Wednesday, December 29, 2010

Bulk Freight Carrier Releases Activity Review

Dry Cargo and Tanker Operator Looks at This Century's Trends
Shipping News Feature

DENMARK – Having announced a dividend of around $90 million for shareholders on the 15th December together with a proposal to buy back shares valued at $30 million, bulk cargo and tanker operator Norden A/S have released a comprehensive review of freight activity during the past decade. Following on from our article earlier this month an examination of the company’s report gives an insight into the bulk freight carrier market of today.

With what they describe as a ‘strong tail wind’ during much of the past ten years, the group have achieved substantial growth in what at times has been a difficult market. Norden has increased its market value from less than DKK 100 million to DKK 9 billion and company revenue from DKK 1.8 billion to DKK 9.1 billion during the period 2000-2010 (end September).

CEO Carsten Mortensen refers in a statement to the groups ability to make money, plus his determination not to sit on profits, as evidenced by activities in 2010 with the purchase of 6 product tankers, exercising purchase options on 4 dry cargo vessels and contracting 4 dry cargo new builds.

The company rightly make reference to the volatility of the market since the turn of the century. The negotiation of long term contracts can protect bulk shipping lines from some of the vagaries of fluctuating rates, yet expose them when renegotiations arrive as deals expire. Norden’s own tanker division has for example just extended its cooperation with Turkish based Geden Lines on chartering of 7 Handysize product tankers for another year with rates 40-45% lower on average than the contracts which have now expired.

New contracts of course are at a premium, like the three year deal Norden have just struck with Swedish energy group Vattenfall for the transportation of approx. 600,000 tonnes of wood chips from rubber trees in Liberia to power stations in Europe. The fact that this is the company’s second major deal for the freighting of sustainable fuel also fits with the reformed image logistics groups are seeking for the industry, Norden themselves having just chartered an ‘eco-ship’, which is expected to reduce fuel consumption by 10-15% and 3-4 tonnes of fuel ,corresponding to $1,000-1,500 per day on average in one year.