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Strategy

NORDEN wants to be the preferred partner

The course is set: NORDEN’s goal is to be a leading shipping company and the preferred partner in global tramp shipping.  The Company seeks to achieve this goal through:

Organisational development

NORDEN considers human activities an essential element in the Company’s endeavours to create value for its shareholders. The distinguishing factors are the competences within the organisation and the Company’s ability to employ the growing fleet and to purchase and sell vessels at the times when this is deemed most advantageous. NORDEN therefore sees it as a constant challenge to attract, develop and retain competent employees and continuously strive to develop the overall competences within the organisation. These years, the Company is focusing particularly on recruiting shipping trainees to secure its future growth and continuously growing business volume. 

Partner focus

NORDEN is dependent on having good relations with shipyards as well as customers, and the Company is dedicated to treating these as partners. Although marginally better terms might during certain periods be achieved by changing partners, the Company is convinced that building and maintaining lasting relations with long-term partners provides the strongest basis for expanding and employing its fleet. By expanding representative offices close to where the customers are and conducting regular customer satisfaction surveys, NORDEN strives to continually improve customer service and thus build on a mutually valuable partnership.

Risk management

Active risk management is a key element in the Company’s business model. The Company actively manages the primary commercial risks relating to the shipping market: fluctuations in freight rates and prices of vessels. In response to spot market rate fluctuations, the Company fixes part of the fleet on long-term charters. NORDEN keeps a close watch of the markets and continually adapts its fleet capacity through a flexible business model. Equally, the Company adjusts coverage to market conditions and expectations. Other risks not related to the shipping market – bunker prices, exchange rates etc. – are hedged in so far as possible (see note 2 to the financial statements). More

Financial strength

NORDEN maintains strong financial resources in order to be able to take advantage of the opportunities opportunities arising in volatile market conditions. Shipping is a cyclical business and strong capital resources are considered necessary for the Company’s ability to maintain and develop its commercial position. The Company’s capital structure will continuously reflect its considerable offbalance sheet liabilities in the form of future time charter payments and payments to shipyards in respect of future newbuildings. 

Profitable growth

NORDEN’s business model is intended to withstand volatile market conditions by being flexible and ensuring a long-term, solid cash flow. Growth should always be profitable and the development of the business volume will always happen in accordance with this requirement. The extension of activities will always be based on the Company’s core competences. This is ensured by means of, among other things, a major newbuilding programme. At the end of 2007, NORDEN owned a total of 14 vessels and had 35 newbuildings on order. See current fleet lists: Dry Cargo Tanker

Corporate Social Responsibility  

Safety and environment are high on NORDEN’s list of priorities – the Company therefore operates only modern, double-hulled tanker tonnage and continuously works on minimising propulsion resistance and optimising fuel consumption on owned vessels. The Company has launched a more systematic approach to environmental and social sustainability in order to take a greater responsibility for safety at sea, occupational health, external environment, employee conditions and opportunities and other Corporate Social Responsibility (CSR) issues.

Previously, NORDEN addressed individual issues on the CSR agenda based on the Company’s values. An example of this is our longstanding work on occupational health and safety at sea, involving regular information, systematic examination of near misses and an extensive set of KPIs for officers in order to eliminate industrial injuries onboard the Company’s vessels and help minimise the vessels’ impact on the external environment through groundings, collisions, spills etc. More details on CSR

Dry cargo: Market leader in Post-Panamax, Panamax, Supramax and Handysize

The Company aims to be a market leader in four dry cargo segments Post-Panamax (starting in 2009), Panamax, Supramax (largest Handymax vessels) and Handysize. To realise this goal, the Company is focusing on the following areas:

Critical mass

It is important to develop critical mass and a strong market profile. Although size is not a goal in itself, it does give NORDEN the ability to offer its customers a better level of service. Critical mass affects positively the Company’s ability to attract new customers and maintain a high level of efficiency and exploitation of the fleet. The Company has already obtained major economies of scale in the Panamax and Supramax segments, and it is the Company’s ambition to continue to develop these segments. In addition, based on its strong customer relations in the Panamax and Handymax segments, NORDEN will extend its activities within the Handysize and Post-Panamax segments. The Company also wishes to develop critical mass in these segments and has already established a major newbuilding programme.

Expansion of the core fleet

The increasing freight rate volatility has made it more attractive to control long-term tonnage, as this allows the Company to achieve very attractive earnings in periods when rates are high. NORDEN’s core fleet has therefore become more attractive, and the Company will increase the core fleet’s proportion of the total dry cargo fleet. More details on Dry Cargo.

Portfolio management

NORDEN controls a large portfolio of owned and chartered tonnage, contracts of affreightment (COAs), forward freight agreements (FFAs) and tonnage chartered out. The organisation is continuously striving to exploit market conditions and, as the business volume increases, has more opportunities to use the capacity and thus optimise earnings through active management of the portfolio. 

Tanker: Greater presence in the product tanker market

NORDEN’s goal for the coming years is to establish a greater presence in the tanker market. The Company assesses that the product tanker market will in the future present a better risk/return ratio than the Company’s crude oil segment, Aframax. Therefore, NORDEN will in future focus on a smaller operator activity in Aframax, having sold off the last of its Aframax tonnage in 2007. The tanker market is characterised by consolidation among the providers, driven by major listed companies. Consolidation among oil companies means that the customers are getting larger, and certain customers – primarily global oil traders – are themselves entering the shipping market, which makes it more difficult to obtain capacity on short-term charter as the owners prefer to charter out vessels to these customers. More details on Tanker

Product tankers

The product tanker tonnage is employed through the Norient Product Pool, which is among the three largest product tanker pools in the world. With its partner Interorient Navigation Company Ltd., NORDEN is continuously expanding its fleets in the Handysize and MR product tanker segments through contracting of new vessels as well as through long-term charters, in order to achieve greater strength and market profile. The pool operates a large fleet of ice-class vessels in order to meet the customers’ demands for year-round operations in ice-filled waters.

Expansion of the business

In 2008, the Norient Product Pool started up a new activity in the LR1 segment. The business thus also includes the larger, 60-75,000 dwt vessels. This move was made to be able to offer customers an extended service in light of the changing transport patterns for refined oil products. These changes are expected to become even more apparent in the future. 

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