Erling Dekke Næss
Encyclopedia
Erling Dekke Næss, was a Norwegian shipowner and businessman. Brother of philosopher Arne Dekke Næss
, his nephew was the mountaineer and businessman Arne Næss Jr.
. Best known for his early adoption of flags of convenience, Næss was Deputy Head of Nortraship's
New York office from 1942 to 1946. Næss was the initiator behind the OBO carrier. He is also credited as proposing the very successful Norwegian International Ship Register
, which allowed Norwegian shipowners to compete on an equal footing with flags of convenience.
. The family moved to Kristiania in 1911 were his father died in 1913. The family seems to have been well off, although in no way affluent. Næss studied economy at the University of Kristiania and earned a B.S.
in 1920, achieved mostly by studying on his own. He contemplated continued studies and travelled to Britain to finish a Ph.D.
at the London School of Economics
.
. He started out as a typist, writing letters to Scandinavian customers, but after a year he was made assistant in the new currency department. In the evenings he continued his studies in economics, and was greatly influenced by John Maynard Keynes
. Of special interest for his research and work were the imbalances created by the German war reparations, as their consequences could be seen clearly in the currency market with the German mark rapidly losing value against other main currencies. The young Næss was amazed at being in the center of the disastrous decline of the mark, severely undermining the Weimar Republic
. By the middle of 1923 Næss decided to concentrate on his Ph.D. and thus ended his engagement with the bank.
The aim of his research was to show how fluctuations in the currency market influenced each nation's prices, and he became a member of the Royal Economic Society
in order to follow lectures by Keynes and others. Keynes was an eager proponent of economists investing in the market, in order to "live as one learned", and young Næss followed this. He started out with small investments in rubber, as there were huge imbalances in supply and demand which he had found through his research. With the profits he continued into tin, and as he was successful he was offered a job as an analyst by his broker, so leaving him with less time for concluding his research.
, the Norwegian company A/S Hektor. In establishing the Hektor Whaling Ltd Næss got good use for his banking experience and contacts in City
. Næss himself took £50,000 of the company's total capital of £600,000, a gamble that was to make him a huge profit. Due to his success in this enterprise he was in the summer of 1928 contacted by the Norwegian whaling pioneers Torger Moe and Johan Rasmussen, asking his help to arrange financing of their Viking Whaling Company Ltd, as they planned to build one of the world's first whale factory ship
. The vessel Vikingen was to be built as a tanker, with the whale processing factory on its deck; thus being able to trade both as a factory ship and a tanker.
Næss found the prospect very interesting, arranged the financing and the first whaling company trading on the LSE
started in January 1929. Næss did receive some critique from Norway for "selling out know-how" to the British, as whaling was a huge Norwegian industry. Næss' view was that the capital was difficult to obtain in Norway; moreover that the crew and supplies anyway would come from Norway. Vikingen, with a deadweight tons
of 15,000 tons was delivered in September 1929 and sailed for its first season, which was a huge success.
.
the prices collapsed, and in the beginning of the 1930s there were a number of vessels laid up and restructuring in the business. Næss was closely involved in this, especially the sale of the huge new whale factory ship Vestfold to a newly established company in London, as A/S Vestfold could not service its debtors. This was made possible by Næss's good connections in London, and saved the Norwegian company from bankruptcy.
During the years 1932-34 the prices on whale oil sank from £25 to £10 per ton. To counter this the first voluntary reductions of production came forth, as governed by a quota agreement signed 9 June 1932. The agreement set limits on production of whale oil and the length of the season, it was to start 7 October 1932 and end 30 April 1933. This resulted in that the companies Næss was involved with used only the modern Vestfold for that season.
in order to study the whale hunt, and reached the Vestfold in January 1935. He saw the whole process of hunting and processing the whales. He was trying his luck at shooting whales and was very much impressed by the gunners' skill. The largest whale caught was some 33 m with a weight of over 100 tonnes. Næss seemed to regret part of his involvement in the whaling business, as it ended with almost exterminating the large whales. Næss was back in London in March 1935, and though the market was still down it had improved, due to large purchases of whale oil by the German government. In the season 1937 - 1938 the market was down again, and with Vestfold producing a loss it was decided to sell Vikingen.
The only buyer was the German government, and it could only pay with building a tanker. It was a huge political gamble, but the agreement was signed in Berlin early 1938 and the building of the tanker started at Deutsche Werft
in Hamburg
. Næss was acutely aware of war looming and followed the building himself. The vessel named Norness and delivered on 4 May 1939. The remaining whale factory vessel in the cooperating companies was now Vestfold; it would do its last season 1939 - 1940. After delivering some of its cargo to Procter & Gamble
in New York
and the rest in Liverpool it would act as a bunker vessel in Freetown
until 1944, when it departed and was sunk by a German submarine.
flag. It bought the two previous mentioned tankers from Rasmussen & Moe's Rederi A/S, and as the tanker market was good it ordered and bought several vessels. By 1938 the company had 5 vessels, Nore, Norvinn, Norvik, Norlys and Norbris, totalling - a large tanker fleet for that period. The financial results were good with a net profit of £192,575 for the company's second year of operation.
began, and the tanker markets became very strong. Even though sailing under a neutral flag the Viking Tanker Company vessels were able to trade as they followed British regulations. Næss travelled to Norway in April 1940, as he had been requested by the British Ministry of Trade to contact Norwegian shipowners that did not fully support the blockade of Germany. He would also meet his colleagues in Sandefjord
, Johan Rasmussen and Torger Moe. Næss managed to have a meeting on 8 April 1940 with the Norwegian Foreign Minister, Halvdan Koht and woke up the day after, 9 April with the German invasion of Oslo, seeing the German transport planes landing at the Fornebu airport from his brother Arne Næss
's house in Holmenkollen
. Næss was pessimistic about Norway's chances towards the German invasion and escaped Oslo on 10 April, heading westwards by air. The journey would be by train, air, car and small boats and he finally ended up in Ålesund
were he volunteered as an interpreter for the British Expeditionary Force. On the way he was twice locked up by Norwegian police, suspecting him of being a spy. After a few weeks in Ålesund the British forces had to withdraw and Næss followed them back to Britain.
Back in London Næss had to establish contact with the seven vessels operated by the group; until the invasion they had been controlled by the office in Sandefjord, Norway. These were the whale factory ship Vestfold (built in Framnæs shipyard
), the tankers Norness, Norbris, Norlys, Norvinn and finally the dry cargo vessels Nordal and Nortun. The British government also wanted control of his fleet, demanding to have the vessels on bare-boat charter. This was a major blow to Næss, he felt insulted by what he viewed as unfriendly treatment of a friend of Britain. Næss insisted on running the company himself; knowing both the vessels and the crew he felt he would be the most competent person for that. The British government initially did not accept this; weeks followed where Næss virtually was a hostage, not allowed to contact his vessels or leave the country. The solution came through the banker Sam Guinness, as the companies had substantial amounts of US dollars in New York banks. This money could only be released by Næss, and the British government needed dollars. So for $1,125,000 Næss got his travel permit to the US.
In August 1940 Næs arrived in New York on the White Star/Cunard liner Scythia, and he immediately proceeded to secure premises in State Street for his company office. The British government was however still insistent on controlling the vessels, and their weapon was the bunkering permit needed for British-controlled harbours. As Næss thought he was the most capable person to control the fleet he took his case to the United States Maritime Commission
. After a 10-minute meeting with its leader, Admiral Emory S. Land, in September 1940 he was instructed that two of his vessels should be chartered to the British and five to the US. Thus Næss, as one of the few, if not the only, private shipowners was allowed to continue his operations during the war. As the trade was good this was indeed a boon, but also a challenge. The other countries controlled their vessels' crews, while Næss with his Panama flag had to recruit his seamen on a voluntary basis. Overall the business went well, and Næss established a good working relationship with the United States Maritime Commission. For the accounting year ending 31 July 1940 the net profit was £150,325, for 1941 it was £155,844, and for 1942 £158,397.
The first vessel the company lost was Norness, torpedoed off Long Island
in January 1942, the first vessel to be sunk that close to the US coast. The sinking was huge news and the press coverage was extensive, even though the whole crew was saved.
, former prime minister of Norway. He was not satisfied with how Nortraship
was administered and wanted Næss into the management of the organisation, as he had good connections with the United States Maritime Commission. In November 1942 Næss was given the position as Deputy Head of the Nortraship New York office. For Næss it was a sacrifice as he had to give up his job as head of the Viking Tanker Company and sell his shares, in order not to have conflicts of interest.
Immediately after joining Nortraship Næss was thrown into negotiating a new tonnage agreement with his British and US counterparts, Bill Weston from the Ministry of War Transport
and David Scoll from the War Shipping Administration
. The negotiations took months and were hard bargaining. The agreement signed on New Year's Eve 1942 and thus named the Hogmanay agreement. The agreement was to last for the rest of the war and Næss played the inexperienced US negotiator against the British, thus landing as many benefits as he could for the Norwegians.
With the tonnage agreement settled Næss focused on the bad relationship between the main Nortraship offices, London and New York. He initiated an exchange of reports between the offices, and made a number of visits to the London office, thus gradually improving the cooperation between them. When the war ended in 1945 Næss was asked to stay on to help liquidate Nortraship and to arrange the negotiations for new vessels replacing the ones sunk during the war. Næss stayed for another year and, together with Nortraship's representative in Washington, George O. Mejlænder, a number of vessels were secured for Norwegian owners. Næss later regretted the decision to stay on as his rivals Onassis
and Niarchos
got a head start on him.
, to be built by their dock in Yokohama
. Næss made his first visit to Japan in 1949 when the country was still occupied by US forces, and the orders were the first from a foreigner after the war. In the years to come Japanese shipyards were to deliver around 30 vessels to the Næss group. The vessels were named Sagura and Yama, the latter sold just after delivery as the market was bad. That was a huge mistake as the war in Korea
broke out and the demand for vessels soared.
After selling the four old vessels Næss liquidated Nortuna Shipping and concentrated on Norness Shipping, and after a dull start he started using "Contracts of Affreightment
" in a 1954 agreement with American Independent Oil Company, of San Francisco. The contract stipulated that a given amount of oil was to be transported to Houston, Texas from the Persian Gulf
. The form of the contract gave Næss room to arrange the best possible conditions for transporting the oil, both for him and the oil company. The terms of the contract created a small sensation and Næss was summoned for a lunch in the Petroleum Club in Houston.
After the Korea war the market dived, but as an economist Næss was sure the market would rise again. If one took a longer view, say 15 years, the fluctuations would level out and ships on long-time charter would be profitable. To realize this idea Næss organised the "Naess Scheme Charters", where he would take other shipowners' vessels on long-term charters. The spirit behind this was pooling resources; each would do what one did best. The shipowners supplying tonnage would build, finance and manage, while Næss as the charterer would do his utmost to place the vessels. From 1954 ten vessels were chartered by Scandinavian American Shipping Company (owned 57% by Norness Shipping and 43% by the Rockefeller family) on Naess Scheme Charters, from reputed Scandinavian shipping companies, among them A. P. Møller
. Næss's theory seemed to hold; although for some years the charters ran with losses, the shipping boom after 1967 ended the 15-year charters with a solid profit.
and two to Texaco
. By April 1957 Næss had ordered 20 new buildings, to be delivered over the following five years. Except for three of the vessels, they were covered by long-time charters. Seven of the vessels were to be built by Japanese shipyards, due to their high quality and prompt delivery. George Mejlænder decided to start his own brokerage firm and Næss paid him out; the company name was changed to Næss Shipping Co. Inc. As the "battle of convenience flags" heated up Næss decided to secure his position and on the 15 November 1958 he established Anglo American Shipping Co. Ltd on Bermuda
; thus the vessels could fly the British flag.
heated up and a boycott of ships sailing under such flags was declared by the ITF
. Næss was having problems with insurance for his vessels and from a number of accusations of him being a "pirate". He was the chairman of the American Committee for Flags of Necessity and as such a highly visible target. As mentioned above he countered by registering vessels on Bermuda; the island required no taxes, the only inconvenience being that he had to employ a British captain, chief engineer and radio officer. Another benefit from using Bermuda was that quite a few charters were settled in British pounds; using the British flag removed the currency risk.
Næss also counter-charged by attending a conference with major British newspapers on 10 July 1958, where he stressed his view that flags of convenience did not need to be substandard. If the ITF encountered substandard vessels he and any sane shipowner would support a boycott of them, Næss argued. Ships with crews paid according to standards, and with a technical standard on a line with what international regulations required, should however not be targeted.
, but as he was not satisfied with the political conditions he started searching for other options. He surveyed Panama City but found the city to be too far from New York, and it would be difficult to recruit good management there. He was advised to have a look at Bermuda and found it favourable, so he moved his offices there.
Anglo American Shipping Co. Ltd was introduced on the London Stock Exchange in November 1959, the majority of the shares owned by Norness Shipping, the remainder owned by British investors and Næss's friends within New York finance. Five vessels were ordered for the company, the largest being the Naess Sovereign and Naess Champion; both were around and built by Mitsubishi in Nagasaki, Japan. When delivered in January 1961 Naess Sovereign was the third largest tanker in the world, and the largest under the British flag. To manage the vessels Næss linked up with a company in Glasgow, establishing the firm Næss Denholm & Co. Ltd. For the shipping industry at large 1960 was a difficult year, with old tonnage laid up; Anglo American with its new vessels and long-time charters was an exception.
s and arranging "affreightment" contracts for them. The focus on Norness Shipping created anxiety among Anglo American shareholders as to whether enough was being done to expand that company. This created the basis for a merger between the two companies, but that was complicated as there were serious problems connected to taxation of shareholders. The tax problem for the US Norness Shipping shareholders was solved in February 1962 and the merger talks could start in detail. The final agreement was signed on 15 December 1962; the value of Næss's original $50,000 was now $44,000,000 and the new company was named Anglo Norness Shipping Company Ltd..
In 1962 Næss learned that the P&O
had ordered four bulk carriers, each of around . Næss knew that this was a new area for P&O and arranged a meeting with the chairman, Sir Donald F. Anderson, whom he knew well from his Nortraship days. Næss proposed that the two companies should cooperate and pool their vessels into one joint owned company. P&O found the idea attractive and Associated Bulk Carriers Ltd. was established on 8 April 1964. The joint company was a huge success and by 1970 ABC contained 36 vessels with a total of . Part of the success was that Næss was able to persuade the more conservative P&O to order a number of OBO carriers, thus adding flexibility to the concept.
In 1964 the Naess group started a collaboration with P&O in the form of the jointly owned company Associated Bulk Carriers, thus giving them access to P&O's vast technical department. The last hurdles were cleared under a meeting at the A. G. Weser shipyard in Bremen on 6 April 1964, and a contract for building the first combined vessel was signed. The vessel was christened 16 June 1965 as Naess Norseman. The German industrialist owning the shipyard proposed the type to be called Naess-type; Næss himself however found it more appropriate to name it after the cargoes carried. Thus the name for the new type was to be OBO for Oil-Bulk-Ore. The vessel performed as expected, with some 75% of the time with cargo and only 25% in ballast. The much increased time with cargo would then more than outweigh the 15% higher cost of the vessel. Adding to the versatility of the type was that the oil and bulk market often developed differently. The OBO ship could then trade with bulk cargoes when that market was on top, and change to oil when the demand for tanker tonnage was high.
The cooperation with P&O in bulk carriers had started through Associated Bulk Carriers Ltd., and the battle of flags of convenience had been won. In twelve years the Anglo Norness fleet had expanded into one of the largest in the world, with 58 vessels totalling including new buildings and charters. The three years from 1964 were meagre for the Næss group.
The market continued to be depressed, and the group had losses on the chartered vessels. Næss was put under considerable pressure to abandon his policy of operating in the spot market but he strongly resisted long time charters as he believed the markets would recover. Then, in June 1967 the Six-Day War
erupted, and the Suez Canal
closed for years to come. This created an enormous surge in demand for tanker tonnage and the Næss group was ideally positioned with 16 large tankers available, receiving extremely good rates for its vessels.
With a strong financial situation Næss started thinking about the group's long-term strategy; the world economy was volatile, and there were inflationary pressure and currency problems. The company was courted by Occidental Petroleum Company and Zapata Offshore Company (founded in 1953 by George H. W. Bush
), and the latter won the merger with an offer of $5 per share, valuing the company at $47.5 million. As a diversified offshore company Zapata seemed to be well positioned to take advantage of the expected boom in oil exploration and its offer was accepted in May 1968, and the company name changed to Zapata Norness Inc..
Næss started as a member of the board of the new company and initiated a huge expansion program, ordering a number of ship with a total costing $163 million. As Zapata had its offices in Houston it became tedious for Næss to attend board meetings; he withdrew and his son Michael was elected in his place. By 1972 Næss grew more and more concerned over the huge volume of new buildings, he feared a collapse of the market and was thus positive when approached by P&O and Hilmar Reksten
who offered to buy his fleet. Næss had very mixed feelings as he had been in shipping for more than 40 years, however, with his experience and background as an economist he anticipated a downturn in the market. He did not have to wait long to see his decision pay off.
In July 1973 the deal was closed and Anglo Norness was sold for $208 million. Today it would equal $1.2-1.6 billion. In October the OPEC
cartel quadrupled the oil price creating the 1973 oil crisis
and the tanker market crashed. Næss was quite self-critical and had lambasted himself after other decisions; however, he had reasons to be proud of the perfect timing of this deal.
As the INTERTANKO president Næss concentrated on scrapping old tonnage, pollution and utilizing supertankers as floating storage tanks. Scrapping older vessels would reduce the amount of surplus tonnage, and this would then in the long run produce better rates. In trying to reduce the surplus tonnage Næss however got into arguments with the US Justice Department as they were on the verge of viewing his actions as violating the anti-trust laws
. His job of promoting scrapping of old tonnage was however made easier by the grounding of the Argo Merchant off Nantucket in December 1976, a 23-year-old run-down tanker. The spillage from the grounding pushed the major US oil companies to examine the vessels they were chartering closely, thus eliminating a large group of old, badly kept vessels.
As a citizen of Bermuda Næss was acutely aware of the problem with marine pollution; taking a walk on his beach he could easily spot lumps of tare that most probably came from tankers. Næss was therefore a staunch supporter of reducing oil waste as much as possible. Næss linked up with the Norwegian explorer Thor Heyerdahl
who had himself witnessed the increased pollution during his expeditions. Næss pushed forward various recommendations that INTERTANKO then took to International Maritime Organization
, the UN organisation responsible for improving maritime safety and to prevent marine pollution.
on the city. His personal lifestyle was frugal as always; a striking contrast to his shipowner colleagues who kept large yachts and mansions.
He loved gardening, and guests at his hotel sometimes took pity on the old guy having to work in the garden, giving him a dollar as they passed by.
Arne Næss
Arne Dekke Eide Næss was a Norwegian philosopher, the founder of deep ecology. He was the youngest person to be appointed full professor at the University of Oslo....
, his nephew was the mountaineer and businessman Arne Næss Jr.
Arne Næss Jr.
Arne Næss, Jr. was a Norwegian businessman and mountaineer. He had been married to Diana Ross since 1985, by whom he had two sons, but the couple was long separated at the time of his sudden death.-Biography:...
. Best known for his early adoption of flags of convenience, Næss was Deputy Head of Nortraship's
Nortraship
The Norwegian Shipping and Trade Mission was established in London in April 1940 to administer the Norwegian merchant fleet outside German-controlled areas. Nortraship operated some 1,000 vessels and was the largest shipping company in the world. It is credited for giving a major contribution to...
New York office from 1942 to 1946. Næss was the initiator behind the OBO carrier. He is also credited as proposing the very successful Norwegian International Ship Register
Norwegian International Ship Register
Norwegian International Ship Register or NIS is a separate Norwegian ship register for Norwegian vessels aimed at competing with flags of convenience registers like Panama, Liberia etc. Originally proposed by Erling Dekke Næss in 1984 it was established in Bergen in 1987 and is managed by the...
, which allowed Norwegian shipowners to compete on an equal footing with flags of convenience.
Family and early years
Erling Dekke Næss was born in Bergen, Norway and was son of Ragnar Næss, a businessman and banker. He had two brothers, the younger being the well known philosopher Arne NæssArne Næss
Arne Dekke Eide Næss was a Norwegian philosopher, the founder of deep ecology. He was the youngest person to be appointed full professor at the University of Oslo....
. The family moved to Kristiania in 1911 were his father died in 1913. The family seems to have been well off, although in no way affluent. Næss studied economy at the University of Kristiania and earned a B.S.
Bachelor of Science
A Bachelor of Science is an undergraduate academic degree awarded for completed courses that generally last three to five years .-Australia:In Australia, the BSc is a 3 year degree, offered from 1st year on...
in 1920, achieved mostly by studying on his own. He contemplated continued studies and travelled to Britain to finish a Ph.D.
Doctor of Philosophy
Doctor of Philosophy, abbreviated as Ph.D., PhD, D.Phil., or DPhil , in English-speaking countries, is a postgraduate academic degree awarded by universities...
at the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...
.
Studies and work in Britain
Næss however did not have the financial resources to study, so he had to work; after a short stint at Midland Bank he changed over to C. J. Hambro & SonHambros Bank
Hambros Bank was a British bank based in London. The Hambros bank was a specialist in Anglo-Scandinavian business with expertise in trade finance and investment banking, and was the sole banker to the Scandinavian kingdoms for many years...
. He started out as a typist, writing letters to Scandinavian customers, but after a year he was made assistant in the new currency department. In the evenings he continued his studies in economics, and was greatly influenced by John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
. Of special interest for his research and work were the imbalances created by the German war reparations, as their consequences could be seen clearly in the currency market with the German mark rapidly losing value against other main currencies. The young Næss was amazed at being in the center of the disastrous decline of the mark, severely undermining the Weimar Republic
Weimar Republic
The Weimar Republic is the name given by historians to the parliamentary republic established in 1919 in Germany to replace the imperial form of government...
. By the middle of 1923 Næss decided to concentrate on his Ph.D. and thus ended his engagement with the bank.
The aim of his research was to show how fluctuations in the currency market influenced each nation's prices, and he became a member of the Royal Economic Society
Royal Economic Society
The Royal Economic Society is incorporated by a Royal Charter dated 2 December 1902. It is one of the oldest economic associations in the world. Currently it has over 3,300 individual members, of whom 60% live outside the United Kingdom...
in order to follow lectures by Keynes and others. Keynes was an eager proponent of economists investing in the market, in order to "live as one learned", and young Næss followed this. He started out with small investments in rubber, as there were huge imbalances in supply and demand which he had found through his research. With the profits he continued into tin, and as he was successful he was offered a job as an analyst by his broker, so leaving him with less time for concluding his research.
Into whaling
In 1927 Næss got to know Rupert Trouton, and he presented Næss with a plan to buy control of his father-in-law's whaling enterpriseWhaling
Whaling is the hunting of whales mainly for meat and oil. Its earliest forms date to at least 3000 BC. Various coastal communities have long histories of sustenance whaling and harvesting beached whales...
, the Norwegian company A/S Hektor. In establishing the Hektor Whaling Ltd Næss got good use for his banking experience and contacts in City
City of London
The City of London is a small area within Greater London, England. It is the historic core of London around which the modern conurbation grew and has held city status since time immemorial. The City’s boundaries have remained almost unchanged since the Middle Ages, and it is now only a tiny part of...
. Næss himself took £50,000 of the company's total capital of £600,000, a gamble that was to make him a huge profit. Due to his success in this enterprise he was in the summer of 1928 contacted by the Norwegian whaling pioneers Torger Moe and Johan Rasmussen, asking his help to arrange financing of their Viking Whaling Company Ltd, as they planned to build one of the world's first whale factory ship
Factory ship
A factory ship, also known as a fish processing vessel, is a large ocean-going vessel with extensive on-board facilities for processing and freezing caught fish...
. The vessel Vikingen was to be built as a tanker, with the whale processing factory on its deck; thus being able to trade both as a factory ship and a tanker.
Næss found the prospect very interesting, arranged the financing and the first whaling company trading on the LSE
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
started in January 1929. Næss did receive some critique from Norway for "selling out know-how" to the British, as whaling was a huge Norwegian industry. Næss' view was that the capital was difficult to obtain in Norway; moreover that the crew and supplies anyway would come from Norway. Vikingen, with a deadweight tons
Tonnage
Tonnage is a measure of the size or cargo carrying capacity of a ship. The term derives from the taxation paid on tuns or casks of wine, and was later used in reference to the weight of a ship's cargo; however, in modern maritime usage, "tonnage" specifically refers to a calculation of the volume...
of 15,000 tons was delivered in September 1929 and sailed for its first season, which was a huge success.
Enter the Panama flag
There were however problems: as Vikingen was British registered, Norwegian stockowners were taxed twice. In order to remedy this, Næss found the innovative solution of moving the administration to France and registering the vessel Vikingen in Panama, as US-owned vessels had done since 1922. Næss had to overcome a number of obstacles, one of them arranging a tax agreement between the US and Panama. In concluding this agreement Næss got assistance from Standard Oil Company of New Jersey. After much research and work a Panama company named Viking Corporation was established and the Vikingen with its whaling vessels was sold to that company in 1931. The various Norwegian sailors' organisations were informed that all wages and agreements would remain as before, and a bonus would be given covering the fact that the seamen would not receive Norwegian public pensions. This was accepted by the powerful head of the seamen's union, Mr. Ingvald HaugenIngvald Haugen
Ingvald Haugen was a Norwegian labour union leader and politician for the Labour Party.He was born in Hadsel, Norway....
.
Depression and overproduction
The purpose of the Viking Whaling Company Ltd was not only to operate its own whale factory ships but to buy shares in Norwegian companies. It bought shares in A/S Vestfold, A/S Sydhavet and A/S Rosshavet, all controlled by Johan Rasmussen & Co. Besides ships these companies had a whaling station on South Shetland. The profits were impressive; for the years 1924 - 1928 above 60%, with a maximum of 147% as net profit to capital. With the depressionGreat Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
the prices collapsed, and in the beginning of the 1930s there were a number of vessels laid up and restructuring in the business. Næss was closely involved in this, especially the sale of the huge new whale factory ship Vestfold to a newly established company in London, as A/S Vestfold could not service its debtors. This was made possible by Næss's good connections in London, and saved the Norwegian company from bankruptcy.
During the years 1932-34 the prices on whale oil sank from £25 to £10 per ton. To counter this the first voluntary reductions of production came forth, as governed by a quota agreement signed 9 June 1932. The agreement set limits on production of whale oil and the length of the season, it was to start 7 October 1932 and end 30 April 1933. This resulted in that the companies Næss was involved with used only the modern Vestfold for that season.
A taste of whale hunting and shadows of war
In December 1934 Næss travelled to Cape TownCape Town
Cape Town is the second-most populous city in South Africa, and the provincial capital and primate city of the Western Cape. As the seat of the National Parliament, it is also the legislative capital of the country. It forms part of the City of Cape Town metropolitan municipality...
in order to study the whale hunt, and reached the Vestfold in January 1935. He saw the whole process of hunting and processing the whales. He was trying his luck at shooting whales and was very much impressed by the gunners' skill. The largest whale caught was some 33 m with a weight of over 100 tonnes. Næss seemed to regret part of his involvement in the whaling business, as it ended with almost exterminating the large whales. Næss was back in London in March 1935, and though the market was still down it had improved, due to large purchases of whale oil by the German government. In the season 1937 - 1938 the market was down again, and with Vestfold producing a loss it was decided to sell Vikingen.
The only buyer was the German government, and it could only pay with building a tanker. It was a huge political gamble, but the agreement was signed in Berlin early 1938 and the building of the tanker started at Deutsche Werft
Deutsche Werft
Deutsche Werft was a German shipbuilding company, located in Hamburg, Germany. It was founded in 1918 on initiative by Albert Ballin and with Gutehoffnungshütte , Allgemeine Elektricitäts-Gesellschaft and Hamburg Amerikanische Packetfahrt Actien Gesellschaft as investors.During World War II...
in Hamburg
Hamburg
-History:The first historic name for the city was, according to Claudius Ptolemy's reports, Treva.But the city takes its modern name, Hamburg, from the first permanent building on the site, a castle whose construction was ordered by the Emperor Charlemagne in AD 808...
. Næss was acutely aware of war looming and followed the building himself. The vessel named Norness and delivered on 4 May 1939. The remaining whale factory vessel in the cooperating companies was now Vestfold; it would do its last season 1939 - 1940. After delivering some of its cargo to Procter & Gamble
Procter & Gamble
Procter & Gamble is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods....
in New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
and the rest in Liverpool it would act as a bunker vessel in Freetown
Freetown
Freetown is the capital and largest city of Sierra Leone, a country in West Africa. It is a major port city on the Atlantic Ocean located in the Western Area of the country, and had a city proper population of 772,873 at the 2004 census. The city is the economic, financial, and cultural center of...
until 1944, when it departed and was sunk by a German submarine.
Into the tanker trade
The whale factory vessels were actually tankers with the whale processing equipment added, so it was natural for Næss and his partners to venture into tankers. The first small step was in 1930 with two motor tankers, Nore, a vessel and Norvinn , both considered large by then current standards. The vessels were to have traded in the spot market, but as the rates were low both were laid up. Næss was not discouraged by this and on 20 February 1936 established the company Viking Tanker Company Limited with capital raised in London. The administration was in Paris and the vessels were to sail under the PanamaPanama
Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...
flag. It bought the two previous mentioned tankers from Rasmussen & Moe's Rederi A/S, and as the tanker market was good it ordered and bought several vessels. By 1938 the company had 5 vessels, Nore, Norvinn, Norvik, Norlys and Norbris, totalling - a large tanker fleet for that period. The financial results were good with a net profit of £192,575 for the company's second year of operation.
War and the escape from Norway
In September 1939 World War IIWorld War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
began, and the tanker markets became very strong. Even though sailing under a neutral flag the Viking Tanker Company vessels were able to trade as they followed British regulations. Næss travelled to Norway in April 1940, as he had been requested by the British Ministry of Trade to contact Norwegian shipowners that did not fully support the blockade of Germany. He would also meet his colleagues in Sandefjord
Sandefjord
is a city and municipality in Vestfold county, Norway. The administrative centre of the municipality is the city of Sandefjord. The municipality of Sandefjord was established on 1 January 1838...
, Johan Rasmussen and Torger Moe. Næss managed to have a meeting on 8 April 1940 with the Norwegian Foreign Minister, Halvdan Koht and woke up the day after, 9 April with the German invasion of Oslo, seeing the German transport planes landing at the Fornebu airport from his brother Arne Næss
Arne Næss
Arne Dekke Eide Næss was a Norwegian philosopher, the founder of deep ecology. He was the youngest person to be appointed full professor at the University of Oslo....
's house in Holmenkollen
Holmenkollen
Holmenkollen is a neighborhood in the Vestre Aker borough of Oslo, Norway. In addition to being a residential area, the area has been a ski recreation area since the late 19th century, with its famous, eponymous, ski jump arena hosting competitions since 1892...
. Næss was pessimistic about Norway's chances towards the German invasion and escaped Oslo on 10 April, heading westwards by air. The journey would be by train, air, car and small boats and he finally ended up in Ålesund
Ålesund
is a town and municipality in Møre og Romsdal county, Norway. It is part of the traditional district of Sunnmøre, and the center of the Ålesund Region. It is a sea port, and is noted for its unique concentration of Art Nouveau architecture....
were he volunteered as an interpreter for the British Expeditionary Force. On the way he was twice locked up by Norwegian police, suspecting him of being a spy. After a few weeks in Ålesund the British forces had to withdraw and Næss followed them back to Britain.
Back in London Næss had to establish contact with the seven vessels operated by the group; until the invasion they had been controlled by the office in Sandefjord, Norway. These were the whale factory ship Vestfold (built in Framnæs shipyard
Framnæs shipyard
Framnæs shipyard was a former Norwegian shipbuilding and engineering firm headquartered in Sandefjord, in Vestfold county, Norway. Originally strongly linked to the whaling industry, in later years it entered into more versatile shipbuilding, including rigs and modules for the offshore business...
), the tankers Norness, Norbris, Norlys, Norvinn and finally the dry cargo vessels Nordal and Nortun. The British government also wanted control of his fleet, demanding to have the vessels on bare-boat charter. This was a major blow to Næss, he felt insulted by what he viewed as unfriendly treatment of a friend of Britain. Næss insisted on running the company himself; knowing both the vessels and the crew he felt he would be the most competent person for that. The British government initially did not accept this; weeks followed where Næss virtually was a hostage, not allowed to contact his vessels or leave the country. The solution came through the banker Sam Guinness, as the companies had substantial amounts of US dollars in New York banks. This money could only be released by Næss, and the British government needed dollars. So for $1,125,000 Næss got his travel permit to the US.
In August 1940 Næs arrived in New York on the White Star/Cunard liner Scythia, and he immediately proceeded to secure premises in State Street for his company office. The British government was however still insistent on controlling the vessels, and their weapon was the bunkering permit needed for British-controlled harbours. As Næss thought he was the most capable person to control the fleet he took his case to the United States Maritime Commission
United States Maritime Commission
The United States Maritime Commission was an independent executive agency of the U.S. federal government that was created by the Merchant Marine Act of 1936, passed by Congress on June 29, 1936, and replaced the U.S. Shipping Board which had existed since World War I...
. After a 10-minute meeting with its leader, Admiral Emory S. Land, in September 1940 he was instructed that two of his vessels should be chartered to the British and five to the US. Thus Næss, as one of the few, if not the only, private shipowners was allowed to continue his operations during the war. As the trade was good this was indeed a boon, but also a challenge. The other countries controlled their vessels' crews, while Næss with his Panama flag had to recruit his seamen on a voluntary basis. Overall the business went well, and Næss established a good working relationship with the United States Maritime Commission. For the accounting year ending 31 July 1940 the net profit was £150,325, for 1941 it was £155,844, and for 1942 £158,397.
The first vessel the company lost was Norness, torpedoed off Long Island
Long Island
Long Island is an island located in the southeast part of the U.S. state of New York, just east of Manhattan. Stretching northeast into the Atlantic Ocean, Long Island contains four counties, two of which are boroughs of New York City , and two of which are mainly suburban...
in January 1942, the first vessel to be sunk that close to the US coast. The sinking was huge news and the press coverage was extensive, even though the whole crew was saved.
Serving Norway
Some time during the summer of 1942 Næss was called for a meeting with Johan Ludwig MowinckelJohan Ludwig Mowinckel
Johan Ludwig Mowinckel was a Norwegian political figure representing Venstre, the social liberal party. He served as Prime Minister of Norway between 1924 and 1926, again from 1928 until 1931, and finally between 1933 and 1935.Born in Bergen, he founded the shipping company A/S J. Ludwig...
, former prime minister of Norway. He was not satisfied with how Nortraship
Nortraship
The Norwegian Shipping and Trade Mission was established in London in April 1940 to administer the Norwegian merchant fleet outside German-controlled areas. Nortraship operated some 1,000 vessels and was the largest shipping company in the world. It is credited for giving a major contribution to...
was administered and wanted Næss into the management of the organisation, as he had good connections with the United States Maritime Commission. In November 1942 Næss was given the position as Deputy Head of the Nortraship New York office. For Næss it was a sacrifice as he had to give up his job as head of the Viking Tanker Company and sell his shares, in order not to have conflicts of interest.
Immediately after joining Nortraship Næss was thrown into negotiating a new tonnage agreement with his British and US counterparts, Bill Weston from the Ministry of War Transport
Department for Transport
In the United Kingdom, the Department for Transport is the government department responsible for the English transport network and a limited number of transport matters in Scotland, Wales and Northern Ireland which are not devolved...
and David Scoll from the War Shipping Administration
War Shipping Administration
The War Shipping Administration was a World War II emergency war agency of the US Government, tasked to purchase and operate the civilian shipping tonnage the US needed for fighting the war....
. The negotiations took months and were hard bargaining. The agreement signed on New Year's Eve 1942 and thus named the Hogmanay agreement. The agreement was to last for the rest of the war and Næss played the inexperienced US negotiator against the British, thus landing as many benefits as he could for the Norwegians.
With the tonnage agreement settled Næss focused on the bad relationship between the main Nortraship offices, London and New York. He initiated an exchange of reports between the offices, and made a number of visits to the London office, thus gradually improving the cooperation between them. When the war ended in 1945 Næss was asked to stay on to help liquidate Nortraship and to arrange the negotiations for new vessels replacing the ones sunk during the war. Næss stayed for another year and, together with Nortraship's representative in Washington, George O. Mejlænder, a number of vessels were secured for Norwegian owners. Næss later regretted the decision to stay on as his rivals Onassis
Aristotle Onassis
Aristotle Sokratis Onassis , commonly called Ari or Aristo Onassis, was a prominent Greek shipping magnate.- Early life :Onassis was born in Karatass, a suburb of Smyrna to Socrates and Penelope Onassis...
and Niarchos
Stavros Niarchos
Stavros Spyros Niarchos was a Greek shipping tycoon, sometimes known as "The Golden Greek." In 1952, Stavros Niarchos built the first supertankers capable of transporting large quantities of oil, and subsequently earned millions of dollars as global demand for his ships increased.- Early life :He...
got a head start on him.
Establishing the Næss group
In November 1946 after leaving Nortraship Næss established the company Næss, Mejlænder & Co. Inc. in New York with a capital of $50,000. They quickly set up two companies in Panama, Nortuna Shipping Company Inc. and Norness Shipping Company Inc. Næss managed to secure financing from J. P. Morgan & Co. which became a pillar in the group's growth. Nortuna bought four old US general cargo ships, and two liners were ordered from Mitsubishi Shipbuilding & Engineering in TokyoTokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
, to be built by their dock in Yokohama
Yokohama
is the capital city of Kanagawa Prefecture and the second largest city in Japan by population after Tokyo and most populous municipality of Japan. It lies on Tokyo Bay, south of Tokyo, in the Kantō region of the main island of Honshu...
. Næss made his first visit to Japan in 1949 when the country was still occupied by US forces, and the orders were the first from a foreigner after the war. In the years to come Japanese shipyards were to deliver around 30 vessels to the Næss group. The vessels were named Sagura and Yama, the latter sold just after delivery as the market was bad. That was a huge mistake as the war in Korea
Korean War
The Korean War was a conventional war between South Korea, supported by the United Nations, and North Korea, supported by the People's Republic of China , with military material aid from the Soviet Union...
broke out and the demand for vessels soared.
After selling the four old vessels Næss liquidated Nortuna Shipping and concentrated on Norness Shipping, and after a dull start he started using "Contracts of Affreightment
Affreightment
Affreightment is a legal term used in shipping.Contract of Affreightment is the expression usually employed to describe the contract between a ship-owner and another person called the charterer, by which the ship-owner agrees to carry goods of the charterer in his ship, or to give to the charterer...
" in a 1954 agreement with American Independent Oil Company, of San Francisco. The contract stipulated that a given amount of oil was to be transported to Houston, Texas from the Persian Gulf
Persian Gulf
The Persian Gulf, in Southwest Asia, is an extension of the Indian Ocean located between Iran and the Arabian Peninsula.The Persian Gulf was the focus of the 1980–1988 Iran-Iraq War, in which each side attacked the other's oil tankers...
. The form of the contract gave Næss room to arrange the best possible conditions for transporting the oil, both for him and the oil company. The terms of the contract created a small sensation and Næss was summoned for a lunch in the Petroleum Club in Houston.
After the Korea war the market dived, but as an economist Næss was sure the market would rise again. If one took a longer view, say 15 years, the fluctuations would level out and ships on long-time charter would be profitable. To realize this idea Næss organised the "Naess Scheme Charters", where he would take other shipowners' vessels on long-term charters. The spirit behind this was pooling resources; each would do what one did best. The shipowners supplying tonnage would build, finance and manage, while Næss as the charterer would do his utmost to place the vessels. From 1954 ten vessels were chartered by Scandinavian American Shipping Company (owned 57% by Norness Shipping and 43% by the Rockefeller family) on Naess Scheme Charters, from reputed Scandinavian shipping companies, among them A. P. Møller
A.P. Moller-Maersk Group
A.P. Moller – Maersk Group , also known as Maersk , is a Danish business conglomerate. A.P. Moller – Maersk Group has activities in a variety of business sectors, primarily within the transportation and energy sectors. It is the largest container ship operator and supply vessel operator in the...
. Næss's theory seemed to hold; although for some years the charters ran with losses, the shipping boom after 1967 ended the 15-year charters with a solid profit.
Years of explosive growth
The year 1956 was to be the start of strong growth for the Næss business as he started to order vessels he anticipated the oil companies would need in the coming years. The basis was long-term financing from banks and insurance companies in the US and other countries; this made it fairly easy to arrange short-time financing for building vessels. He ordered four big tankers from Japanese builders; each was around , to be delivered from September 1957 to June 1958. It was a gamble, but it paid off; within a few months all four were on long-term charter, two to SocalChevron Corporation
Chevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining,...
and two to Texaco
Texaco
Texaco is the name of an American oil retail brand. Its flagship product is its fuel "Texaco with Techron". It also owns the Havoline motor oil brand....
. By April 1957 Næss had ordered 20 new buildings, to be delivered over the following five years. Except for three of the vessels, they were covered by long-time charters. Seven of the vessels were to be built by Japanese shipyards, due to their high quality and prompt delivery. George Mejlænder decided to start his own brokerage firm and Næss paid him out; the company name was changed to Næss Shipping Co. Inc. As the "battle of convenience flags" heated up Næss decided to secure his position and on the 15 November 1958 he established Anglo American Shipping Co. Ltd on Bermuda
Bermuda
Bermuda is a British overseas territory in the North Atlantic Ocean. Located off the east coast of the United States, its nearest landmass is Cape Hatteras, North Carolina, about to the west-northwest. It is about south of Halifax, Nova Scotia, Canada, and northeast of Miami, Florida...
; thus the vessels could fly the British flag.
The flag of convenience fight
In 1958 the battle of convenience flagsFlag of convenience
The term flag of convenience describes the business practice of registering a merchant ship in a sovereign state different from that of the ship's owners, and flying that state's civil ensign on the ship. Ships are registered under flags of convenience to reduce operating costs or avoid the...
heated up and a boycott of ships sailing under such flags was declared by the ITF
International Transport Workers' Federation
The International Transport Workers' Federation is a global union federation of transport workers' trade unions, founded in 1896. In 2009 the ITF had 654 member organizations in 148 countries, representing a combined membership of 4.5 million workers....
. Næss was having problems with insurance for his vessels and from a number of accusations of him being a "pirate". He was the chairman of the American Committee for Flags of Necessity and as such a highly visible target. As mentioned above he countered by registering vessels on Bermuda; the island required no taxes, the only inconvenience being that he had to employ a British captain, chief engineer and radio officer. Another benefit from using Bermuda was that quite a few charters were settled in British pounds; using the British flag removed the currency risk.
Næss also counter-charged by attending a conference with major British newspapers on 10 July 1958, where he stressed his view that flags of convenience did not need to be substandard. If the ITF encountered substandard vessels he and any sane shipowner would support a boycott of them, Næss argued. Ships with crews paid according to standards, and with a technical standard on a line with what international regulations required, should however not be targeted.
Moving office to Bermuda
In the 1950s Næss had offices in Nassau, BahamasNassau, Bahamas
Nassau is the capital, largest city, and commercial centre of the Commonwealth of the Bahamas. The city has a population of 248,948 , 70 percent of the entire population of The Bahamas...
, but as he was not satisfied with the political conditions he started searching for other options. He surveyed Panama City but found the city to be too far from New York, and it would be difficult to recruit good management there. He was advised to have a look at Bermuda and found it favourable, so he moved his offices there.
Anglo American Shipping Co. Ltd was introduced on the London Stock Exchange in November 1959, the majority of the shares owned by Norness Shipping, the remainder owned by British investors and Næss's friends within New York finance. Five vessels were ordered for the company, the largest being the Naess Sovereign and Naess Champion; both were around and built by Mitsubishi in Nagasaki, Japan. When delivered in January 1961 Naess Sovereign was the third largest tanker in the world, and the largest under the British flag. To manage the vessels Næss linked up with a company in Glasgow, establishing the firm Næss Denholm & Co. Ltd. For the shipping industry at large 1960 was a difficult year, with old tonnage laid up; Anglo American with its new vessels and long-time charters was an exception.
Merger and ABC with P&O
Creating Anglo American and the transfer of a number of vessels on time-charter to that company partly changed Norness Shipping to an investment company, as it held 68.5% of Anglo American's shares. As the years 1959 - 1961 were bad in the tanker market Næss placed his attention on developing large bulk carrierBulk carrier
A bulk carrier, bulk freighter, or bulker is a merchant ship specially designed to transport unpackaged bulk cargo, such as grains, coal, ore, and cement in its cargo holds. Since the first specialized bulk carrier was built in 1852, economic forces have fueled the development of these ships,...
s and arranging "affreightment" contracts for them. The focus on Norness Shipping created anxiety among Anglo American shareholders as to whether enough was being done to expand that company. This created the basis for a merger between the two companies, but that was complicated as there were serious problems connected to taxation of shareholders. The tax problem for the US Norness Shipping shareholders was solved in February 1962 and the merger talks could start in detail. The final agreement was signed on 15 December 1962; the value of Næss's original $50,000 was now $44,000,000 and the new company was named Anglo Norness Shipping Company Ltd..
In 1962 Næss learned that the P&O
Peninsular and Oriental Steam Navigation Company
The Peninsular and Oriental Steam Navigation Company, which is usually known as P&O, is a British shipping and logistics company which dated from the early 19th century. Following its sale in March 2006 to Dubai Ports World for £3.9 billion, it became a subsidiary of DP World; however, the P&O...
had ordered four bulk carriers, each of around . Næss knew that this was a new area for P&O and arranged a meeting with the chairman, Sir Donald F. Anderson, whom he knew well from his Nortraship days. Næss proposed that the two companies should cooperate and pool their vessels into one joint owned company. P&O found the idea attractive and Associated Bulk Carriers Ltd. was established on 8 April 1964. The joint company was a huge success and by 1970 ABC contained 36 vessels with a total of . Part of the success was that Næss was able to persuade the more conservative P&O to order a number of OBO carriers, thus adding flexibility to the concept.
The OBO carrier
Næss was always searching for increased efficiency, and the long voyages ballasted for tankers posed an intriguing problem. In the mid of the 1950s he started to think about a combination ship that could carry both oil and bulk cargoes. Oil and ore ships had been in operation since the 1920s, but a vessel with the capability of carrying both oil and bulk cargoes seemed impossible to construct. Næss pushed his chief naval architect T. M. Karlsen to keep researching the combined vessel, also checking in on various failed projects like the Mando Theodoracopulos. One of the deficiencies of that vessel was the small hatches, too small for efficient discharging.In 1964 the Naess group started a collaboration with P&O in the form of the jointly owned company Associated Bulk Carriers, thus giving them access to P&O's vast technical department. The last hurdles were cleared under a meeting at the A. G. Weser shipyard in Bremen on 6 April 1964, and a contract for building the first combined vessel was signed. The vessel was christened 16 June 1965 as Naess Norseman. The German industrialist owning the shipyard proposed the type to be called Naess-type; Næss himself however found it more appropriate to name it after the cargoes carried. Thus the name for the new type was to be OBO for Oil-Bulk-Ore. The vessel performed as expected, with some 75% of the time with cargo and only 25% in ballast. The much increased time with cargo would then more than outweigh the 15% higher cost of the vessel. Adding to the versatility of the type was that the oil and bulk market often developed differently. The OBO ship could then trade with bulk cargoes when that market was on top, and change to oil when the demand for tanker tonnage was high.
Trying years and the Zapata merger
After the boom from mid 1956 to mid 1957 the shipping markets were depressed for years to come. In spite of this the Anglo Norness Shipping Company had impressive results:| Year | Assets | Investments | # of shares | Shares value | Profit | Dividend paid |
| 1958 | $61.3 m | $10.1 m | 6.0 m | $2.32 | $3.6 m | $0.62 |
| 1959 | $78.7 m | $16.2 m | 6.2 m | $3.04 | $3.4 m | $0.52 |
| 1960 | $117.6 m | $17.1 m | 7.2 m | $3.45 | $4.2 m | $0.60 |
| 1961 | $156.2 m | $15.1 m | 7.8 m | $4.20 | $5.3 m | $0.66 |
| 1962 | $168.0 m | $18.8 m | 8.8 m | $4.92 | $4.8 m | $0.56 |
| 1963 | $185.1 m | $17.9 m | 9.3 m | $5.94 | $6.7 m | $0.78 |
| 1964 | $193.2 m | $19.0 m | 9.5 m | $6.50 | $8.1 m | $0.85 |
The cooperation with P&O in bulk carriers had started through Associated Bulk Carriers Ltd., and the battle of flags of convenience had been won. In twelve years the Anglo Norness fleet had expanded into one of the largest in the world, with 58 vessels totalling including new buildings and charters. The three years from 1964 were meagre for the Næss group.
The market continued to be depressed, and the group had losses on the chartered vessels. Næss was put under considerable pressure to abandon his policy of operating in the spot market but he strongly resisted long time charters as he believed the markets would recover. Then, in June 1967 the Six-Day War
Six-Day War
The Six-Day War , also known as the June War, 1967 Arab-Israeli War, or Third Arab-Israeli War, was fought between June 5 and 10, 1967, by Israel and the neighboring states of Egypt , Jordan, and Syria...
erupted, and the Suez Canal
Suez Canal
The Suez Canal , also known by the nickname "The Highway to India", is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea and the Red Sea. Opened in November 1869 after 10 years of construction work, it allows water transportation between Europe and Asia without navigation...
closed for years to come. This created an enormous surge in demand for tanker tonnage and the Næss group was ideally positioned with 16 large tankers available, receiving extremely good rates for its vessels.
With a strong financial situation Næss started thinking about the group's long-term strategy; the world economy was volatile, and there were inflationary pressure and currency problems. The company was courted by Occidental Petroleum Company and Zapata Offshore Company (founded in 1953 by George H. W. Bush
George H. W. Bush
George Herbert Walker Bush is an American politician who served as the 41st President of the United States . He had previously served as the 43rd Vice President of the United States , a congressman, an ambassador, and Director of Central Intelligence.Bush was born in Milton, Massachusetts, to...
), and the latter won the merger with an offer of $5 per share, valuing the company at $47.5 million. As a diversified offshore company Zapata seemed to be well positioned to take advantage of the expected boom in oil exploration and its offer was accepted in May 1968, and the company name changed to Zapata Norness Inc..
Næss started as a member of the board of the new company and initiated a huge expansion program, ordering a number of ship with a total costing $163 million. As Zapata had its offices in Houston it became tedious for Næss to attend board meetings; he withdrew and his son Michael was elected in his place. By 1972 Næss grew more and more concerned over the huge volume of new buildings, he feared a collapse of the market and was thus positive when approached by P&O and Hilmar Reksten
Hilmar Reksten
Hilmar A Reksten was a Norwegian shipping magnate. After studying business in Cologne, he started his own company in 1929...
who offered to buy his fleet. Næss had very mixed feelings as he had been in shipping for more than 40 years, however, with his experience and background as an economist he anticipated a downturn in the market. He did not have to wait long to see his decision pay off.
In July 1973 the deal was closed and Anglo Norness was sold for $208 million. Today it would equal $1.2-1.6 billion. In October the OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
cartel quadrupled the oil price creating the 1973 oil crisis
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...
and the tanker market crashed. Næss was quite self-critical and had lambasted himself after other decisions; however, he had reasons to be proud of the perfect timing of this deal.
INTERTANKO and pollution
Even though being a staunch defender of personal initiative and unregulated business, Næss supported organisations that could solve problems specific for the business area voluntarily. The reasoning behind INTERTANKO was to organise the independent tanker owners and solve problems particular to the tanker market. In the 1960s it was scrapping old vessels; after the 1973 oil crisis this problem surfaced again. With his large fleet of tankers Næss was a natural participant, and after being a member of the executive committee he was elected chairman in 1976. Due to the large number of new buildings the rates in 1975 gave the shipowners huge losses; some $125 millions on Persian Gulf to Europe alone. Of a total tanker tonnage of close to were laid up, while an equal amount sailed with reduced speed.As the INTERTANKO president Næss concentrated on scrapping old tonnage, pollution and utilizing supertankers as floating storage tanks. Scrapping older vessels would reduce the amount of surplus tonnage, and this would then in the long run produce better rates. In trying to reduce the surplus tonnage Næss however got into arguments with the US Justice Department as they were on the verge of viewing his actions as violating the anti-trust laws
Sherman Antitrust Act
The Sherman Antitrust Act requires the United States federal government to investigate and pursue trusts, companies, and organizations suspected of violating the Act. It was the first Federal statute to limit cartels and monopolies, and today still forms the basis for most antitrust litigation by...
. His job of promoting scrapping of old tonnage was however made easier by the grounding of the Argo Merchant off Nantucket in December 1976, a 23-year-old run-down tanker. The spillage from the grounding pushed the major US oil companies to examine the vessels they were chartering closely, thus eliminating a large group of old, badly kept vessels.
As a citizen of Bermuda Næss was acutely aware of the problem with marine pollution; taking a walk on his beach he could easily spot lumps of tare that most probably came from tankers. Næss was therefore a staunch supporter of reducing oil waste as much as possible. Næss linked up with the Norwegian explorer Thor Heyerdahl
Thor Heyerdahl
Thor Heyerdahl was a Norwegian ethnographer and adventurer with a background in zoology and geography. He became notable for his Kon-Tiki expedition, in which he sailed by raft from South America to the Tuamotu Islands...
who had himself witnessed the increased pollution during his expeditions. Næss pushed forward various recommendations that INTERTANKO then took to International Maritime Organization
IMCO
IMCO may refer to:* the Intercontinental Manufacturing Company* the International Maritime Organization* the Intermountain Manufacturing Company* the Committee on the Internal Market and Consumer Protection of the European Parliament...
, the UN organisation responsible for improving maritime safety and to prevent marine pollution.
Retirement, sort of
Næss settled in Bermuda, buying land and building a hotel, but well into his old age seemed always on the lookout for a good deal that could have him started again in shipping. He made generous donations to Bergen, especially the museum documenting the old hanseatic influenceHanseatic League
The Hanseatic League was an economic alliance of trading cities and their merchant guilds that dominated trade along the coast of Northern Europe...
on the city. His personal lifestyle was frugal as always; a striking contrast to his shipowner colleagues who kept large yachts and mansions.
He loved gardening, and guests at his hotel sometimes took pity on the old guy having to work in the garden, giving him a dollar as they passed by.