Overseas Shipping Management Service
Overseas Shipping Management Service
Shipping and Chartering
During September 2013, we executed our first shipping and chartering service agreement with Tianjin Zhi Yuan Investment Group Co., Ltd. (“ the Zhiyuan Investment Group ”), a company that is owned by Mr. Zhong Zhang, the largest shareholder of our Company. In accordance with the agreement, we assisted Zhiyuan in the transportation of approximately 51,000 tons of chromite ore from South Africa to China. The Zhiyuan shipping and chartering service agreement resulted in revenues in excess of $ 1.9 million and gross profit of approximately $ 0.6 million for the year ended June 30, 2014.
Shipping Agency
We provide two types of shipping agency services: loading/discharging services and
protective services. For protective agency services, we charge fixed fees while
our customers are responsible for the payment of port costs and expenses. For loading/discharging
agency services, we receive the total amount from our customers and pay the port
charges on our customers’ behalf. Under these circumstances, we generally require
payments in advance from customers and bill them the balances within 30 days after
the transactions are completed.
We believe the most significant factors that directly
or indirectly affect our shipping agency service revenues are:
1) The number of
ships to which we provide port loading/discharging services;
2) The size and types
of ships we serve;
3) The type of services we provide, for example loading/discharging,
protective, owner’s affairs, shipping and chartering service;
4) The rate of service
fees we charge;
5) The number of ports at which we provide services; and the number
of customers we serve.
Ship Management Services
On September 8, 2014, we acquired LSM, a ship management services company based in Hong Kong from Mr. Deming Wang. LSM currently manages seven vessels and outsources the actual ship management duties (which include among other things, crew, technical and insurance arrangements) to Qingdao Longhe Ship Management Services Co., Ltd.
