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Inchcape Shipping Services
 

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As a result of their success in carrying troops from Ceylon (present day Sri Lanka) to India during the Indian Mutiny of 1857 to 1859, and through Mackinnon's influential contacts, the partners obtained further contracts to support a fleet of coastal steamers carrying mail around the Indian coast with extensions to the Persian Gulf and Singapore. In 1862, C&B raised sufficient additional capital - a total of £400,000 - to float the company under the new name of the British India Steam Navigation Company (BI). MMC continued to act as agents for the BI for nearly 100 years.

Sir William Mackinnon also promoted steamer traffic to the Dutch East Indies, establishing a Dutch-registered shipping line around Java and forming the Netherlands India Steam Navigation Company in 1868. With the opening of the Suez Canal in 1869, BI ships entered the Mediterranean, establishing a trunk line between London and India via the Suez Canal in 1876. In the process, MMC became one of the greatest Eastern agency houses, and the BI posed a mighty challenge to all other shipping lines operating between the United Kingdom and the East, including the giant Peninsular & Oriental Steam Navigation Company (P&O).

These events were the backdrop to the formative years of James Lyle Mackay, later to become the first Earl of Inchcape in 1911. Born in 1852, the son of an Arbroath shipmaster, Mackay left Scotland at the age of 20 and worked in the Customs department of Gellatly, Hankey and Sewell, loading brokers in London for many lines including BI.

Mackay joined MMC's Calcutta office in 1874 and through great diligence and flair, became the heir to the Mackinnon businesses after the death of Mackinnon in 1893.

Mackay first became a partner after saving the BI's Bombay (now Mumbai) office from bankruptcy, and was to become president of the prestigious Bengal Chamber of Commerce a record three times between 1890 and 1893.

Mackay returned to the United Kingdom in 1894 as a director of the BI, becoming chairman in 1913. Continuing his work on the Council of India, Mackay's growing reputation as an outstanding public servant led to his being offered the viceroyalty of India in 1909. Prime Minister Herbert Asquith opposed Mackay's nomination, however, on the grounds of his commercial interests in the Subcontinent, and Mackay was offered a peerage in 1911 by way of compensation. He chose the name of Baron Inchcape of Strathnaver, commemorating the Inchcape Rock, located 12 miles from his home town of Arbroath, and expressing his loyalty to the clan Mackay, whose home is in Strathnaver.

Between 1913 and 1932, Lord Inchcape personified Britain's shipping industry as chairman of the BI and the P&O, after effecting a merger between the two lines in 1914.

Less well known than Lord Inchcape's shipping activities is his consolidation of an extensive group of commercial interests in India and beyond. These began with his accumulation of shares in MMC and by 1950 the Inchcape family held a controlling interest. Inchcape's chairmanship of the BI and P&O resulted in a very close connection between MMC and the shipping line, to the extent that many observers came to believe that they were one company.

MMC spawned a variety of other enterprises to serve the BI routes. The BI originally employed small private firms in local ports of call as agents, but eventually replaced them with firms within the Mackinnon complex. These all came under the control of the senior partners and ultimately under Lord Inchcape himself.

To separate the trading businesses from the shipping line, the Macneill & Barry partnership was developed to take over the extensive tea and merchanting operations that Lord Inchcape had acquired in 1915. Amalgamated in 1949, Macneill & Barry Ltd. comprised three merchant partnerships formed in the second half of the 19th century: Barry & Company, Macneill & Company, and Kilburn & Company, involved in tea, coal, jute, river steamers and various trading enterprises. Their principals included the Assam Company, the oldest tea company in India; the River Steam Navigation Company; and the India General Steam Navigation and Railway Company. Between 1951 and 1956, Macneill & Barry took over Kilburn & Company, and the three groups set up Pakistan-based companies. In 1965 the two river steamer businesses were sold to the government of India.

Owing to the need to supply ship agency services to the BI, Mackinnon group enterprises were established in East Africa, the Persian Gulf, Australia and London. In East Africa, as Sir William Mackinnon began to open up the region to British influence, the BI operated a steamship service. In 1872, Archibald Smith, a member of the staff of William Mackinnon & Company in Glasgow, together with a Mackenzie man from Calcutta, established an agency to operate as BI agents and general traders. In 1887, Sir William Mackinnon won from the Sultan of Zanzibar, the right to administer a coastal strip of land in return for Customs revenue, which led to the founding of the Imperial British East Africa Company (IBEA), partly in response to the buildup of German interests in this area. Smith Mackenzie & Company took a stake in IBEA and acted as its agents, until the charter was surrendered in 1897. Smith Mackenzie & Company and the agency for Shell in East Africa became joint coaling agents to the admiralty during World War I and in the 1930s gained the agencies for British American Tobacco, Imperial Chemical Industries, and British Overseas Airways Corporation.

In 1862, when a contract was won to carry mail eight times a year up and down the Persian Gulf, the merchant partnership that became Gray Mackenzie & Company was formed, helping to develop navigation on the Euphrates and Tigris Rivers, and establishing a diversified trading business in an area that was also facing German expansionism. In World War II, Gray Mackenzie & Company acted as agents for the British government in unloading military cargoes; the growth of its business was helped by the spectacular development of the oil industry and the rapidly growing need to service the expanding ports of the Middle East.

The Mackinnon complex also branched into Australia, with BI services at first managed by the British India and Queensland Agency Company Ltd. The Mackinnon partners invested in the formation of a major Australian shipping conglomerate in 1887, the Australasian United Steam Navigation Company (AUSN), formed with a capital of £600,000. In 1894, Mackay was appointed to the board of the AUSN and, in 1900, spent several months in Australia successfully restructuring the business. In 1915 he created a new merchant partnership, Macdonald Hamilton & Company, formed by two trusted Mackinnon appointees, B.W. Macdonald and David Hamilton. The AUSN, which had once owned 42 steamers, declined in the face of increasing competition from railways in the 1920s, and Macdonald Hamilton & Company diversified its activities into mining, pastoral management, and operating the P&O agencies in Australia. The P&O acquired Macdonald Hamilton's P&O-related activities in 1959 and 1960.

These diverse Mackinnon group interests were consolidated and reorganized during the 1950s, coming together as Inchcape & Company Ltd in 1958 on the initiative of the third Earl of Inchcape, James Lyle Mackay’s grandson. Tax considerations necessitated the conversion of these entities into private limited companies - whose former partners became the principal shareholders- controlled through London-based subsidiaries. Also in 1958, Inchcape & Company became a public company through a public offering of 25 percent of its equity, and starting in 1958 embarked on a program of growth and diversification, principally through acquisitions.

During the 1960s and 1970s, under the leadership of the third Earl of Inchcape, the company expanded to over 150 times its previous capitalization, due principally to a series of successful acquisitions, especially those of the Borneo Company in 1967; Gilman & Company in 1969; and Dodwell & Company in 1972.

The merger with the Borneo Company almost doubled the size of Inchcape overnight, bringing in new interests in Canada, the Caribbean, Hong Kong, Malaysia, Singapore, Brunei, and Thailand.

In 1985 Gellatly's largely North European agency network was acquired; this gave a European base which was developed further in Greece in 1989, the UK and France in 1992, and Suez, Turkey and Scandinavia in 1993.

Through a variety of acquisitions from 1990 through 1993, Inchcape expanded its shipping businesses in China, Korea, Vietnam, Indonesia, Canada, Turkey and Ecuador.

With the acquisition of Southern Steamship in 1990, Inchcape extended into the North American shipping market. The Group subsequently consolidated its position on the West and East coasts with the acquisitions of Williams Dimond in 1991 and Lavino in 1992.

In 1993, ISS was established to manage the Group's global shipping operations. The primary task was to transform what was then a loose federation of ship agents into an integrated international network with defined and common service standards worldwide.

In 1999, in a move to focus on its burgeoning motor trade, the Inchcape Group divested ISS which was purchased by Electra investment Trust Plc, a British investment group. Electra fostered the strategic goals of ISS providing finance for acquisitions and technology advances, which enabled ISS to further develop its role as the world’s leading ship agency.

In January 2006 Electra sold ISS to Istithmar PJSC, a major investment house based in the United Arab Emirates focusing on private equity, real estate and other alternative investments. Established in 2003, Istithmar was created with the key mission of earning exceptional returns for its investors while maintaining due regard for risk.

With over 300 offices worldwide and a team of 3,800 professional and committed staff, ISS is today the world's largest independent marine management company. Through web-based technology we have been able to transform both the speed and accuracy of the operational, financial and port information provided to our clients by our offices worldwide.

With Istithmar’s support, ISS is now pursuing its strategic aims with the same confidence and commitment that has characterized the Group’s activities throughout its long and proud history.

The above article includes extracts from the International Directory of Company Histories, Volume 50: Inchcape PLC, published by St James Press 2003. Copyright is duly acknowledged.

Further Reading:

Jones, Stephanie, Trade and Shipping: Lord Inchcape 1852-1932, Manchester University Press, 1989

Two Centuries of Overseas Trading: The Origins and Growth of the Inchcape Group , London: Macmillan, 1986.

 

 

 
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