In many ways, 2008 was a particularly
eventful year for global shipping. Most
of the world’s shipowners began the year
with undiminished optimism. This took the
form of, for example, continuing ship orders
despite very large order books at the shipyards.
In some segments, especially the dry
cargo and container segments, the markets
began to show signs of weakening as early
as during the first half of the year although
the tanker markets remained relatively stable. When September came, it proved to be a
fateful month.
A lot happened in a very short time.
The global economy came to a sudden and
abrupt halt and the financial system was
shaken to its very foundations. The bottom
fell out of the dry-cargo market and the
liner shipping companies found themselves
facing container freight rates in free fall. New
orders worldwide abruptly more or less dried
up and second-hand values began to fall.
End of the “super cycle”
For us at Concordia Maritime, the downturn
was no surprise as such. But it was not triggered
by a weakened market resulting from
far too many deliveries of new vessels, as we
had thought, but by a sudden halt caused by
the collapse of the financial systems.
It is probably no exaggeration to say that
the “super cycle” in tanker shipping, which
began in around 2000, seems to have come
to an end. We are entering a period during
which we can probably expect to see casualties.
A weak market in combination with a
poorly functioning financial market will test
many shipowners to the limit, and some of
them will fail. A large number of the vessels
ordered in recent years do not have financing.
The inability to obtain financing will without
any doubt result in delayed deliveries
or even annulled newbuilding contracts.
Paradoxically, this could speed up a trend
towards a better balance between the
demand for transportation and the supply
of ships, thus strengthening the market.
Good opportunities
for Concordia Maritime
Where, then, is Concordia Maritime in this
challenging market situation?
All the vessels in our fleet are signed to
time charter contracts up until 2011 and
are thus generating stable cash flows. Our
financing for the four remaining newbuildings
is secured and we have a strong balance
sheet. This means that we can take advantage
of the opportunities that may arise in
the current market situation. At present, it
is not our intention to set limits to exactly
what this means in the form of new business
deals and projects. In the past few years, we
have focused on the product tanker segment,
in particular our special P-MAX design,
which has been developed in collaboration
with customers. However, this does not
mean that we will exclude other types of
tanker tonnage if we consider them to be attractive to and favourable for our customers
and shareholders.
Continued high demand for
transportation
The downturn in the market is having a
tendency
to overshadow the fact that the
demand for safe and efficient tanker transportation
will continue to be large in the
foreseeable future. Today, we are in a strong
position in the market thanks to our pronounced
customer focus, our cutting-edge
competence in ship design and, not least, a
high-class ship operation. We intend to
retain and develop this position.
Development according to plan
In 2008, our vessels continued to operate
according to plan and generated charter
revenues
that, at times, exceeded the freight
rates in the open market by a good margin.
While no new vessels were delivered, work
on the construction of the remaining four
P-MAX tankers in the newbuilding program
began during the year. The Stena Polaris and
the Stena Progress will be delivered at the end
of 2009, followed by the Stena Premium and
the Stena Penguin at the end of 2010. When
all the vessels have been delivered, we will
have a very modern fleet at the cutting edge
of technology and safety that gives us the
advantages of having several vessels in the
same series. We see the fact that all the vessels
are already signed to charters as proof
that they satisfy the demands the market
makes on safety and transport economy.
Competence and collaboration
In these turbulent times, Concordia
Maritime
has a solid and stable base and
is well-positioned to continue to develop.
This requires competence and collaboration,
which we have in the form of all the people
who are involved in our business activities;
customers, partners and employees on board
our vessels and ashore. I would like to thank
all of them for a very good year. We are now
looking forward to an exciting and challenging
2009.
Gothenburg, March 2009
Hans Norén
President