Dr Heinrich Schulte was recently asked about what lessons he might pass on to his two sons, Johann and Christoph.
Had he any regrets?
The 86-year-old chairman of Schulte Group conceded that he had indeed made plenty of mistakes in his six decades in the business.
“We missed chances here and there,” Schulte responded to the question posed by Borealis Maritime founder Christoph Toepfer at Marine Money Hamburg in May.
He recalled when the company waited to finance a series of container ship newbuildings at the time of the 2008 financial crisis.
“With the optimism, we thought we could take it easy,” he said. “Then with the sudden downfall in markets, we had about $600m to finance.”
“And there was no bank in Europe with which we had ties that were willing to touch any of these ships, despite a pretty good charter.”
“So we turned to Asia and we finally obtained the finance at reasonable terms.”
Radical move
The move to Asian finance was a radical shift, but it helped the company weather “the most difficult shipping crisis we had ever encountered”.
“I wouldn’t say unscathed,” Schulte said. “But our balance sheet was still such that we survived, and we still got credit from the banks.”
Schulte concedes it led to “a few months when we shivered a little”.
Whatever mistakes the Schulte chairman believes were made, it has not prevented him from building one of Germany’s largest and most diversified shipping businesses.
As an owner of 90 vessels and manager of about 600, the company has been a leading member of the German shipping cluster for five generations.
Speaking in the forum’s “Captain of Industry” slot, Schulte said he joined the family business in 1963 when he quickly learned that shipping markets are very volatile.
“What saved us over the decades was our belief to remain conservative in this volatile business. That meant that we were never the fastest in expansion.”
The experience from the shipping crisis of the 1980s prompted the diversification into other maritime service sectors in the 1990s.
That includes Bernhard Schulte Shipmanagement, the operation for which the company is well-known.
Such moves were made along with the philosophy that Schulte Group should be able to operate as an independent entity.
Independence is deemed of fundamental importance because it allowed the company to take swift decisions. Schulte suggested that may not always be possible when teaming up with some of the big financial players.
“There may be rich potential partners around, but beware of those: it could be a very difficult marriage,” he said.
Golden rule
Schulte suggests there are many rules for the next generation to adhere to in shipping. Perhaps the most important is to set aside enough funds to have the freedom to make anticyclical decisions.
“If you act in shipping, you can make money if you act anticyclonically. That is probably number one in shipping.”
Such is the current market, however, that Schulte said he would not know where best to invest in shipping.
There is too much uncertainty to know where to invest any funds.
“Our investment decisions in 2022 have been very low. So we simply live off the fruits of the past,” he said.
“We have no newbuilding programme, nothing. We are buying a few secondhand ships.”
Schulte paid tribute to his wife, Astrid, for advising on personal matters including leading positions in the company now led by his two sons.
“The gut feeling of my wife many times was better than mine,” he said.
