country courtesy of Phoenix Petroleum and which piqued Ramon Ang enough that he chopped the fuel prices of Petron. And so Davao fares remained among the highest in the country. Does it make sense? Nope. Maybe it is the moves of Chelsea and Dennis Uy which only makes sense.
I do not know if a second “Great Merger” will happen in Philippine shipping after the first “Great Merger” of 1996 which created William, Gothong and Aboitiz or WG&A, the predecessor company of 2GO. That first one ended in disaster and it only resulted in the death of two great historical shipping companies.
Will history repeat itself? I have my doubts. This time around there is only one top honcho which is Dennis Uy unlike before there was a big merged company with three heads pursuing some kind of a mirage. Actually it could be great for Philippine shipping as Dennis Uy and his patron are both loaded and might have the money to make moves in shipping without going to the banks. Who knows if the moribund shipping industry is revived with their coming?
Now if only Manny V. Pangilinan (MVP) bought out Negros Navigation Company (NENACO) outright some 15 years ago instead of being just a “white knight”. NENACO is one of the merged companies in 2GO. We really need investors with deep pockets in shipping. That is what might turn things around and not due to some government blah-blah.
Is there a renaissance of Philippine shipping in the horizon?