Finding The Right Formulae

Dan Tufui, chairman of Pacific Forum Line (PFL) for most of its 25 years of sometimes stormy life, can relate how the history's of the regional shipping line is. He became the third chairman after Samoa's Neroni Slade and New Zealand's Harry Julian.

He was the most senior member of the board and most senior official for Tonga.

Planning for a regional shipping line began in 1972, and the 1976 Pacific Islands Forum meeting at Nauru agreed on forming the company.

We went off with a great bang of expectation that because PFL belonged to the region that immediately the shippers of the region would turn their attention to us and desert our competitors. It didn't turn out that way. As we found out, the shippers were more practical. They wanted to see if we had a good track record, would meet their needs and so on, before they started giving us their support.

Because of that expectation we thought great amounts of capital would not be required. We kicked off with a total capital of, I think, NZ$100,000 and expected cash flow to meet all the costs and lead to profitability. We learnt the hard way, that we had to prove ourselves before we could earn the trust and support of the region. When that didn't come, that put a great big hole in the operation of the line and great difficulties later on.

While Australia and New Zealand were maintaining their support for the line, there was still hope that in the long run they would give it time to develop a record of service to the region.

"When Australia in 1983 pulled out its support for the commercial regional shipping venture and diverted its funds to naval ships, PFL felt the need for immediate capitalization. That was the time I felt there was great danger of the line sinking."

The then New Zealand prime minister, Robert Muldoon was the rescuer, he says.

"There is no doubt about it. He was a strong shipping man, especially with PFL. I think he foresaw that PFL would provide shipping for New Zealand exports to the region. He maintained a great interest in the line and ensured that it was properly capitalized. Without support from Muldoon during that critical period, the line would have foundered."

Fiji's prime minister, Ratu Sir Kamisese Mara, wasn't very keen. He supported the line as a matter of principle for regional cooperation and solidarity originally. But he wasn't willing to put in any money. I think firstly, Fiji was well served anyway for shipping and didn't need the Forum Line at all; and secondly, it might have had something to do with the fact that a big meeting to try to work together to establish a regional airline didn't work out. They couldn't find the right formulae, and perhaps Mara wasn't too happy with that situation.

But certainly when Bob Hawke pulled out, that got him back and he threw his considerable weight behind PFL and together with his colleagues, they were able to source funds from the European Union towards the proper capitalization of PFL.

Our maiden profit was made in 1985. George Fulcher was general manager then and he was able to provide the kind of thinking to enable shareholders to provide the capital the line needed. When it was in place, he said 'next year we will make a profit and thereafter we will be all right.' Then he pulled out. We tried to persuade him to stay on because he was a great shipping man. But he said, 'No, you have a good man here coming after me. That was John McLennan.

"Ever since then, I think we have made more profits than not. The hard headedness of our CEOs and their knowledge of the business enabled the directors to provide the guidance the shareholders wanted. After 1985 there was a great bound of confidence from everybody that from then on the line was able to compete on a level field with all its competitors." Competition became cruel, he says.

There are people who seem to think that there's a lot of gold to be made from Pacific shipping and they come in and cut rates and go away. They don't care about the people of the Pacific, just the buck. Our charter is that we are there to serve the Pacific. We had to make sure that we had the resources to meet the storm, weather the challenge and wait for them to move out to look for a buck elsewhere.

"It is still one of our concerns. After 25 years we thought they might learn something, but every time someone pulls out, someone else pulls in and tries the same thing over and over again."

Tufui's greatest regret about PFL is: One of the things we've always aimed at was to try to serve all members of the Forum, as we did with the Micronesian Line servicing Tuvalu, Kiribati and the Marshalls. There wasn't enough trade to make it commercially viable. It was subsidised by Australia and New Zealand for a number of years. But they pulled out and we couldn't hold it.

"It is still our aim to be able to gather enough resources to be able to service every member of the Forum Line. We have found a formula to be able to service the Cook Islands."

The PFL's retired chairman approved of the Australian decision to support a regional ship as well as a regional airline service review.

As far as shipping is concerned we're open to it. If our leaders at the moment think there ought to be another look at it, we have no problems with that. Don't forget that all the leaders in place now are all new; all the old ones have gone. The young ones coming through now may have different perceptions of what regional shipping and regional airline companies might be.

"It's time they had another look at the prospects for creating a regional airline. I think there is a consensus of opinion that this is a good way of doing it. For too many small countries it is a very costly business to run. The failure has been to find the right formula."