Pacific Basin ceo Mats Berglund attributed the better performance to a “tighter geographical focus” in its handymax business. Elaborating, he said the company had tried to replicate its handysize strategy in the segment but suffered from a lack of owned ships when the market conditions turned last year.
“We were a bit too spread out last year and we went a bit too far in trying to replicate what we do on handysize… so we had cargo contracts in all geographical regions and in the winter of 2013/14 we were not able to schedule our own ships properly against these contracts and when rates went up we had to charter-in some expensive ships to cover,” said Berglund.
The company has since changed that strategy to focus on specific trade routes where they have a concentration of both cargo contracts and ships so that lessens exposure. It has also been benefitting from using a higher proportion of short-term and index-linked charters where the rates have been very low, he added.
As a result the cost advantage in the handymax segment has been more pronounced than in the handysize segment, where Pacific Basin has a higher proportion of owned ships. While in the handysize segment blended vessel costs came down from $8,750 in the previous corresponding period to $7,870, the equivalent costs for the handymax segment fell from $11,050 to $8,330.
Another factor which helped handymaxes has been the good growth in Chinese steel exports. “There have been good volumes there and we are in a good position to take advantage of Chinese exports, being based in Hong Kong with Chinese-speaking staff, although this has softened a bit recently,” said Berglund.
Looking ahead, Berglund said the supply side picture is looking better than it was. “Slippage is significant, and everyone who can is delaying or cancelling,” he said, adding that the issue is on the demand side.
While Chinese minor bulk imports are still down 7% year-on-year, volumes have been on an uptrend since March. Meanwhile with the number of Chinese yards delivering handy bulk vessels going down to just 21 in 2015 from 54 in 2012, and almost no new ordering in the past quarter, Pacific Basin expects net fleet growth of around 2.5% in 2015.
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