Koninklijke Nedlloyd Groep N.V.

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Koninklijke Nedlloyd Groep N.V.

Boompjes 40
3011 XB Rotterdam
Netherlands
(10) 40071 11
Fax: (10) 404 61 90

Public Company
Incorporated: 1970
Employees: 21,500
Sales: Dfl 6.75 billion (US$4 billion)
Stock Exchanges: Amsterdam, Frankfurt; Nedlloyd shares also trade in the United States in the form of ADRs and in London on SEAQ.

The Royal Nedlloyd Group is one of the largest transport companies in Europe. During the last decade, Nedlloyd has evolved from an organization primarily active in liner shipping into a logistics group active in all aspects of the transportation industry.

The formation of the Nedlloyd Group occurred in 1970 as the result of the amalgamation of four major Dutch ship-owning companies, but its origins can be traced back to the founding of the Koninklijke Nederlandsche Stoomboot Maatschappij (KNSM) in 1856; the company joined Nedlloyd in 1981. In the mid-nineteenth century, when the British, Russian, and French merchant fleets were occupied with the Crimean War, there was an acute shortage of vessels available to carry out everyday trade. Christian Ramann, a young German businessman, persuaded two Dutch merchants, C. A. von Hemert and M. S. Insinger, of Amsterdam’s potential as a major European port. The trio successfully applied for a royal charter to establish liner services between Amsterdam and several Baltic ports—including St. Petersburg, Gothenburg, Copenhagen, and Königsberg—and between Amsterdam and Bordeaux via Le Havre. The resulting company, KNSM, started its Baltic service on October 1, 1856, with two chartered sailing ships. Expansion was rapid, and by 1863 the company was operating 11 ships totalling 4,200 tons.

In 1870, the Stoomvaart Maatschappij Nederland (Nederland Line) was founded for the purpose of trading with and in the Far East. The company got off to a bad start when its first ship, S.S. Willem II, caught fire in 1871, but the vessel was not seriously damaged. In 1883 Rotterdam Lloyd, a company which was to become both a competitor and a collaborator, was founded.

Meanwhile, KNSM entered a difficult phase. In 1869, it decided to enter the lucrative migrant trade to North America, but by the time its new ships, S.S. Stad Haarlem and S.S. Amsterdam, were delivered in 1875, the combination of a severe economic depression in the United States and a European boom severely reduced the number of immigrants to North America. KNSM put the new ships into service but losses increased and the ships were sold in 1879, leaving KNSM seriously in debt. The managing directorship of Ernst Heldring restored the fortunes of KNSM. He consolidated existing services and added new ones, helping KNSM to develop successful trade with North America. European governments commonly used mail contracts during the nineteenth century to subsidize their national shipping lines. This was part of a strategy to consolidate their overseas possessions and expand their spheres of interest. In 1888 the Dutch government, intent on strengthening its links with the Indonesian archipelago, awarded the Indonesian mail contract to a new company, the Koninklijke Paketvaart Maatschappij (KPM). KPM was founded jointly by Nederland Line and Rotterdam Lloyd expressly for the purpose of developing inter-island trade in Indonesia. The service began on January 1, 1891, with 30 ships on 13 regular routes.

KPM’s early years were difficult: it sought to establish trade with the smallest and most inaccessible islands of the archipelago and suffered fierce competition from British ship owners. After overcoming these initial difficulties, KPM started to expand and during the early years of the twentieth century began services between Indonesia and Australia, and Indonesia and Thailand (then known as Siam). In 1911, with a fleet approaching 100 ships, KPM introduced fast weekly services between several Far Eastern ports. Following a temporary halt in its progress during the First World War, KPM became the largest ship owner in the Far East by the late 1920s.

Postal service also played an important part in the development of KNSM. Koninklijke West-Indische Maildienst (KWIM) had been established to deliver mail to and from the Dutch West Indies. However, it expanded too rapidly and left itself vulnerable to competitors. By 1913, KNSM had gained effective control of KWIM, seeing the opportunity to become a leading player in the West Indies. KNSM also hoped to expand its services through the Panama Canal and across the Pacific, but the First World War intervened before this became possible.

KPM, Rotterdam Lloyd, and Nederland Line also had shares in the Java-China-Japan Line (JCJL), a company founded in 1902 to take advantage of the growing traffic between India and the Far East. JCJL’s major shareholder was the Nederlandsche Handel Maatschappij, a bank backed by the government which provided capital for Dutch overseas investors. JCJL’s progress was steady rather than spectacular; by 1939 it services were limited to 11 vessels. However, JCJL came into its own after the Second World War and the Dutch withdrawal from Indonesia.

In 1908, KPM, Rotterdam Lloyd, and Nederland Line came together, this time through a holding company, to found Koninklijke Hollandsche Lloyd (KHL)—a consolidation of the South America Line which had been established in 1899.

By 1914 those companies that eventually came together to form the Nedlloyd Group were, for the most part, in a sound financial condition and had extended their sphere of activity to the Far East, Australasia, and the Americas. During the First World War, the allied forces exercised the “Right of Angary”—that is, the right of a belligerent state to utilize the property of a neutral state. Consequently, the portion of the Dutch fleet that had escaped the German navy (138 ships altogether, including 22 KNSM vessels) was used to support the allied cause.

The immediate postwar years were prosperous for Dutch ship owners. They benefitted from restraints imposed on German competitors and from Europe’s determination to rebuild its stocks of basic commodities. However, by 1920 freight rates had started to fall and shipping companies were feeling the pinch. The Nederland Line, Rotterdam Lloyd, KPM, JCJL, KNSM, and three other small companies came together to form Vereenigde Nederlandsche Scheep-vaartmaatschappij (United Netherlands Navigation Company, or VNS), a joint venture that was intended to help restore prewar services and to strengthen the competitive position of Dutch ship owners in anticipation of a German shipping revival.

The fortunes of VNS companies varied during the interwar years. KPM recovered quickly; most of its fleet was fully intact after the war and the company rapidly resumed business on its old routes. Before long it was the largest shipping company in the Far East and during the boom years between 1925 and 1930 it added 60 new vessels to its fleet. KPM also entered the tourist market during this period, opening hotels in Bali and other Far Eastern countries.

The early 1930s were for shipping, as for most industries, a time of contraction. Most Dutch ship owners, including Nederland Lines, KPM, and Rotterdam Lloyd, went through a period of severe cost cutting. KPM was the only company to begin its recovery before the start of World War II; in 1937 it brought two state-of-the-art cargo ships into service and started up the Zuid Atlantische Lijn, which linked Durban, Montevideo, Buenos Aires, Santos, Rio de Janeiro, and Capetown.

At the outbreak of the Second World War, all Dutch ships in European waters were instructed to make their way to British ports if they were able to do so. Vessels outside European waters continued with their existing activities until it was decided how they should serve the allied cause at sea. The future Nedlloyd Group companies served the allied war effort, incurring severe losses of personnel and ships. In 1939 the KNSM fleet, for example, comprised seven passenger vessels and 76 cargo ships; six years later it had fallen to three passenger vessels and 39 cargo ships. KPM lost 98 vessels in the conflict, having begun the war with 146 ships.

Insurrection in Indonesia and the subsequent declaration of the Republic of Indonesia on December 27, 1949, precipitated the most immediate postwar change in Dutch shipping. KPM’s success had been based on their services in the Indonesian archipelago and, in view of the political upheavals there, the company did not find postwar business in the area profitable. Accordingly, KPM’s Far Eastern fleet was merged with JCJL in 1947. The latter company had lost six out of 11 vessels during the war but, with the help of “Victory” ships, had quickly resumed its old services between Indonesia, Hong Kong, China, and Japan, and had added the Philippines to its route. The new JCJL-KPM company was called Koninklijke Java-China Paketvaart Lijnen (KJPCL), but it eventually became known by the English title Royal Inter ocean Lines.

The remaining portion of KPM’s fleet tried to continue its Indonesian inter-island services but was under constant harassment from the Indonesian government, which seized some of its ships and expelled the company in 1957. The remaining 40 ships were initially put in dry dock, but some were later sold and others used as tramp ships. In 1966, the remnants of KPM joined Royal Interocean.

The rise of civil aviation accelerated the withdrawal of future Nedlloyd companies from passenger services. In 1964, both Nederland Lines and Rotterdam Lloyd sold their passenger ships. The company’s final passenger ship was not sold, however, until 1974 when Royal Interocean’s New Holland left the fleet.

The modern era in Nedlloyd’s history began in 1970 with the full integration of the activities of Royal Interocean Lines, Rotterdam Lloyd, Nederland Line, VNS, and their subsidiaries into the Nedlloyd Group. In 1977, the name was changed to the Koninklijke (or Royal) Nedlloyd Group.

In 1981 the Royal Nedlloyd Group took over KNSM, which, with a history of 125 years of service, was the world’s oldest shipping line still operating independently. During the postwar era, KNSM had rapidly rebuilt business halted by the hostilities and reestablished its routes, particularly in Central and South America. However, it was not able to withstand the severe shipping slump of the late 1970s and early 1980s.

During the 1980s, Nedlloyd was affected by the recession in liner shipping, and divestment rather than expansion became the company’s watchword. The company’s strategy of concentrating on shipping and inland transport and disposing of peripheral activities eventually became profitable: after losses in 1990, Nedlloyd returned to the black in 1991. Nedlloyd remained in fragile financial condition (no dividend was paid in 1991), but liner shipping, out of all of its core activities, exhibited the most improved performance.

In 1983, the company, in an attempt to bolster its inland transport business, decided to move further down the transport chain and provide transport service not only from port to port but also from the factory gate to the final consumer. Feeling it necessary to purchase regional transport companies to improve its services, Nedlloyd bought Van Gend and Loos, a Dutch company active in storage, distribution, and specialized transport in 1986. Nedlloyd also purchased the Spanish shipping company Fernando Roque in 1987, the German companies Andreas Christ and Union-Transport in 1989, and Great Britain’s Transflash, also in 1989. These acquisitions were later criticized for being inconsistent with the company’s policy of concentrating on its core activities, i.e.: container logistics through a global network of shipping links, and transport, forwarding, inventory management and distribution, including those for specific industries and products, principally in Europe.

While attempting to take advantage of the greater integration of the European market, Nedlloyd also targeted road transport companies in northern Europe, especially in Germany. The financial demands of acquisitions and new building (seven large ultramodern container ships were ordered in 1989 and 1990, with five ships delivered in 1991 and 1992, and two to be delivered in 1994 and 1995, respectively) were high and Nedlloyd sold non-core activities to help finance them.

Despite the active divestment policy in 1991, the Nedlloyd supervisory board was criticized by Torstein Hagen, a Norwegian citizen who held almost 30 percent of Nedlloyd shares in early 1992. Hagen believes that Nedlloyd, rather than focusing on core business, over-expanded into areas it did not fully understand. Campaigning periodically since 1988 for a seat on the Nedlloyd supervisory board, Hagen was initially thwarted by Dutch takeover barriers, but the board eventually agreed to grant Hagen’s wish in the spring of 1992. The move was blocked by the employees’ council but the board sought to overturn the decision in the Dutch courts.

In 1992 economic conditions affecting the freight industry remained difficult: freight rates in most markets had fallen dramatically, the weakness of the dollar—the currency of the shipping industry—was also expected to adversely affect earnings, and economic slowdown in major European markets was impeding business. This combination of factors made the short-term future of Nedlloyd uncertain. At the press conference in August 1992 at the occasion of the publication of the half year figures, the Executive Board forecasted a modest positive result for 1992.

Principal Subsidiaries

Nedlloyd Lines Division: Nedlloyd Lijnen B.V. (NL); Nedlloyd Lines (USA) Corp.; Nedlloyd Agencies S.A. (Pty.) Ltd. (South Africa); Nedlloyd Lines Singapore Pte. Ltd; Nedlloyd Lineas Agencias S.A. (Costa Rica); Nedlloyd (HK) Ltd. (Hong Kong); Nedlloyd Lines Switzerland A.G.; Nedlloyd Lines Nederland B.V.; Nedlloyd Lines K.K. (Japan); Nedlloyd Lines U.K. Ltd.; Nedlloyd Lines Belgium N.V.; Nedlloyd Lines France S.a.r.L.; Nedlloyd Lines Deutsch-land GmbH; Nedlloyd Do Brasil Navegacao Ltda; Nedlloyd (Argentina) S.A.; Nedlloyd Lines (New Zealand) Ltd.; Nedlloyd Australia Pty. Ltd.; Nedlloyd (E.A.) Ltd. (Kenya); CGM NED GIE (France, 45%); Nedlloyd Lines (Malaysia) Sdn Bhd; Nedlloyd Lines (Thailand) Ltd; Nedlloyd Lines Philippines Inc.; Nedlloyd Lines Korea Co. Ltd.; Nedlloyd Lines Italia; Nedlloyd Lines Portugal S.A.; Nedlloyd Lines B.V. Corp. (Coral Gables, USA); Nedlloyd Road Cargo Division: Nedlloyd Road Cargo International B.V. (NL); Nedlloyd Road Cargo B.V. (NL); Nedlloyd Road Cargo Ltd. (U.K.); Nedlloyd Road Cargo Ltd. Sti (Turkey); Nedlloyd Road Cargo N.V. (Belgium); Nedlloyd Road Cargo A.E. (Greece); Nedlloyd Road Cargo S.A. (France); Nedlloyd Road Cargo S.A. (Luxembourg); Nedlloyd Road Cargo S.A. (Spain); Nedlloyd Road Cargo SpA (Italy); Nedlloyd Road Cargo A.G. (Switzerland); Nedlloyd Road Cargo (Bulgaria); Nedlloyd Road Cargo Tran-sitarios Lda. (Portugal); VGL Rail Cargo N.V. (Belgium); MSAS Nedlloyd Air Cargo N.V. (Belgium, 50%); MSAS Nedlloyd Air Cargo S.A. (Spain, 50%); MSAS Nedlloyd Air Cargo v.o.f. (NL, 50%); Nedlloyd Road Cargo GmbH (Austria); Nedlloyd Road Cargo GmbH (Germany); van Swieten B.V. (NL); Unitrans Division (Germany): Nedlloyd Unitrans GmbH; Scherbauer Spedition GmbH (50%); Trans-Paket Service GmbH & Co.oHG; Union-Transport Verkehrsbetrieb GmbH; Van Gend & Loos Division: Van Gend & Loos B.V. (NL); Van Gend & Loos S.A. (Belgium); S.A. Van Gend & Loos N.V.; Selektvracht B.V. (NL); Nedlloyd Districenters International: Nedlloyd Districenters B.V. (NL); Nedlloyd Districenters GmbH (Germany); Nedlloyd Districenters International B.V. (Schiphol); Nedlloyd Districenters Ltd. (U.K.); Nedlloyd Districenters N.V. (Belgium); Nedlloyd Districenters Pte. Ltd. (Singapore); Nedlloyd Districenters S.A. (Spain); Nedlloyd Districenters SNC (France); Port of Tianjin Commercial Bonded Warehousing & Service Company Ltd. (45%); Nedlloyd Districenters (Japan); Nedlloyd Districenters (Taiwan); Nedlloyd Districenters (Hong Kong); Deni Dis-tributiecentrum B.V. (NL); Specialized Transport Division: Faxion (U.K.) ATS Ltd.; Faxion B.V. (NL); Faxion Italy S.r.L.; Faxion-Oeschger A.G. (Switzerland); Faxion Scandinavia A/S (Denmark, 60%); Fernando Roqué Especialidades S.A. (Spain); Fransen Transport B.V. (NL); Gerlach Art Packers & Shippers B.V. (NL); Gerlach & Co N.V. (Belgium); Gerlach & Co GmbH (Germany); Gerlach & Co B.V. (NL); Geytenbeek B.V. (NL); Faxion Janssen B.V. (NL); J P Janssen International Freight Forwarders B.V. (Schiphol); Nedlloyd Specialties B.V. (NL); Nedlloyd Rijn-en Binnenvaart B.V. (NL); Faxion J P Janssen S.A. (Belgium); Transfashion S.A. (Spain, 60%); Transvet S.A. (France, 49.99%); Wim Vos Internationale Transporten B.V. (NL); Faxion Scandinavia (Norway) A/S; Faxion Scandinavia (Sweden) A/S; Gerlach (France) S.a.r.L.; Gerlach Internationale Spedition GmbH; Aeronaut B.V. (NL); Aery Express Corp. Ltd. (Hong Kong); Damco Verhuizingen B.V. (NL); Damco Maritime International: Damco Maritime B.V. (NL); Damco Maritime (Belgium) N.V.; Damco Maritime Corp. (U.S.); Damco Maritime GmbH (Germany); Damco Maritime International B.V. (NL); Damco Maritime Ltd. (U.K.); Damco Maritime Ltd. (Hong Kong); Damco Maritime Pte. Ltd. (Singapore); Damco Maritime S.A. (Spain); Damco Maritime S.A. (France); Damco Maritime K.K. (Japan); Damco Intermodal Systems Taiwan Inc.; Damco Oeschger Maritime A.G. (Switzerland); Hansen Far East Ltd. (Hong Kong); Mammoet Transport Division: Alatas Mammoet Co. Ltd. (Saudi Arabia, 49%); Davenport Mammoet Inc. (U.S., 90%); Mammoet Canada Ltd. (45%); Mammoet Ferry Transport B.V. (NL); Mammoet-Hansa-Linie A.G. (Germany, 50%); Mammoet Stoof B.V. (NL); Mammoet Transport B.V. (NL); Mammoet Western Inc. (U.S.); Walter Wright Mammoet Ltd. (Hong Kong); Neddrill Division: Neddrill Nederland B.V.; Nedlloyd Drilling B.V.; Miscellaneous Activities: Argus Company Inc. (Hong Kong); Brinks Nedlloyd v.o.f. (35%); BulkNedlloyd Holding B.V.; B.V. Container Service “Amsterdam”; Combined Terminals Amsterdam v.o.f. (61.54%); Delta North Transportation Inc. (64.2%); Europe Combined Terminals B.V. (44%); Fernando Roque TISA (Spain); Handelsvereniging Neptunus Holding B.V. (34.7%); Hendrik Veder B.V.; KNSM Group B.V. (99.7%); KNSM-Kroonburgh B.V.; Logion B.V.; Martinair Holland B.V. (49.19%); Mercury Shipping Co. Ltd. (Hong Kong); Neddata B.V.; Nedlloyd Bedrijfsgebouwen C.V. (25%); Nedlloyd Beheer B.V.; Nedlloyd Deutschland Holding GmbH; Nedlloyd Group Holdings U.K. Ltd.; Nedlloyd Holdings France S.A.; Nedlloyd Holdings USA Inc; Nedlloyd Schiffmakler GmbH (Germany); Nedlloyd Tankers B.V.; Nedlloyd Telecom B.V.; Nedlloyd Vastgoed Beheer B.V. (25%); Noordzee Veerdiensten (North Sea Ferries) B.V.; OWAT Assurantie B.V.; Smit Internationale N.V. (40.1%); Unilloyd Tankrederij B.V. (50%); Uniterminal B.V.; Willemswerf v.o.f. (49%).