Pacific Basin Shipping, the world's leading small bulk vessel operator, posted a 73 per cent slide in net profit last year but forecast a better time this year due to the recovering fortunes of the mainland economy. The shipping firm said 2010 would be less challenging amid greater demand from the mainland for commodities as well as a chance to purchase new vessels at reduced prices. Net profit fell to US$110.28 million last year, in line with analysts' expectation, from US$409.12 million a year earlier on plunging freight rates. The downturn in freight rates had resulted in distressed prices for bulk vessels in the market, which had created a chance for Pacific Basin to increase its fleet size by acquiring five new and second-hand bulk vessels since last December, the company said yesterday, without giving the valuation of the ships. 'We are fairly optimistic about the future, from a negative to a neutral view,' said Klaus Nyborg, the chief executive of Pacific Basin. Over 1.2 million deadweight tonnes of new vessels are scheduled to be delivered this year, accounting for around 26 per cent of existing bulk vessels. 'However, it is estimated that from 35 to 40 per cent of ships will not be delivered on schedule due to the problems at shipyards or with the shipowners,' he said. Daily charter rates earned by the shipping company last year was 35 per cent below 2008 on average for handysize vessels, the small bulk vessels that transport logs, grain and metal concentrates. The rates for handymax vessels, the medium-sized bulk vessel for coal, iron ore and agricultural products, dipped 56.3 per cent year on year. Contracted freight rates in 2010 had stabilised at US$14,290 per day, compared with US$14,500 in 2009, as of February 22. Some 59 per cent of handysize vessels have been covered by contracts. The company has tapped into the roll-on roll-off vessel market, banking on the demand for vehicular ships in Europe. However, the economic downturn in the continent reduced the demand for ro-ro substantially last year. As such, Pacific Basin has made a US$25 million provision on the six ordered ro-ros last year. Two ro-ro vessels will be delivered in the second half while another three will come on stream from next year. 'The ro-ro business will remain challenging this year,' Nyborg said. 'But the rebound in the ro-ro market will be very quick as the market is too small and could be driven by any upswing in demand.' A final dividend of 15 HK cents per share has been recommended.