Emerging Stronger
    Category: Maritime Economy By : Ardian Wibisono Read : 814 Date : Tuesday, March 15, 2016 - 05:27:57

    Santirta Matendano for Forbes Indonesia

    The good old days for shipping company PT Humpuss Intermoda Transportasi ended along with the Suharto regime in 1998. The company started as a LNG division of PT Humpuss, a holding company owned by former President Suharto’s favorite son Hutomo “Tommy” Mandala Putra. Entering the shipping business in 1990 and operating the biggest LNG fleet in the world at the time, the liner had many privileges back then due to its ownership. But soon after Suharto stepped down, those ties became a liability, making it hard for the company to build its business. President Director Theo Lekatompessy says some questioned the company’s professionalism as soon as they heard the name.

    The situation got worse in 2012 when its Singapore based subsidiary Humpuss Sea Transport Pte. Ltd. was declared bankrupt by the Singaporean High Court after failing to pay for a chartered ship worth over $140 million, the result of a bad investment decision in 2007. Like other Indonesian shipping companies, at the time Humpuss had expanded its fleet in 2007 to ride on the commodity super cycle, not knowing it was about to end soon.

    “When everybody is heading towards the same direction, it will surely destroy supply and demand, it’s just a matter of time. Commodity cargo was never our core competence either, it is being a liquids and gas tanker. It was bad timing and we looked at the wrong road map,” says Theo, now 56.

    Tommy, who remains a major shareholder with a 46% stake, asked Theo to become president director in 2012, after he joined the company as a managing director in 2008. He already had extensive experience in the shipping business and an academic background for the job. Theo holds two master degrees in law, the first in international law from Erasmus University in Rotterdam, with a focus on international arbitration.

    Theo is well aware that a good reputation is everything in business. So, despite the bankruptcy ruling, he decided to still pay the debt. “In this business, once you don’t deliver what you promised, you are finished,” he says. After settling with creditors in a debt-restructuring scheme in 2014, Theo launched a turnaround plan focusing on three aspects: returning to core competence, heading to a “blue ocean,” and building a winner’s mentality. Like a person who just had an accident, the first thing that should be done is to stop the bleeding, Theo says. The noncore businesses were causing a loss of cash flow, so coal transport and bulk cargo transport were slashed since both were no longer promising due to the current low commodity prices and slowdown of the global economy. Both also happen to be a “red ocean” where competition is already fierce.

    The company’s core competence is in oil and gas transport, and actually gives Humpuss a lead in the search of the “blue ocean”—a wide open market opportunity. The nature of the business creates a huge barrier to entry for competitors as vessels are expensive and require a high international standard of safety and operation. Theo claims Humpuss is the only Indonesian company that owns its own vessels and operates them with its own crew, and there are only a few international competitors as well.

    Despite the oil prospect being gloomy, the opportunity in the LNG business is still good since the government wants to fuel 13,000 MW of the targeted 35,000 MW of new power plants with LNG. Humpuss has just won a seven-year delivery contract recently worth nearly $100 million to transport LNG from Bontang, Kalimantan, to a state-owned PLN power plant in Bali. Currently the company is also bidding for a LNG delivery contract with state-owned Perusahaan Gas Negara (PGN). Humpuss’s core competence in liquid and gas transport is also in line with its holding company’s business. The Humpuss holding company operates several petrochemical plants such as a methanol plant, an aromatic plant and a refinery. “We won against Norgas in Bali and now are competing with Duta Marine for PGN, so there aren’t many players,” Theo says.