There was a change of leadership at Steamships Trading Company on July 1, with Chris Daniells replacing Rupert Bray as managing director. In an exclusive interview with Business Advantage PNG, the two share how Steamships is pursuing its long-term growth plans amid a challenging economic environment.

Departing managing director Rupert Bray (left) and incoming MD Chris Daniells. Credit: Steamships

Departing Steamships Trading Company Managing Director Rupert Bray says he is still bullish about Papua New Guinea, despite the “underwhelming” economic performance during his six years in the country.

Bray and Chris Daniells, who replaced him as Steamships MD on July 1, granted an exclusive joint interview to Business Advantage PNG to mark the handover.

Comparing the business environment in PNG now to when he joined Steamships in 2018 as Chief Operating Officer, Bray says it feels “a bit like Groundhog Day”.

Steamships will continue to be a “forward-looking company” that is focused on “building things that build PNG.”

“I arrived pre-APEC 2018 [which PNG hosted], when the expectation was that Papua LNG was soon going to start. There was a lot of optimism, and for a whole bunch of reasons – largely political, and the impact of COVID – that hasn’t happened,” Bray says.

“It’s been six more years of underwhelming economic performance, which has been hugely frustrating because I can see the potential. I can see the growth.”

Investing for next growth cycle

Steamships’ Chris Daniells

The quieter economic conditions have not stopped the company, which has interests in logistics, property and hospitality, from investing in PNG.

New MD Chris Daniells notes that Steamships has invested between K130 and K140 million in its shipping business in the past 18 months to prepare for a possible final investment decision on Papua LNG and the start of the next economic growth cycle.

“We’ve bought a lot of new assets. We’ve also gone through a large dry docking and maintenance program to get our vessels up to scratch for the next five years. I’m pleased to say that the investment is essentially complete,” he says.

Large-scale investments in other business divisions further reflect the company’s overall economic optimism.

The Grand Papua Hotel in Port Moresby is currently undergoing a K70-80 million rejuvenation. In addition, Steamships has plans to invest a further K200 million over three years across its Coral Sea Hotels group.

On the property side, Daniells says the Marriott Executive Apartments in Port Moresby have had an “incredibly positive” reception since opening in March this year. It may take “some time” to fill all the apartments, he says, “but we’re absolutely convinced that we’ve built the right product in the right place, and we differentiate ourselves by having premium apartments and a mixed residential/commercial precinct development downtown.”

The company is also investing heavily outside the capital, including in Mount Hagen in the Highlands, where it expects to begin construction on the joint Steamships/Tininga Wonye Dobel development by the final quarter of this year.

“Security has been better in Hagen over the last couple of years, and it’s really increasing demand for goods and services,” Bray adds.

Open about challenges

Steamships’ Rupert Bray

Despite his overall optimism, Bray is open about the challenges PNG businesses face – and how these impact planning. He names the degradation of educational standards, the poor performance of utilities and major service providers, and reduced government capacity as key factors.

But, he says, the biggest problems are declining security and increasing socioeconomic instability as a result of long-term economic underperformance.

“Black Wednesday [the January 10 riots] was symptomatic of those two underlying problems. Obviously, the security is a reflection of a socioeconomic trend.”

While the riots damaged some of Steamships’ properties, they haven’t affected its long-term strategy. However, they have raised the cost of new projects and made financing more expensive. As a result, Bray says, Steamships has had to “adjust the time frame to some extent on our aspirations.”

The best example of this is the Melanesian Hotel in Lae, which Steamships closed way back in 2016 in preparation for its redevelopment.

“We’re now having to relook at the plan, given the cost increases,” Bray says.

Forward-looking

Daniells has a long association with PNG, having lived in the country during a previous stint with Steamships from 1998 to 2000, and visited regularly in the 2000s with Singapore-based sister company, Swire Group.

He has witnessed major significant economic growth over that time, and observes that Port Moresby has become a “much more interesting place to live and work.”

Turning to his new role, Daniells says Steamships will continue to be a “forward-looking company” that is focused on “building things that build PNG.”

And despite the challenges, he says, it is “very much business as usual” for the company.

“Some of the timing may have changed because of Papua LNG being delayed. But I don’t think it’s fundamentally changed what we do.”