A policy of chartering in tonnage gave Samudera Shipping Line the flexibility to emerge relatively unscathed from the economic turmoil of the last four years and build the second largest feeder business in Southeast Asia.

But the Indonesian-based, Singapore-listed company is going the other way with its smaller, but growing, industrial shipping business, buying ships to pursue highly focused long-term transport projects.

Samudera's executive director for investor relations, Dhrubajyoti Das, insists the two contrasting strategies make good business sense: "For container shipping you need to have control of your ships' sizes. It is a very dynamic market and we need to retain flexibility -- upsize or downsize, increase or decrease."

Not so for the company's bulk business, he continues, where all ships are linked to long-term charters. "You need more stability in this side of the business. If you don't have the asset long-term, things are not sufficiently under control."

The strategy has won plaudits from the market. "With a fleet mainly consisting of chartered vessels, cashflow stability is underpinned by Samudera's ability to shed excess capacity during an economic downturn," says one Singapore-based analyst. "Also declining freight rates are mitigated by a corresponding decline in vessel charter rates."

The feeder business brings in the vast majority of Samudera's business and 90% of its profits. The line operates 26 ships ranging from 1500-teu down to 122-teu, only two of which the company owns. The rest are chartered in, typically for periods of between six to 12 months. The company's largest ships have been taken in for longer in a deal arranged through Japanese trading house Mitsui. The newly built ships were taken for five years and delivered through 2000 and this year.

Increasing ship size reflects the growth of vessels run by the main line operators (MLOs), Das says. "There is a rule of thumb that says feeder ships should be one quarter of the size of the ships they are serving, so our vessels have to get bigger," he explains.

Samudera has good relationships with most of the MLOs serving Asia, Das claims. "We have a unique, broad-base of customer support and relationships with all the major lines. We should be willing to serve everybody." He does concede particularly strong ties with Hanjin, MOL and Hapag Lloyd.

Samudera's main competitors are Regional Container Lines (the biggest regional feeder operator), and PIL and, to a lesser extent, Djakarta Lloyd. Recent start-up New Econ Line is also starting to make an impression on the market.

Samudera's Indonesian roots can be seen in its business. The country still accounts for just over half of the company's revenue, but this has declined sharply as the line has expanded its geographical reach.

The company now runs services to all Southeast Asia countries as well as China, Australia, the sub-continent and the Middle East. Das says China is likely to provide the greatest opportunities for future growth. At present, Samudera operates just two weekly services to the China: one to Qingdao and another to Hong Kong and Shanghai. Further services are likely in the near future.

However, Das sees greater growth opportunities coming from the industrial shipping business, operated under its Foremost Maritime subsidiary.

Foremost owns nine ships: two oil tankers, seven chemical carriers and one cement carrier. All are linked to long-term charters or contracts of affreightment.

"We want steady partners who have shipping requirements for particular projects. We are looking for customers who require steadiness," Das says.

Industrial shipping clients include Indonesian state oil company, Pertamina, which has two Samudera tankers on time charter and Japanese chemicals concern Asahi.

At present Foremost contributes around 10% of Samudera's profits but Das would like to see this rise to around one quarter. Foremost operates five ships with Indonesian cargoes and five elsewhere in the region.

"We are trying to diversify the business geographically, but it takes time to find the right customers," Das explains. "You have to understand their distribution patterns and make sure there is a need for a long-term contract, because it involves the acquisition of an expensive asset."

Das sums it up thus: "we are offering a tailored solution to our customers." This stands as a good summary of the Samudera credo: carefully tailor you operations and financial exposure to the particular needs of each business.

Rare bird in Indonesia

For a company heavily focused on Indonesia, Samudera's financial performance over the last five years marks it out. Its light-footed approach to fleet management allowed the company to respond quickly to the demands of the Asian financial crisis that swept through the region from 1997 onwards.

"Since it listed in 1997, Samudera's performance has been commendable," says a research note by Jardine Fleming, "despite operating in a tough environment where some of its peers were badly hit by the regional crisis."

Samudera's latest set of financial results bears the comment out. The group saw turnover in 2000 increase by 22.8% compared to the year before. Operating profit rose 7.5%. Earnings per share were 4.5 cents.

This contrasts with Regional Container Lines that just reported a first quarter loss.

Samudera's listing on the Singapore Stock Exchange is widely considered a success. Although the stock has fallen sharply over the last year (echoing a weak Singapore equities market). Das says Samudera has no intention of following companies like Pacific Carriers off the exchange. "We need the capital raising options a stock market listing gives you," Das comments.

One market player feels the listing has been relatively successful against other shipping quotes because Samudera did not inflate asset values when they listed. "They were smart and not too greedy," he says.

Although the stock currently trades at significant discount to net asset value per share, until recently it offered a decent premium, rare for a shipping company.

And rare for an Indonesian company, Samudera regularly attracts positive notices from the investment community.