EUROPEAN LINES SEE OPPORTUNITIES . . .

EUROPEAN LINES SEE OPPORTUNITIES . . .

While the 1990s undoubtedly will be much tougher for the car carriers than the 1980s, the three largest European auto-carrying ship lines are not showing any obvious anxiety about the future.

Instead of worrying, they accept there will be changes and they are confident they can adapt. They're keeping a close eye on the newly opening trade routes as they consider the possibility of expanding their range of services.The restructuring of the world car market "is both a threat and an opportunity," said Nils-Hendrik Jaeger, vice president of Oslo-headquartered Norwegian Specialized Autocarriers, more popularly known as Nosac.

Despite a contracting market, Nosac enjoyed its best year ever in 1989, according to Mr. Jaeger, carrying the equivalent of 600,000 cars.

Nosac operates a fleet of around 15 vessels, of which 10 are provided by the line's two shareholders, Norwegian American Line A/S, which owns 70 percent, and Wilh. Wilhelmsen Ltd. with a 30 percent interest. Other ships are on long-term and short-term charter.

While Mr. Jaeger agreed with other analysts that the overall vehicle shipment market has reached a mature stage with no overall growth for some years, he reckoned there are plenty of opportunities for those operators willing to be flexible.

Helge Solheim, company secretary at Hoegh Ugland Auto Liners A/S, admits that competition will be tougher. Car specialists could find themselves competing directly with container carriers, he noted, as manufacturers start to ship more parts and components to overseas assembly plants rather than export built cars.

On the other hand, business is growing for the shipment of other roll-on roll-off traffic such as construction equipment, according to Mr. Solheim, especially from Europe to the Middle East and Far East.

Hoegh Ugland is a joint venture between two Norwegian companies, Leif Hoegh & Co. A/S and the Ugland Group. The line operates a fleet of 14 owned vessels plus about an equal number of chartered ships.

The largest European vehicle transporter is Wallenius Lines AB, Stockholm, Sweden. Wallenius also carried more roll-on roll-off traffic in 1988 and 1989, despite the overall market decline, according to Christer Olsson, its executive vice president.

The line, which has been experimenting in a modest way with door-to-door services for the past couple of years, is expected to unveil two new initiatives at the annual roll-on roll-off conference in Trieste, Italy, this week designed to improve both the quality and breadth of service.

Wallenius claims to account for around 9 percent of the world's vehicle carrying fleet. The company operates 26 vessels with a combined capacity of 130,000 cars. Nosac and Hoegh Ugland each have around 6 percent of market capacity, according to statistics supplied by Wallenius.

The only European car manufacturer to run its own shipping line is Volkswagen, which operates a fleet of 10 vessels.

Vehicle exports from Europe to North America fell 11 percent last year compared with 1988, according to Wallenius. Japanese vehicle shipments to Europe were marginally higher, though, supported by an unexpected increase in total West European car sales last year of 3.6 percent.

The Wallenius figures indicate that shipments from Asia to North America declined 10 percent, due in part to the growth of Japanese transplant facilities in the United States.

The relative confidence with which the three independent European carriers view the future partly reflects the state of the world fleet.

The market is roughly in balance, thanks to the scrapping of older ships, which, over the past two years, has exceeded the volume of new construction. The average age of the world car and truck carrying fleet is only around seven years old, according to data published by Wallenius, and very few new car carriers are due to come into service in the next few years.

Unlike their Japanese counterparts, European lines seem relatively unconcerned about the 15-year-age limit mandated by automakers for ships that carry their cars. Rather than fearing a sharp jump in insurance premiums as vessels grow older, Europeans executives say the required phase-out of old ships has helped to prevent surplus capacity.

Furthermore, the vehicle shipping trade is a difficult market for newcomers to enter, in stark contrast to the much more cutthroat liner shipping sector.

Wallenius, a privately owned company, claims to carry around 30 percent of vehicles exported from Japan to Europe. It also holds a large share of car and truck exports from Europe to North America, with the exception of Volkswagen vehicles and some Saab cars.

A major growth area for Wallenius is the shipment of vehicles from the United States to Europe.

Nosac carries cars built by General Motors and Ford in Asia to the United States. It shipped 265,000 cars from the Far East to North Amrica last year and signed an agreement with Wallenius to establish a joint service called Wallnos to carry cars fromthe U.S. West Coast to the Far East.

The line also ships Chrysler cars from the United States to Europe, and operates between Japan and Europe in partnership with Nippon Yusen Kaisha. Nosac also carries 50 percent of all European roll-on, roll-off exports to China, Mr. Jaeger said.

Hoegh Ugland is a major carrier of Nissan cars to Europe and also operates services between the U.S. East Coast and the Middle East and Far East, and between northern Europe and the Middle East and Far East. An important growth area, said Mr. Solheim, is the shipment of construction machinery and heavy rolling stock to the Middle East.

Ugland Car Carriers, one of the owners of the Hoegh Ugland joint venture, is reported to be close to an agreement to transfer control of its European short-sea fleet to the Japanese ship line Nippon Yusen Kaisha. That arrangement is not expected to affect activities of Nosac or Hoegh Ugland.

The three Scandinavian lines hope to take full advantage of the car industry revolution taking place on their own doorstep. The key to success, said Arne Koch, Wallenius president, is to be as flexible as possible and ready for any number of different scenarios that may emerge in the challenging years ahead.