Pacific Basin hurt by falling charter rates
Pacific Basin Shipping is facing a harsh year at its core dry-cargo division, with average charter rates lower this year than last as a glut of new tonnage outpaces growth in cargo demand.
Chief operating officer Jan Rindbo said: 'We expect dry bulk rates to be weaker in 2012. It will be a tough year for our dry bulk business.'
The firm operated an average of 148 dry cargo ships in the first half of the year, of which about 100 were Handysize ships of between 25,000 and 38,000 deadweight tonnes (dwt).
Average daily earnings from the Handysize fleet fell 23 per cent year on year, although average rates were still 38 per cent higher than the market spot rates between January and June, he said.
Rindbo said the 'ongoing challenge is too much capacity'. Dry cargo vessels totalling 139 million dwt are scheduled for delivery this year out of a total dry bulk order book over at least the next three years of 164 million dwt.
'On the demand side, the signals are still relatively good,' Rindbo said. He said the firm saw a 22 per cent increase in the volume of minor bulk cargoes such as fertiliser going into China in the first half of this year.
Mats Berglund, who took over as chief executive on June 1, said the company was eyeing the purchase of further dry cargo ships to expand its fleet, because ship prices had returned to pre-boom levels.
Their comments came after the firm announced a first-half net loss of US$195.93 million compared with a net profit of US$2.95 million in the first six months of last year. The loss included a US$190 million impairment for its loss-making fleet of six roll-on/roll-off (ro-ro) vehicle ferries.
Berglund said the firm made an underlying net profit of US$3.2 million in the first half. This included a net profit contribution of US$7.5 million from the dry bulk division and US$14.1 million from its towage business. But there was a US$8.5 million net loss from the ro-ro business.
Berglund said three of the six ferries were idled because of poor market conditions in Europe, while the average charter rate for those in service was US$19,450 per day. He pointed out that these charters were agreed three years ago and would expire at the end of this year or in 2013. There is contract cover for just 4 per cent of the available vessel operating days for the ferries next year, while market charter rates now run from US$11,000 to 12,000 per day.
Berglund reiterated plans to sell the ferries, as well as other non-core businesses, including the firm's stakes in ports, although he gave no timeline for the disposals.