CEO's Column - NORDEN News Magazine Summer 2009

The will to drive NORDEN ahead

The other day, our Dry Cargo Department chartered out a Panamax vessel on a 6 month charter party at USD 32,000 per day. Only a few months ago, we would have barely gotten more than USD 8-9,000 per day in such an agreement. And we only have to go back to the last months of 2008 to find times when it would have been impossible to enter into a 6 month charter party that made any sense financially.

The example shows how volatile the dry cargo market has been – and still is.

At the time of writing – at the end of June – the dry cargo spot market is still on a very high level, while in the product tanker market, there have not been any persistent improvements compared to the downturn that really accelerated in April.

I am often asked if I am an optimist – if I think that the dry cargo market will last or if we are even on the threshold of the new super cycle, which some people have already started talking about. But just as often, I am asked if I am a pessimist – that is, if I believe in a downward adjustment.

I normally reply that I am not an optimist nor a pessimist, but a realist. And with realism comes that even though we are obviously happy about the positive signs that we see in e.g. the steel industry in China, we still have to be cautious as the newbuilding order book is still very large and large parts of the world economy is still in recession. So in future, the market will probably also be both challenging and volatile, but what we are most happy about is that we at NORDEN have prepared well for that situation.

  • Financially, we are stronger than ever with more than USD 850 million in cash. With this money, we can nearly cover all liabilities in relation to our newbuilding programme until 2012.
  • We have efficiently covered 100% of the capacity in the Dry Cargo Department for the rest of the year – and in 2010 we are positioned well with coverage of more than 40%. Also the Tanker Department is well covered with 46% for the rest of 2009 and 37% for 2010.
  • We have cleaned out well and truly in the counterparty portfolio in dry cargo. Unfortunately, we have had to refer a few cases to the court or arbitration, and other cases we have decided to settle. And just as important – knock on wood – we haven’t experienced any new considerable counterparty problems in recent months.
  • The average fleet costs are developing positively and are very competitive in the long term both in dry cargo and in tankers.
  • Last but not least, we have a strong organisation with the right competences and the will to drive NORDEN ahead.

So in terms of NORDEN’s future, there is good reason for optimism. Have a great summer.


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