Tokyo broker Seaservice closes its doors to shipping

Withdrawal seen as sign of the times for Japan’s beleaguered tanker brokers as consolidation of country’s oil refiners bites

Long-established Tokyo shipbroker Seaservice has closed down its tanker broking business to focus on more profitable business operations such as real estate and cosmetics.

The company informed brokers last week that it would be withdrawing from the market from the end of March, without explanation.

The closure marks the end of 35 years in the tanker broking business since Seaservice was set up in 1983 by two former tanker brokers who worked with Japanese trading houses and were looking to go independent.

The company became an established part of the Tokyo tanker broking scene, a member of the Japan Shipbrokers Association and specialised in medium range product tanker and VLCC broking.

But after 15 years as a dedicated broker, the company began to diversify, with the partners building an office block in the upmarket Tokyo district of Aoyama as well as taking on extra business lines in food, leisure and cosmetics.

There were signs that its tanker business was struggling when one of its shipping-related companies, Seaservice Tankers, filed for bankruptcy in 2016 as part of a restructuring of parent company Seaservice Ltd.

However, Seaservice continued in broking. The partners told local press as recently as last summer that they were looking for ways to diversify in tanker broking and bring better value to customers.

Worse environment

But the business environment for Japanese tanker brokers has been getting worse. Tokyo’s tanker brokers have been complaining that there is less business to go around, while the relationship between oil companies and tanker owners has been getting closer, effectively cutting them out.

Japan’s oil majors used to share charter work around the Tokyo broking network, but the industry has been hit by several consolidation moves that have more than halved the number of refiners.

The creation of Japanese giants through consolidation, such as JXTG Nippon Oil and Energy and the ever closer ties between Idemitsu and Showa Shell, has meant Japanese oil company-controlled fleets have become more coordinated, decreasing spot tonnage demand.

On top of that, there is a long-term decline in crude imports to Japan — a trigger that is also driving consolidation.

A Seaservice executive confirmed to TradeWinds that it would close its shipping business next month. He stressed that Seaservice would continue in diversified areas including real estate.