How I Work: Gustavo Machado

Brazilian Gustavo Machado has been with the Wilson, Sons shipping group for more than 15 years and CEO of Wilson, Sons Ultratug (WSUT) offshore support vessel operation since its inception, in 2010, but he and WSUT have never experienced such a depressed shipping market as the one they have suffered over the past three years.

The OSV operator, which includes Chilean service provider Ultramar as a partner, owns 23 OSVs but, despite those vessels enjoying the benefits of Brazilian flag status and the other three being registered on the REB (Registro Especial do Brasileiro, or Special Brazilian Register), four are currently laid up in Guanabara Bay, Rio de Janeiro, and it has been an extremely tough time for all players in the fiercely competitive OSV market.

Charter rates on those still operating – many companies have fallen by the wayside over the past three years – are way below what were available prior to the recession that hit the Brazilian maritime sector, after the 2014 World Cup which they hosted.

“It’s been a really tough few years, but I think we are over the worst of it,” declared Mr Machado. He has had to oversee a reduction in staff over the past three years, with the Brazilian economy suffering a severe depression which deteriorated still further after the 2016 Olympics (hosted by Rio de Janeiro but plagued by corruption scandals) with Rio de Janeiro, the home of the oil industry and shipping in general, suffering the deepest. 

Tennis enthusiast Mr Machado, who plays three times a week at the Clube Navale in Niteroi, says the entire Wilson, Sons group had to make tough decisions which included cutting back the workforce from 165 to 150, and also diversifying into new sectors.

“I think it will remain tough for another year, year and a half, then there will be opportunities to grow again,” he added. “In the meantime, we have devised a strategy to diversify our activities. Up until two years ago we were just a PSV operator but then we decided to move into some different segments in the sector.”

The international price of oil plummeted some four years ago just when Brazil was ramping up its offshore operations to cater for the discovery of the Pre-Salt, deep-lying reserves of oil and gas, off the coast of Rio de Janeiro and Sao Paulo. 

That fall combined with the Lava Jato inquiries at state-controlled oil giant Petrobras led to a massive loss of confidence in the Brazilian market and OSV activity sank from a peak of 499 vessels (257 foreign flag and 242 Brazilian) in 2013 to just 368 ships (323 Brazilian and 45 foreign flag) by July of this year, a fall of more than 30%. Many companies switched their vessels to the Brazilian flag to stay competitive, and WSUT did the same with the few foreign flag ships it had but some remained laid up.

“Brazil is a micro universe because of its specific regulations,” explained Mr Machado. “You compete with Brazilian shipping companies, and Brazilian flag ships and also with those from outside Brazil. It’s a tough market.

“It got tough for us at the end of 2016. That was when we saw the first of our Brazilian flag ships laid up. Other Brazilian based companies faced these problems quite a bit earlier than us.

“In Brazil for the past two years we have had an over-supply in the OSV sector, especially in the PSV segment and it will remain like that for at least another 18 months or so.” 

Under the maxim of “Flexibility is the key to survival” WSUT converted both the Mandrião and the Pardela from PSVs 3500, into SDSVs (shallow diving support vessels), with contracts for Petrobras starting on 3rd July and 23rd August this year, respectively. The two OSVs are also equipped with a remotely operated vehicle (ROV).

“For these conversions we didn’t need to dry dock the vessel,” explained Mr Machado. “We did it along with two with two partners: Sistac (a Brazilian diving company) and an ROV services company,  Oceaneering,  of Houston, Texas.

Back in 2015, the Wilson, Sons shipyard in Guaruja (another subsidiary) delivered the first remotely operated vehicle support vessel (ROV SV) ever built in Brazil – Fugro Aquarius – and its first oil spill recovery vessel (OSRV), plus the largest tugboat in the Brazilian market, WS Titan.

It is this experience that is allowing WSUT to continue along that path of diversification.

Mr Machado told SMI that WSUT has also looked into possibility of converting one of the WSUT vessels so that it can handle containers on the Lagoa dos Patos (lake of Ducks, in the far south of Brazil), possibly to supplement the feeder service of Wilport (another branch of Wilson, Sons) which operates between Contesc terminal in Triunfo, to Tecon Rio Grande box terminal: yet another Wilson, Sons subsidiary.

“We have looked at several new projects, cabotage, project cargo and liquid bulk, such as chemicals from the Porto Alegre region to the Rio Grande port area,” explained Mr Machado. “We have used out-of-the-box thinking to try and find decent, long term and viable contracts for laid up vessels if possible but it’s not easy because of fierce competition.”

The WSUT executive started his shipping career in the container sector with Crowley American Transport and then Zim Line before joining Wilson Sons group as towage and offshore operations manager in 2003, and he stayed there until switching to the offshore start-up of WSUT.

He enjoys the cut and thrust of the OSV sector despite the turbulence of recent years and believes his “cornucopia” of different shipmanagement experiences is now holding him in good stead.

“I enjoy it a lot but all of the shipping sectors have their own particularities and enjoyable facets. Even towage eventually became very interesting,” he joked, “as it is a dynamic sector.”

“Then there are the commercial aspects in the liner shipping business, how to deal with customers, training etc, which I learnt at Crowley and I then learnt a lot about operations with Zim Line. My engineering background helps on the technical side, so I guess you could call me an all-rounder.

“And as for offshore; in terms of operations this is the most sophisticated segment in shipping that I have been managing. This is because there are so many different types of operations and types of vessels: PSVs, AHTS, subsea, RSVs, diving additions. It has everything.

During his time at Zim Line, where he held a managerial position from 1996 to 2001, Mr Machado took up the offer of a scholarship, awarded by the British Council, which allowed him to study, for 16 months, for a Masters’ Degree in Shipping Transport and Finance at the City University, in London. 

Apart from his family – wife Luciana, a dentist, and his two children (a son, aged 11 and daughter, aged 12) his main interest outside of work is tennis.  Sometimes he even finds time to read and is currently reading a book called 1822 by Laurentino Gomes about the Brazilian Independence process, and Les Miserables by Victor Hugo.

He is also one of those executives who clocks up his fair share of air miles in the course of an average year.  On top of his working trips – to Holland, Norway, the UK, China and Singapore plus Chile and Argentina for some board meetings – the WSUT CEO also does a fair amount of travel with his family, mostly to Europe and to the US, especially Walt Disney World.

They always dreamed of visiting the Florida amusement park while Mr Machado continues to enjoy his “dream job” which is certainly not ‘Miserables’.