Erik F. Johnsen, president of International Shipholding Corp., sat at the head of the huge, mostly empty boardroom table overlooking New Orleans, shrugging his shoulders.
Although Mr. Johnsen's company is making a healthy return with lighter- aboard-ship, or LASH, vessels, he recently read yet another article referring to the alleged failure of LASH. "People always dispute its success," he said.The numbers tell a different story. International Shipholding, one of the world's few LASH operators, earned net income of $15.1 million last year on revenue of $309.2 million, including $18.3 million in U.S. government operating subsidy. Two outside analysts say the company is on track toward higher earnings this year, after racking up a 20 percent profit gain in 1990.
International Shipholding is the parent company of U.S.-flag carriers Waterman Steamship Corp. and Central Gulf Lines Inc., and foreign-flag Forest Lines Inc.
Sally H. Smith, financial analyst for the Baltimore-based investment firm Alex. Brown & Sons Inc., said the company is "doing fine" in 1991. She predicted earnings will rise about 5 percent to $15.8 million this year.
''They provide services in a niche of the market, and they do a good job at it," she said.
James Winchester, vice president of Mabon Securities Corp. in New York, said this year's net income would total $15.5 million. "They'll turn in a solid performance for an otherwise recessionary year."
Alex. Brown and Mabon both make a market in International Shipholding stock; Alex. Brown also has managed public stock offerings for the company in the past three years.
LASH is a unique system involving huge, specially built motherships that hoist out of the water and carry up to 89 barges, each with a capacity of 375 tons. "LASH offers the convenience of a 375-ton package," an International Shipholding executive said.
Doubts about the system seem based on the fact that LASH never gained the widespread popularity of containers.
Other companies adopted the technology after its debut in the late 1960s, including Delta Steamship Lines, Pacific Far East Line, Prudential Lines Inc. and Farrell Lines Inc. But Farrell dropped LASH; the three other companies went out of business.
Only about two dozen of the ships remain; International Shipholding, believed to be at present the only American LASH operator, owns 10. Thus, the company has little if any direct competition. Other carriers shy away from LASH because it differs greatly from general international shipping, Mr. Johnsen speculated. "LASH involves a shift in perception from a shipping line to big barge line."
Starting such an operation might cost hundreds of millions of dollars, he added. "You have to operate units on both sides (of a trade route) with the cost factors of normal barges and tugs."
Ms. Smith added that large maritime operators perceive LASH as niche market "that's not big enough for them to worry about."
But International Shipholding makes money in that niche. Mr. Winchester attributed the profitability in part to firmer shipping rates for bulk cargo. LASH vessels frequently carry cargoes such as forest products and steel.
The company also benefits from U.S. military business. The armed forces stored vast amounts of ammunition in the barges during the war in the Persian Gulf. Mr. Johnsen noted the war improved the company's bottom line.
Post-war reconstruction, with shipments of cargo such as cement and steel, is likely to provide further opportunity, Mr. Winchester said.
It is uncertain how long International Shipholding will continue with so few other contenders in LASH. "One never knows when competition will raise its head," Mr. Johnsen said.
The company is content with the status quo. No major service changes are planned, and it will continue to deploy about three-quarters of its fleet under long-term charters or contracts, rather than liner trades.
Mr. Johnsen declined to forecast the company's earnings for 1991, but hinted at continued profitability. "The past is an index of our future," he said. "Looking forward, I feel comfortable that we will continue to see opportunity."