Horizon Lines names Woodward CEO

   The domestic container shipping company Horizon Lines said yesterday that it had named Sam A. Woodward as president, chief executive officer, and a director of the company.
   Woodward, who assumes the job immediately, was a managing director of Bengur Bryan & Co., a Baltimore-based middle market investment bank, where since 2008 he headed the firm’s transportation and business process outsourcing practice. He also was an executive at Traffic Tech Inc., a Montreal-based freight forwarder with offices in the United States and China. 
   He succeeds Stephen H. Fraser, who has served as Horizon’s interim president and CEO since March 2011 and is stepping down from Horizon’s board of directors.
   In a joint interview with Fraser, Woodward said he has “extensive experience with companies that have highly levered balance sheets and are under pressure in the marketplace.” The Bengur Bryan Website said his background is in special situations with large and small companies needing “strategic re-alignment or partnering, raising difficult capital, and transforming the core business.”
   Despite that troubleshooter background, Woodward said “all the heavy lifting in terms of fixing the company’s financial challenges and so on have been done by the good work of Stephen (Fraser) and company. My mission is a very simple one, to run the company and take it to the next level.”
   After becoming CEO in March 2011, Fraser resolved litigation related to a price-fixing conspiracy among carriers serving the U.S. mainland-Puerto Rico trade with both the federal government and shippers. He restructured the company financially, with bondholders acquiring nearly all the equity in the company.
   Fraser, who was a member of the search committee that looked for his replacement, said Woodward was not chosen because the board was looking “for someone who was adept at distressed companies.” Instead, he said Horizon’s board was looking for someone that had “broad expertise, financial acumen, transportation knowledge and an entrepreneurial vision.”
   In addition to working at Bengur Bryan and his own investment firm SAW Investment Services, Woodward has had stints as an executive at Gemini Air Cargo, Purolator and Yellow Corp. (now YRC Worldwide), in addition to working with other companies as an investment banker.
   Brad Dechter, president of DHX, a non-vessel-operating common carrier and logistics company heavily involved in the trade with Hawaii, said a major challenge facing Horizon will be acquiring new ships to replace its current fleet. It has 15 owned and chartered ships built between 1968 and 1987.
   Horizon is the only domestic container shipping company to operate in all three of the major Jones Act cabotage trades between the U.S. mainland and Puerto Rico, Alaska and Hawaii. Federal law requires those ships not only to be registered in the United States and employ Americans, but to be built in U.S. shipyards, making them much more expensive than containerships purchased in overseas yards.
   Woodward said Horizon “will start to refleet the company in the next several years. I have a long history of being a creative financier in the marketplace and I am confident that between the talent that is inhouse and the folks that support the company from the capital perspective we will do that. It may require a little more creative financing than other companies do.”
   Horizon last year ended a service that used foreign-built ships operating between the United States Guam and China.
   That leaves Horizon operating in the Jones Act trade, which appears to have limited growth potential. Earlier this year Horizon projected container volumes would increase only modestly in the 1-to-2 percent range this year, and that container rates and net of fuel surcharges will rise slightly from 2011 levels.
   “Somewhere downstream, a multiple of years from now the issue of growing at GDP plus or minus a scooch could prove to be an issue. That said I don’t think that is going to be a governing issue in the next five years, so I am not terribly worried about that,” Woodward said. “That will probably be something for the tail end of my career or perhaps my successor will worry about.”
   Woodward said the company “does not require any fundamental change in operating size or scope or scale. What it requires is a return to the relentless pursuit of its execution of the operation, and that is what we are going to focus on. “
   “The company has not had the luxury of doing that for some period of time. That will drive the company for a number of years” and eventually “produce the plan for the company to grow beyond GDP,” he added.
   He said “if you look at the risk-adjusted return on deployed capital, the core business has more than the ability to return a healthy yield over the next five to 10 years.” – Chris Dupin