AMERICAN SHIPPER: JULY 2003

A piece of the American maritime dream

GCL, one of the largest transporters of humanitarian aid, wants U.S.-flag vessel.

BY CHRIS GILLIS

Global Container Lines wants a piece of the American maritime dream. That is, the company wants to operate its own U.S.-flag commercial ship, a job, which it believes, it’s well equipped to handle.

“ It’s frustrating being a U.S-owned and based company and being still treated like an outsider when it comes to cargo preference,” said Bijan Paksima, vice president of North American services for New York based Global Container Lines. “Most U.S.-flag vessel owners are ultimately foreign-owned corporations.”

GCL, and its general agent Shiptrade, arrange the movement of hundreds of thousands of tons of U.S. humanitarian cargoes a year on foreign-flag ships. Under U.S. cargo preference rules, the federal government requires that 75 percent of U.S.-financed food-aid shipments be transported on U.S.-flag ships. The Maritime Administration ensures that the food-aid agencies follow the cargo preference rules.

“We have made the point to MarAd: If you want to enhance the maritime presence of America, it’s not enough to create shipboard jobs on U.S.-flag ships. We need to create shore-based jobs for Americans as well,” Paksima said. “We would like to see a new category under cargo preference which would give U.S.-owned carriers operating foreign flag ships more of an edge.”

However, GCL isn’t waiting for Washington to change its long-held policies regarding cargo preference. Late last year, the company laid out a two-year business plan during which it would acquire its first U.S.-flag vessel.

“Although we’re not sure yet which type of U.S.-flag vessels we’ll acquire, the management has ade a commitment to do this,” Paksima said.

Maritime Tradition. GCL is managed by the Paksima family. The Paksimas are well acquainted with the intricacies of ocean cargo management and vessel operations. The family traces its maritime roots back 50 years to Iran.

Paksima’s Uncle Ali and father Kazem, the sons of merchants, started an ocean shipping business in Iran during the late 1950s and were ready when Iran embarked on ambitious modernization and restructuring projects, thanks to the oil boom.

In the late 1960s, the brothers started the first break-bulk shipping line operating between the United States and the Far East to Iran, known as South Shipping Lines-Iran Lines. They also backed the service with an in-house ship agency, freight forwarding, and a large domestic and transnational land transport operation. In addition, they established the first port management company in the Iranian port of Khorramshahr. In all, the Paksimas controlled a shipping empire in Iran that had more than 12,000 employees by the mid-1970s.

The brothers, however, suffered a significant setback in the early 1970s when the then national carrier Arya Shipping Lines engineered the forcible takeover of South Shipping Lines-Iran Lines. Prior to this move, Arya only had ocean transport service from Europe to Iran. The South Shipping Lines-Iran Lines takeover introduced Arya to the U.S. and Far East markets.

Unperturbed, Ali and Kazem Paksima quickly established a replacement carrier to South Shipping Lines-Iran Lines, called Iran Express Lines. The service would compete head on with Arya in the U.S. and Far East markets.

Iran Express Lines was considered the pioneer of containerization in Iran. Since the Paksimas still controlled their own port operations, they could quickly move containers through the congested port of Khorramshahr to various inland destinations using their own in-house trucking fleet.

The Paksima’s work in the Iranian maritime and land transport sector, however, started to come undone at the time of the Iranian revolution and the family had to leave Iran in 1980.

“We were lucky,” said Bijan Paksima, who was 14 years old when they left Iran. “We were able to replant ourselves and start over again.”

He admits that losing everything in Iran was “heartbreaking” for the family, but perhaps they came away with the most important thing intact. “Both my father and uncle had extensive experience in all phases of shipping and impeccable reputations,” he said. “Everyone was willing to do business with them.”

Ali Paksima stayed behind briefly to help clear out Iran-destined shipments that were dropped by the carriers in neighboring ports in the Persian Gulf.

The Paksimas arrived in the United States in 1981 and congregated in New York a year later. The family also immediately began reestablishing itself in the maritime industry by setting up Shiptrade, a vessel agent and ship consulting company.

During their early years in the United States, the Paksimas never lost touch with their Middle East shipping roots. In 1985, the family along with a group of investors founded GCL, a regional East African container service.

“There was a need for a container service between East Africa and the Indian Subcontinent,” said Bijan Paksima, whose cousin David (Ali’s son) oversees the operation. “It was an area of the world we knew best.”

GCL began with two-chartered multipurpose ships, which could carry a combination of container, roll-on/ roll-off and break-bulk cargoes. While a variety of freight was transported on these ships, the backbone of the trade for GCL was the movement of tea in containers from Kenya to Pakistan, returning to East Africa with industrial products, finished goods, steel, electronics, textiles and vehicles.

Today the carrier service includes five vessels, which operate in a 10-day service from Sharjah/Dubai in the United Arab Emirates to Mombassa, Kenya; Dar es Salaam and Zanzibar, Tanzania; and north to Karachi, Pakistan; India’s Mumbai (formerly Bombay) and Muscat; and back to Sharjah/Dubai. Mombassa is GCL’s primary hub in East Africa. The company manages its own freight terminals in this Kenyan port.

Over the years, many carriers have come in and out of the trade. GCL has provided container space on its ships to former U.S. Lines, Maersk and APL, because the carriers lacked direct service in the region. GCL and P&O Nedlloyd are considered the oldest players in the market. GCL controls about 60 percent of the trade, with about five other lines, including P&O Nedlloyd and Maersk Sealand, sharing the rest.

GCL relishes its ability to efficiently operate multipurpose roll-on/lift-off ships in the East Africa/Middle East/Indian Subcontinent trade. The company, for example, has become a large carrier in the Middle East used car business. Many of these cars arrive from the Far East at Sharjah. GCL transports these vehicles to Kenya and Tanzania.

“The beauty of our service is that it lends itself to a mix of cargo,” Bijan Paksima said. “It allows us to sustain the economic ups and downs of the region.”

In 2000, GCL extended its service toSouthern Africa. Two dedicated multipurpose ships operate between Dar es Salaam; Durban, South Africa; and Mozambique’s Maputo, Beira, and Nacala.

GCL also recently began to carry Lykes Lines’ cargo from Durban to ports in East Africa, including managing any inland transport work. The carrier has a reciprocal arrangement with European liner services Delmas and Nile Dutch, which transport cargoes from Durban on GCL’s behalf to West African ports. This feeder activity accounts for about 10 percent of GCL’s business today.

In addition, GCL operates a small feeder ship every few weeks from Mombasa to Comoros, Madagascar and Mauritius. P&O Nedlloyd and Delmas rely on GCL to move their shipments to these islands.

GCL has made some inroads into the U.S. and Far East ocean freight markets. In the early 1990s, after the devastating Iran/Iraq war, there was an attempt by the United States and Iran to reconcile their political differences. The U.S. government allowed the sale of some goods to Iran, of which GCL handled a large portion. The carrier, for example, moved 5,000 used Navistar and Mack trucks from the United States to Iran between 1990 and 1993, in addition to large shipments of grains, rice, pipes and PVC resin.

Today, the bulk of the U.S./Far East/ Midde East market is based on vessel charters with large project shippers. “We tailormake these voyages based on the cargo requirement,” Bijan Paksima said.

In recent years, GCL has become the largest foreign-flag charter vessel operator by tonnage for transporting U.S. government food-aid.

“We have the experience in Africa and the Mideast, which I believe gives us an edge over anyone else,” Bijan Paksima said. “Intimate knowledge of the African ports helps us to assist our customers with the rapid loading and discharging of their cargoes. If you don’t know what you’re doing, you can experience long delays.”

The company expects to remain heavily involved in food-aid transport to this region for the U.S. Agency for International Development, especially with the ongoing disaster relief efforts in Ethiopia and countries in Southern Africa.

“USAID cargoes fit well with lots of other cargoes that we transport to the Red Sea and India,” Bijan Paksima said. “Bagged rice, for example, serves as a good base cargo. Then we try to load in higher paying cargoes, such as turbines and vehicles in the remaining ship holds.”

GCL is also one of the largest carriers for the United Nations. The company managed the evacuation from Cambodia, Somalia and moved UN freight in and out of Bosnia, Kosovo and East Timor and Sierra Leone.

‘Full Circle.’ For the Paksimas, the recent U.S./British war with Iraq appears to mark a “full circle” in the family company’s maritime business in the Persian Gulf. GCL hopes to rapidly become a large player in the management of aid and restructuring project cargoes to Iraq.

With the downfall of Iraqi leader Saddam Hussein, the Bush administration has committed millions of dollars in food-aid and reconstruction assistance. USAID will provide 610,000 metric tons of food, worth more than $300 million, to feed the Iraqi people. This will add to more than 130,000 metric tons that the UN’s World Food Program had pre-positioned in the area when the war broke out.

GCL was one of two carriers to move the first shipments of USAID food aid to Iraq. On March 28, GCL’s Free Atlas dry bulk vessel loaded more than 28,000 metric tons of bulk wheat at the port of Galveston, Texas, and transported it to Iraq’s Umm Qasr seaport for discharge in early May. The company has also become involved in the movement of Iraq-bound cargoes that were dropped in neighboring ports at the beginning of the war. “All of this has to be moved and we know how to do it,” Bijan Paksima said.

AMERICAN SHIPPER: JULY 2003