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CEO's Column - NORDEN News Magazine Winter 2009

The long haul

We finish the year in fine style at NORDEN. In the last couple of days, our charterers in Dry Cargo have concluded two new COAs, which are so large that they employ well above 10,000 ship days in total.

In Handysize, we will from 2011 every year for 15 years be sailing around 30 shipments over the Atlantic, and a large and long-term contract like this is quite unusual in the Handysize vessel type, which is mostly oriented towards the spot market. Thus, we will have a solid base for the new Handysize Pool, which we are launching together with INC. Furthermore, we will, in Handymax, be transporting more than 6 million tonnes of coal from Indonesia to the Philippines, and this 11-year contract really emphasises NORDEN’s strong position in the Indonesian coal market.

The two new contracts enter the top 5 of long-term contracts in NORDEN’s history, and measured in volume, they are also quite considerable. The contracts confirm what we have seen during the last year: that more and more customers are tired of the heavy market fluctuations where the rates are racing down and up. Producers of raw material, power plants, industries and construction companies would like more predictable costs, and they want stability and security. Thus, more customers would like to enter into long-term contracts, and therefore, in addition to the two new contracts, NORDEN has entered into other contracts of 5, 10 and 15 years of duration since the autumn of 2008.

The long-term COAs and T/C contracts show that the customers and brokers have confidence that NORDEN will deliver the goods in an otherwise uncertain future. We are very pleased with this recognition. We are also pleased that the contracts provide a solid and predictable cash flow in a number of years and that it will be easier for our operators and charterers to plan and optimise voyages. Finally, the contracts fit well into our business philosophy. There has to be room for bold moves – to take short positions in the market when it is favourable – and you will be seeing more of that from our part in 2010. But the primary focus is the long haul and the long-term employment of the fleet.

In Tankers, we cannot tell you about new, long-term contracts. Right now, the focus in Tankers is on adjusting capacity, costs and processes to a market, which is extremely tough. But it is exactly when a market hits the bottom that it is most optimal to carry out offensive investments. So when we are planning the investments which are to secure NORDEN’s long-term platform during these weeks, we allocate funds to both Dry Cargo and Tankers.

2009 has been demanding for all of us. But the challenges of everyday life should not overshadow the opportunities of the future. It is all about the long haul. That is the way it is in a cyclical business.

With these words, I would like to wish a merry Christmas and a happy and prosperous New Year to customers, business partners, employees, shareholders and everyone else who follows NORDEN.

CARSTEN MORTENSEN

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