Denmark-based owner and operator NORDEN’s strategy of focusing more on long-term cargo contracts is beginning to pay off. Actual transported dry cargo volumes on NORDEN- operated vessels have grown by 40% this year and also forward dry cargo bookings are exceeding expectations.
“We are gaining market shares and making a lot of new business. In a market which is growing 5–6% in volumes, we have transported 40% more cargo compared to the first half of last year,” says executive vice president Peter Norborg, head of NORDEN’s dry cargo department.
According to Norborg, the growth is attributable to two factors:“This is partly due to us working more determinedly at entering into COAs [contracts of affreightment] with solid, global customers, and partly a result of things going our way. In times of uncertainty, cargo owners and charterers prefer to work with financially sound shipping companies which are able to deliver today as well as in five, ten or fifteen years. And this is definitely an advantage to NORDEN given our strong financial position,” says Norborg.
NORDEN transported close to 26mt (million tonnes) of cargo in the first half-year (excluding cargo on chartered-out vessels) and the 40% growth should be compared to NORDEN’s strategic target of a 15% increase per year in actual transported cargo volumes for the next three years.
“We have sealed a number of COAs which make me very comfortable with our targets. If we just wanted to take cargo at any price, we could have grown volumes a lot more. But we want quality counterparts and we want something that makes sense financially,” Norborg continues.
The focus on long-term contracts did help the NORDEN Group record decent earnings despite very challenging conditions in the dry cargo market. First half year earnings before interest, taxation, depreciation and amortization (EBITDA) totalled US$88 million and profit before tax was US$82 million. Full-year outlook is an EBITDA of US$135–175 million.
 
FORWARD BOOKINGS
NORDEN is also forging ahead with its strategy of increasing contractually secured future cargo volumes by 15% per year over the next three years. The company has managed to book 35mt (million tonnes) of cargo in the first half of the year versus a full-year target of 40mt.
The three most significant contracts entered into by NORDEN this year are a five-year COA with a Norwegian state-owned company on coal from the Arctic Svalbard islands to different countries in Northern Europe; a ten-year COA with a Chilean mining and transportation company on road salt from Chile to the US East Coast; and a five-year COA on coal from Indonesia (option South Africa) to India on behalf of an Indian customer. Volumes under these three contracts alone amount to more than 20mt cargo, resulting in approximately 330 Handymax and Panamax shipments.
 
COAL — A KEY COMMODITY
Accounting for approximately 40% of the company’s transported volumes, coal remains a key commodity for NORDEN. On a regular basis, NORDEN-operated vessels ship coal for utility companies and steel mills in countries such as China,Taiwan, India, the Philippines,Thailand, Japan, Chile, Italy and the UK.
Other key commodities of NORDEN include iron ore, grain products, salt, cement and clinker, bauxite/alumina, minerals, metals and fertilizers. A new commodity emerging this year is biomass as part of some energy producers’ efforts to reduce CO2 emissions by replacing fossil fuels by CO2 neutral fuels.
“Last year we transported basically no biomass products, but this year we expect to lift more than 1mt of woodchips and wood pellets. Biomass is an interesting new segment, and we are happy to be on board as we expect demand and volumes in this
market segment to increase over the next few years,” says Norborg. Two large COAs providing utility companies in Scandinavia and Germany with pellets and chips form the basis of NORDEN’s biomass activities, but activities also include some spot trades.
 
170 DRY CARGO VESSELS ON WATER
By mid-September, NORDEN was operating approximately 170 bulk carriers. The core fleet of owned vessels and long-term chartered vessels with purchase options has grown to encompass 60 vessels (+40% in one year), and this core fleet will continue to grow thanks to the company’s order book of 26 owned new-buildings and long-term chartered vessels with purchase options.
NORDEN is active in all major vessel types. Handymax and Panamax continue to be the cornerstone of the operations and NORDEN is one of the world’s largest operators of these vessel types. However, in addition to this, NORDEN is increasing the fleet of Handysize and Post-Panamax vessels via NORDEN-led pools. Furthermore, the company is active in Capesizes.
Besides dry cargo, NORDEN is active in the product tanker segment through the 50%-owned Norient Product Pool. The pool operates approximately 75 modern MR and Handysize tankers from NORDEN and the pool partner Interorient Navigation Company of Cyprus.
NORDEN was founded in 1871, making it one of the oldest globally operating listed shipping companies. In addition to its head office in Hellerup, Denmark, NORDEN has offices in Singapore, China, the US, Brazil and India and site offices at various Asian ship yards. At its offices, NORDEN employs around 260 people on shore, and about 810 are employed on board the company’s owned vessels.