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Print articleMichael Drayton
Baltic
chairman
 Michael Drayton, Baltic chairman |
The new Baltic chairman has just been presented with two new Baltic Exchange flags. Company and association flags are a familiar sight in shipping company offices, but these are headed somewhere very different. Michael Drayton is making a flying visit to London to attend his first meeting as chairman of the Baltic Exchange before returning to the Prince Borghese Memorial Rally, which is currently halfway across Siberia (he has left his co-driver with instructions to “turn left at Irkutsk”), and the flag is destined for the roof of his Jeep, to replace the original, currently somewhere in Mongolia.
The two-month drive from Beijing to Paris is an appropriate break before the next stage of Drayton’s career. He has just stepped down as a director of Galbraith’s, where he has worked since 1972, when he left university with the intention of working “in the City somewhere”. Along with the chairmanships of the Baltic Exchange and Arlington Tankers, Drayton has been offered two further directorships. He can’t yet go into detail about them, but does say that they are aligned with shipowning rather than with shipbroking. “As a shipbroker, I’ve always looked at the other side of the fence,” he says. “I’ve invested in shipping companies, and I’ve enjoyed that very much, so I’ve been looking at a move into that camp.”
Although he will no longer be working directly with a shipbroking company, Drayton’s role as chairman of the Baltic Exchange is to represent all member firms, including of course the major shipbrokers. He already has considerable experience in the area, having spent seven years on the Baltic board. In that time, a number of significant changes have taken place, both in the way that the Exchange views itself and its role, and in the way that it operates.
Seven years ago, says Drayton, the major concern of the board was to ensure that the differing needs of the shareholders and the members were both adequately met: “At the time, the shareholders’ vision was not represented in the same way that the members’ was. The Baltic took a long hard look at where its priorities should lie and set about focusing on the provision of enhanced freight market information services, ensuring that its membership services were no longer run on a loss-making basis and that shareholders’ and members’ interests were better aligned. A lot of that has now come into line with what we hoped to see. Following the share buyback and stock spilt, as well as a number of other changes over the years, that goal has been achieved,” he says.
So what are the most pressing issues for the board to deal with over the next two years?
First in the list of concerns is a detailed examination of a proposal to establish a subsidiary company to handle the Baltic Exchange’s freight indices. The new company would be chaired by a Baltic director and both the Baltic Exchange and the panellist companies would have a stake. The new company would derive its income from the sale of freight market information. “We are hugely grateful to the panellists, and in the long term we need to share not only the workload, but also the benefits, of that work. Baltic chief executive Jeremy Penn has done a lot of work on this, and we have begun a series of consultative meetings. Nothing has been concluded yet, but we hope to have a working proposal by the end of the year,” says Drayton.
The internationalisation of the Baltic’s role will be an ongoing challenge. Chartering activity today is not solely focused on London as it once was and the Baltic needs to ensure that its services reflect this changed environment. The opening of the Singapore office this year was a major step in this direction, and the office has taken off very successfully, publishing data on two Asian tanker routes during the Asian working day, working with the Baltic’s Asian Users Group as well as developing social networking opportunities for members in the region.
However, there is still a lot of work to be done in Asia with targets for membership expansion in both China and India, where shipbroking communities are experiencing unprecedented growth. Shanghai, Beijing, Mumbai and Delhi are all emerging as growing centres of shipping activity. The Baltic is also looking to raise its profile and expand its membership in the US. Here, again, there is a different set of requirements for success. “The main issue in Asia was reporting and time zone. While there was a clear requirement for continuous reporting in the East, this is not the case in the US,” says Drayton.
The focus of the Baltic remains ensuring that its information services continue to meet the needs of the shipping markets. An increased global demand for biofuels for example has led to traders, charterers and owners looking to the Baltic to provide independent assessments for these new trades, with a Malacca Strait to Europe palm oil route currently under test. Also under test is an India – China supramax route for the iron ore trade. As Baltic chairman, Drayton says that he looks forward to ensuring that the Baltic’s brand of independence and credibility continues to be recognised around the world.
In the UK, the Baltic Exchange has always maintained strong links with the City of London, and Drayton is keen to maintain its profile here. One possibility he would like to discuss is that of a closer cooperation with the London Stock Exchange. “This has not been an area we’ve concentrated on in the past, but with the booming shipping markets, and the IPO market in particular, there’s a demand for more IPOs in London. People are asking about floating here, rather than in New York, where there are issues with both cost and compliance. We have a lot to offer in terms of our expertise in the market, providing exactly the information that potential investors might want to know,” explains Drayton. Some US investment firms have already been set up specifically in order to advise on listing in London, he says, and there is considerable potential for the Baltic Exchange to get involved in this market.
Before returning to the Baltic Exchange though, Drayton has a race to complete. Taking part in the Beijing – Paris rally is an ambition that he has held almost exactly from starting life as a shipbroker, so it is a fitting way to mark the transition in his career. “I first read about the rally when a book on the first Prince Borghese Memorial Rally came out in 1972, and thought ‘If only I could do that...’ Then, at a rally in Finland last year, a Swiss friend asked if I was interested in ‘a mad idea, driving from Beijing to Paris’. It took me about a hundredth of a second to say yes.” As the driver of one of the more modern cars in the rally, and one of the few four-wheel drives, Drayton’s Jeep has been put in charge of “sweeping up” the casualties – and bad roads and harsh conditions have seen plenty of those. “It’s just what I wanted between Galbraith’s and the Baltic, but it’s also exhausting,” admits Drayton. “I might spend all day driving, get in, have a shower, then it’s back into the boiler suit and into the garage to get the cars ready for the next day.”
After 10 days in London for his first meeting as chairman of the Baltic Exchange, Drayton is due to head back to Russia, where he will rejoin the rally at Ekaterinenburg, and straight on to Paris, where the rally will arrive on 10th August, exactly 100 years after Prince Borghese made his victorious drive into the city. Then it’s back to London, and ready for his next challenge as chairman of the Baltic.
 The Baltic Exchange is keen to maintain links with the City |
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