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A Conversation with Michael Belmer,
President and Chief Executive Officer, Montship Inc.

Montship, one of the oldest and most respected shipping agents in Canada, has made careful succession decisions and continues to thrive in today’s ever-changing shipping environment. Our liner business has also grown — in a business environment where many shipping lines have opened their own offices instead of using agents. We have been fortunate that the lines we represent have retained our expertise. I believe the best

LQ: Please provide some introductory notes about your company.

Michael Belmer: Montship, originally known as Montreal Shipping, was established in 1925 and is one of the oldest and most respected shipping agents in Canada. Originally a family business, the management team at our firm has changed three times since its founding. Developing a tradition aimed at ensuring good governance, our succession model has been based on handing the leadership over to the next tier of middle management, rather than to third or fourth generation family members, who may not be engaged in the business with the same level of enthusiasm as their predecessors. I began working at this company in 1964 in the Treasury Department, moving steadily up to the position of Vice President of Sales and Marketing in 1984. In January 1991, five of us from middle management finalized the purchase of the company. When Mr. Guy Bouchat passed away in 1996, I succeeded him as President and CEO. My partners complete the senior management group of this firm: Brent Coulthard in Vancouver, Brian McDonald in Toronto and Domenic Bravi here in Montreal. Jim Allan, who is part of the original five that bought the company, developed and runs Trealmont Chartering Inc. and Trealmont Logistics (USA) Inc., with offices in Montreal, Vancouver, New Orleans and South Carolina.

LQ: Please provide a brief overview on your firm’s operations.

Michael Belmer: Fundamentally, we have been a ship agent and chartering company for more than 80 years, handling several areas of operation. We are a liner agent for several prestigious carriers, such as Bermuda Container Line, Great White Fleet, Hamburg Süd, Hoegh Autoliners, MOL and Swire Shipping. We also own Trealship Services Inc., a repair company specializing in refrigerated containers and mobile climate control systems, with offices in Halifax, Montreal, Toronto and Winnipeg, and Prairie International, a Winnipeg-based trucking company. Our company has a dozen locations from coast to coast, from Newfoundland to B.C., with almost 200 employees. Our head office is in Montreal, with an estimated 15 percent of its business in this city, and the balance spread across Canada. A significant area of growth has been our chartering group. Our liner business has also grown — in a business environment where many shipping lines have opened their own offices instead of using agents. We have been fortunate that the lines we represent have retained our expertise. I believe the best measure of performance has been our customer relationships and market share.

LQ: How have circumstances in the Middle East impacted vessel costs?

Michael Belmer: The biggest impact relates to fuel prices, which have been affected by the instability in the fuel supply. That in itself has moved many carriers into loss position.

LQ: With respect todrayage, is the shortage of truck drivers affecting your business and that of others in the industry?

Michael Belmer: In our business, most of the costs associated with trucking are covered by the importer/exporter. We have a small trucking company in Winnipeg that focuses mostly on refrigerated containers and uses 35 owner/operators who own their trucks. The real problem has been with the trucking companies that own their trucks, since they often appear to need drivers.

LQ: In terms of the railways, is there a capacity problem, and what is its impact?

Michael Belmer: With regard to the infrastructure, CN and CP have addressed the capacity issue through using each other’s rail lines. They have put in more sidings and have made some other significant investments. It is also noteworthy that Prince Rupert has been added as a major facility. This does not necessarily help our Canadian shipments, however, since the development of the Port is primarily targeting shipments destined for Chicago and the U.S.Midwest. The equipment balance is a major factor impacting railway capacity. On average, for every three containers that arrive from the Far East and Europe, two return full, with the third container remaining empty. As a result, we normally have a surplus of empty containers and we must look into ways of returning them, but not necessarily on the railways, creating an imbalance of rail equipment. The biggest infrastructure problem pertains to the terminals, especially in Vancouver. From time to time they become saturated and, consequently, containers are sitting at the terminal that cannot be loaded onto railcars in a timely manner. If we continue to increase business at an annual rate of 6–8 percent a year, these terminals will not be able to accommodate this growth. The Delta, B.C., port is developing, but at a very slow pace.

LQ: What is the impact of rising fuel costs?

Michael Belmer: Today the cost is about $500 per ton for fuel. For vessels transmitting from the Far East there is a $1,000,000 additional cost in fuel compared to last year, which means an average cost of over $900 per container — one way. And using the rule of thumb, whereby three containers arrive in Canada and two are returned full, it means one empty is going back;so one third of the containers coming in must support the cost of bringing the empty container back.

LQ: What are your forecasts for trends for 2008 and as far as 2010?

Michael Belmer: In the charter market, we see the rates holding steady for about three years. The supply of vessels will increase, but so will the demand for them. This forecast is contingent, to a large extention trade with China, which is importing more foodstuffs, such as wheat and soybeans. In regard to Europe, they have had a poor crop this past year, and as a result, shipments of agricultural products are rising to levels where forest products have traditionally been. In summary, the demand for breakbulk vessels and bulk vessels continues to be consistent.

LQ: Do you see a weakening or strengthening of the charter market?

Michael Belmer: Our chartering department forecasts that the next three years will be strong. The manufacture of ships has not kept pace with demand, which is clearly evidenced in container business — where more container ships are being built, but they’re also full and used to capacity. Today we are raising rates to cover the costs of fuel, and the overstretched infrastructure has become a major and costly issue. Delays of ships in port are significant and also add to costs, but overall, the charter market outlook is very good.

LQ: How does the U.S. economy impact your company?

Michael Belmer: In Canada, the economy in general is very dependent on what happens in the United States. In our chartering and liner agency business, when the U.S. experiences a recession, it can result in our company’s best years, because ships calling at Canada have more available space to fill.

Questions for this interview have been prepared by LQ’s Maritime Executive Editor, Ed Kearns.