Norway

What was once considered a conglomerate in the shipping industry, Leif Hoegh & Company has redefined their focus to better position themselves in the extremely competitive shipping industry.

During the early years, LHC was involved in almost every aspect of the shipping business from gas and oil to liners and even livestock. A broad spectrum of services that proved at the time to be the appropriate strategy. But as their customers, the economy, and the industry changed, so too did LHC.

With their roots securely anchored in the Norwegian shipping industry for over 74 years, LHC has gone through a shift in its operations, moving away from it's traditional vessels to focusing most of their attention on Ro/Ro (roll-on/roll-off) and LNG (liquified natural gas) carriers.

Currently, LHC's operations are segmented in the following way: Ro/Ro generates 63 percent of business with an operating profit of 8 million dollars, while contract shipping (LNG and dry bulk) makes up 18 percent with profits of 4 million dollars.

Meanwhile, cool containers (or reefers) rakes in 12 percent of the revenues with a profit of 14 million dollars, including a sales gain of 12.5 million dollars. The open hatch liners of Hoegh Lines bring in 7 percent of LHC's earnings and 1 million dollars in profit.

While all activities have yet to be fully divested, according to Thor Guttormsen, President of LHC, the transition is well underway.

"Mentally and administratively, we are there now. In terms of assets, we are selling them. This takes time, but it is being done. I would express it in a way that we are totally focused on two areas - Ro/Ro's and LNC's. Going forward from 2001 we are totally focused," he says.

The Ro/Ro business continues to be a growing market worldwide. But, the traditional position companies have taken in the past has shifted due to changing customer needs and well as the types of vehicles being transported. Guttormsen believes its Ro/Ro operations is strategically positioned to accommodate these changes,

"We have to look at each customer and market case by case. For example, when it comes to cars, 40 percent being transported are new cars, 30 percent used cars and 30 percent so-called "high/heavy" vehicles. But, it has been increasingly expensive in certain countries to register a "slightly used" car so we have seen an increase in used car exports to new regions," Guttormsen points out.

These days, LHC is working more closely with companies exporting cars out of countries like Japan due to high registration costs and are transporting a large number of cars to South America. A cargo and shipping route that was uncommon several years ago.

LHC has been involved in the LNG industry for over 30 years and they have seen a positive trend from last year in terms of operating profit. Currently, two of their three vessels are operating under long-term charter agreements, while the third vessel was recently overhauled and contracted out to Enron under a 17-year charter deal. LHC is also responsible for the operations of a fourth vessel that it does not own.