Janusz Kuzmicki, commercial manager of the Polish division of Chipolbrok, explains how the Sino-Polish company works.

Chipolbrok is the first joint venture made between China and Poland. Since its establishment in 1951, the tendency has been to chide the shipowner for secrecy, wondering how is information shared, is the power balance shaky and is the Chinese government behind the operation?

“Nonsense,” replied commercial manager Janusz Kuzmicki who’s been working at the Polish office for two decades. The company hasn’t said much to the press for two storming years and now wants to set things straight.

Chipolbrok is short for Chinese-Polish Joint Stock Shipping Company and is 50:50 Chinese and Polish owned. “In those years China saw Eastern Europe as a natural partner of choice, as they were oriented in similar ways,” said Kuzmicki, speaking at the company’s plush Gdynia office.

Apart from shipping, Chipolbrok is involved in other activities, including real estate and financial capital investments, but “shipping is the most important.”

What Chipolbrok offers is a essentially a liner service, “working on a schedule, with regular customers and carrying contracts for investment cargoes,” Kuzmicki explained. There are about 21 people working in the shipping division in Gdynia and the same number in Shanghai.

Trade was initially bilateral and based on clearing, he said, but political changes in 1989 forced the company to go into the open market and compete. It took the risk in Germany and in the early 1990s the creation of a regular liner service from Hamburg to China made things more comfortable – until now.

Chipolbrok has been hit by the financial crisis and today has 19 30,000-tonne cargo ships and six newbuildings on order from Dalian for delivery to 2011. Some of the fleet over two years may need to be replaced because “all the time we need new ships.”

Usually Chipolbrok would wish to expand but cannot do so in the current climate. “We are not expanding new services right now. Last year the Far East wanted to expand and we also had the idea of expanding into Africa but suspended it.” Additionally, a proposed route from China to the Gulf was axed.

Low exposure

One reason that business didn’t collapse during the credit crunch is that the company is not connected to spot trades: “Things are not bad, and in light of the financial crisis we cannot complain. We are not as much exposed to the risk as the spot market,” said Kuzmicki.

“Oil markets on the other hand, go down and stop trading; they are totally exposed to this risk and are desperate for other pieces of the market. In theory this means a kind of danger for us, but in reality we are not fighting.”

How Chipolbrok conducts business has intrigued the industry for years, and in practice it’s very simple. Operations from Europe and the US are operated by the Gdynia office, while operations in Far East are undertaken by Shanghai.

Rumours of privatisation or a take-over from the Chinese government are flatly denied. “We never have plans to privatise, it’s never necessary,” Kuzmicki stated. Shareholders are gaining dividends and a lot of money is being invested in newbuildings.

There are two managing directors and Kuzmicki sits with his Chinese partner Chen Qiang. “We sit together. There is an equivalent of myself in Shanghai and about 90% of our business is done over email,” he explained.

He likens the relationship to a holy union. “It’s like honesty and trust in a marriage. We are honest and straight with the Shanghai office. Politics has nothing to do here. There are no surprises.”

Chipolbrok class

Chipolbrok’s vessels are classed by Chinese class society CCS as well by the Polish Register PRS. Kuzmicki commented: “Chipolbrok would be glad to see PRS reinstated into IACS, as it makes our job more difficult sometimes because some of our vessels aren’t IACS-classed.”

Fairplay asked PRS whether it can apply for IACS membership immediately and PRS board member Jerzy Wyrzykowski responded: “PRS satisfies the IACS quality requirements but cannot satisfy the quantitative requirement of classified tonnage (8M gt). Thus any application for membership is pointless until changes in criteria are introduced.”

IACS is currently being investigated by the EU Competition Directorate for alleged restrictive business practises.

Fairplay International Shipping Weekly, 7 May 2009