Forbes Container Line Pte Ltd, the Singapore-based non-vessel operating common carrier (NVOCC) that is a subsidiary company of Mumbai-listed Forbes and Co. Ltd, has quietly shut its business without returning containers leased to the company by five entities and settling outstanding dues of as much as $20 million.
Forbes & Co. is part of the diversified conglomerate Shapoorji Pallonji Group.
On 19 August, the high court of Singapore appointed liquidators after winding up the company on an application filed by Singapore-based Sea Consortium Pte Ltd, to recover 148,172 Singapore dollars for freight services rendered to Forbes Container Line between October 2015 and March 2016.
Forbes Container Line, through its solicitors, disputed Sea Consortium’s claims and said that it “(does) not agree with the quantum claimed”.
An NVOCC is a cargo consolidator in ocean trades who buys space from a container carrier and sub-sells it to small shippers. They collect small quantities of cargo from customers and aggregate them into a full container load for shipments.
Forbes Container Line had a fleet of some 10,000 containers, of which about 9,000 containers were taken on lease from various container leasing companies, including the New York Stock Exchange-listed Textainer Group Holdings Ltd, the world’s largest lessor of inter-modal containers by fleet size.
Other container lessors who are yet to get back their containers and outstanding rentals from Forbes Container Line include Blue Sky Intermodal (UK) Ltd, Florens Container Services (USA) Ltd, Raffles Lease Pte Ltd and VS&B Containers Llc. Some of these entities are funded by large financial institutions and private equity funds.
The containers were given to Forbes on short-term, long-term, finance and/or purchase leases.
“Each of the container lessors has placed great reliance in its relationship with Forbes Container Line on the support that we were led to believe that the company enjoyed from Forbes & Co. as the parent company in India, and that Forbes & Co. in India is a highly regarded honourable company. This understanding was reinforced by the commitment statement to provide financial support to Forbes Container Line Pte Ltd clearly affirmed in its annual report for the year ended 31 March 2015. At the present time, we fear that this is not the case. We all now share the same concern that it is the intention of the Forbes Group to walk away from its obligations in Singapore,” said Chris Langley, treasurer of Blue Sky Intermodal, which had leased 500 containers on a finance lease to Forbes in September 2015, for which it received rentals for one month.
“This has had a chilling effect on many of the foreign companies operating shipping and their financiers as this was completely un-professional/unethical of Forbes, one of India’s premier companies,” said an executive at VS&B Containers, who declined to be identified.
“Since it is a commercial dispute and the matter is sub-judice, we would not be able to respond to any of your queries,” a spokesman for Forbes & Co. said.
“The commitment made by Forbes & Co. in its financial statements was very critical for companies dealing with them,” he said. “It meant that we were lulled into thinking that even though the company in Singapore is not doing well, with a large parent back in India, who will support this company, we had no cause for worry. So nobody took any precipitate action.
The firm, though, is yet to announce the closure of its Singapore NVOCC. “What they did is they packed up everything, closed the office and sent off everybody in Singapore where it was being run from. This was done about a month ago. We have no place to correspond to, no one to talk to,” said a person familiar with the development. Of its 10,000-container fleet, about 2,500 containers are being held up by various people at various places including ports and everyone is stuck, he said.
In the container-leasing industry, an un-returned container, typically, entails a cost of about $2,000, whereas the rental for a container is about $30, according to the VS&B Containers executive cited earlier.
The situation is quite bad for many shipping firms globally. “This leaves a very bad taste in everyone’s mouth”, the VS&B Containers executive said.
Following a review of its business portfolio, the management and board of Forbes & Co. concluded earlier this year that the container freight stations (CFS) and logistics businesses were not a strategic fit with the firm’s long-term vision, and as such, it was necessary and prudent to exit these businesses in a manner that optimizes value.
In April 2016, Forbes completed the slump sale of the Mundra CFS to TG Terminals Pvt. Ltd, and the company executed an agreement to transfer assets pertaining to its logistics business with Transworld Global Logistics Solutions (India) Pvt. Ltd for Rs.53.5 crore. The transaction for the Veshvi CFS is likely to be completed in the second quarter of this fiscal year.
“For Shapoorji Pallonji and Forbes, I don’t think $15-20 million should be that big a deal to wreck a more than 150-year-old reputation”, the VS&B Containers executive said.
Source: Live MintPrevious Next
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