Pacific Basin poised for better performance in 2014

The smaller size bulker specialist managed to outperform handysize spot market rates of $9,470 per day net, although the stronger daily earnings were partly offset by the increased cost of the ships they used under short-term and index-linked charters to optimise the execution of their cargo systems.

Reflecting its forward looking strategy, Pacific Basin said handymax daily earnings were only marginally higher than handysize earnings as it embarked on a large seasonal programme of low-paying positioning voyages to benefit from higher paying fronthaul voyages that it anticipates later in the year.

To this end, Pacific Basin expects minor bulk freight earnings to improve in the second half of 2014 on seasonally stronger cargo volumes and more favourable supply fundamentals as the cyclical recovery progresses.

However, in the first quarter, while indices were better compared to Q1 2013, freight rates have experienced a seasonal quarterly decline since end-2013 and the minor bulk freight market has been characterised by geographic differences in vessel earnings.

"We faced the higher cost of chartering in Handymax ships during the unexpected regional market spike at
the end of 2013 to perform our US Gulf front-haul cargo commitments in the first quarter of 2014," Pacific Basin noted.

It added that 42% of its 26,510 contracted Handysize revenue days in the last three quarters of 2014 have been covered at
$10,070 per day net, which it admitted was a low level of cover but made in the expectation of improving market strength ahead.

On its harbour towage business, Pacific Basin said the number of job increased 18% year-on-year in Q1.

The offshore towage business however continued to seek contract renewals and new contracts. Meanwhile, the unusually heavy rainfall and physical location difficulties affected PB Towage's barging operation in Australia’s Northern Territory resulting in contract restructuring.

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