Bold and responsible leadership in uncharted waters: The future of BW Tankers

• Main Authors: KOH, Annie, JOSEPH, Flocy, CHEAH, Sin Mei
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: Maritime; shipping; megatrends; family business; leadership; acquisition; sustainability; Corporate Finance; Finance; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/254; https://smu-my.sharepoint.com/personal/chiweichan_smu_edu_sg/_layouts/15/onedrive.aspx?listurl=https://smu.sharepoint.com/sites/admin/CMP&id=/sites/admin/CMP/cases/SMU-19-BATCH [PDF-Pic]/SMU-19-0012 [BW]/SMU-19-0012 [BW].pdf&parent=/sites/admin/CMP/cases/SMU-19-BATCH [PDF-Pic]/SMU-19-0012 [BW]
• Institution: Singapore Management University

Set in January 2019, the case follows Andreas Sohmen-Pao, Executive Chairman of the BW Group, as he reflects on a fruitful year that passed and looks forward to an exciting and equally challenging year in 2019. BW, a global maritime group operating in the oil tanker, gas carrier and offshore floating infrastructure sectors, was a third-generation family-run business. Established in 2005, BW was the result of a merger of two long-standing shipping firms - Bergesen from Norway and World-Wide Shipping in Hong Kong (the latter was founded by Andreas’ grandfather, Sir Yue-Kong Pao). Like many of the preceding years, BW had its share of highs and lows in 2018 too. The highlight was the successful acquisition of Hafnia Tankers by BW Tankers, a BW Group subsidiary. The eventual merger of the two would elevate BW Tankers to become the market leader in product tanker shipping with the largest commercially-managed fleet of more than 150 vessels. However, over the past few years, the tanker market as a whole had sunk into the trough of the shipping cycle. Demand for tanker chartering was unable to keep pace with faster growth in fleet capacity, forcing tanker companies to lower freight rates and leading to depressed earnings. The shipping business was widely perceived to be risky. There were not only short-term market cycles to contend with, new and longer-term challenges surfaced every now and then - such as environmental sustainability concerns (specifically the IMO2020 regulation on curbing ships’ sulphur emissions), as well as opportunities and threats from technology (e.g., blockchain, artificial intelligence and cyber-attacks). Diversification had successfully enabled BW to weather challenges in the past, and its current strategy was to actively invest in diversifying and scaling up across multiple shipping segments. Andreas had to chart the way forward for BW in the coming years - how could he best navigate the oncoming headwinds?