Business

Shooting stops, shipping starts

Ed Ellis of San Juan Navigation, before a wall-size map on which the company’s charters are tracked. - DOUGLAS CRIST/Staff Writer
Ed Ellis of San Juan Navigation, before a wall-size map on which the company’s charters are tracked.
— image credit: DOUGLAS CRIST/Staff Writer

Like a number of his Bainbridge neighbors, Ed Ellis vehemently opposed the war in Iraq.

For that reason, he is especially pleased at the opportunity to participate in efforts to rebuild that country. The first postwar food aid is on its way to Iraq on board a ship operated by San Juan Navigation, Ellis’s company.

“I’m excited because this is something new and different with political implications,” said Ellis, who was also involved with the first agricultural shipments to Cuba. “It’s nice to be part of what is going on out there – a humanitarian effort to feed the Iraqi people.”

The call was issued on a recent Friday by the United States Agency for International Development for the shipment of 28,000 tons of wheat. And while USAID specified that the grain would be loaded at Galveston, Texas, the destination was and remains unknown.

“There were 12 possible discharge ports,” Ellis said. “It could be Umm Qasr in Iraq, but it would also go through Turkey, Lebanon, or a number of other places.”

Despite those information gaps and the uncertainties inherent in a war siituation, Ellis had to develop shipping rates, then get permission from the Turkish owners of the ship in question.

After a weekend spent on the telephone, Ellis was able to present an offer by the Monday morning deadline, and by the next day, the offer was accepted. So during the first week in April, while Ellis and his family were vacationing in Hawaii, the ship – aptly named “Yellow Rose” – loaded in Texas and set sail for the Mideast.

“Several ships were waiting to load, but the government was able to pull some strings, and the Yellow Rose jumped in front of the line,” he said.

The ship is headed for Gibralter, and its masters hope then to know their ultimate destination – through the Suez Canal to Umm Qasr if that port is deemed safe, or perhaps to Turkey otherwise.

“There were some ships loaded before the war and standing by offshore,” Ellis said. “Because the Umm Qasr harbor was mined, they went to other ports. Ours is the first shipment after the war began.”

The grain was loaded in bulk, but to be useful in Iraq, it will have to be put in bags. So the ship also carries 570,000 empty sacks, and will stop in Gibralter to pick up a machine that will bag over 10,000 tons of grain a day.

Founded in 1996 when Ellis broke away from Korean shipping giant Sanko to go into business for himself, San Juan Navigation is what the maritime industry calls a vessel operator, meaning it charters – maritime for leases – ships owned by others, then finds cargo for the ships to carry.

The day-to-day sailing of the vessel, what might popularly be thought of as “operations,” is actually left to the owners.

“We have a different expertise,” Ellis said. “They build the vessels – financing is their big concern – and run them, and we pay the mortgage.”

The vessel-operation business is conceptually simple. If the market allows the operator to charge more than he is paying the owner, the operator makes money. Otherwise, he loses money.

“Business is really good right now,” Ellis said, “not because of the war, but really because of the influence of China, which is importing so much.”

San Juan presently has 12 ships under charter worldwide, Ellis said, and 10 fulltime employees working from the company’s headquarters in the San Juan Building at the east end of Winslow Way. The building was a joint venture with Ed’s brother John, who owns Pacific Rim Shipbrokers, a firm that serves as a middleman in a number of maritime contexts.

“We’ve built up the business to the point that we’re a household name in the market,” said Ellis, who added that a big part of business-building was establishing enough of a financial war chest to weather downturns in the market.

The next step for the Ellises may be buying a ship of their own, and becoming owner-operators.

While there have been other calls for shipments to Iraq, they have been small and scattered, and Ellis hasn’t bid on them. But he expects to in the future.

“There will be a million tons-plus of grain going every year to Iraq,” he said. “The farm lobby will be very happy, just as they were with the opening of Cuba.”

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